<p>Around 400 additional homes could be built at Southwark Grounds on Port Road, lifting total site capacity from 1300 to around 1700 dwellings.</p>

<p>A recently approved code amendment would allow apartment towers of up to 14 storeys in some areas of Renewal SA’s redevelopment of the former West End Brewery.</p>

<p>Renewal SA Acting Chief Executive Shane Wingard said he welcomed the code amendment, with the increase in heights and homes making a positive impact on the supply of high-quality, well-connected housing close to the city.</p>

<p>“By going higher across some parts of Southwark Grounds, we are adding a substantial number of very well-located homes with little impact on project delivery time or planned open space,” Mr Wingard said.</p>

<p>Since the project officially launched in 2025, Mr Wingard said more than 12,000 enquiries had been received about living at Southwark Grounds.</p>

<p>“The very strong early interest we’ve seen since homes were first released in the precinct reinforces our plans to create more housing opportunities,” he said.</p>

<p>The Southwark Grounds code amendment was launched in December last year, with community engagement undertaken over five weeks from January.</p>

<p>It proposed increasing maximum building heights from eight to 14 storeys on the eastern section of Southwark Grounds, and to 12 storeys across the remainder of the site, with minimum building heights ranging from two to four storeys.</p>

<p>The code amendment was implemented through an Early Commencement policy in late January, allowing developers to quickly explore the viability of increased height and housing yield while other planning processes continue.</p>

<p>One of the first developers delivering apartment sites have already finalised redesigns to increase the number of apartments following the code amendment.</p>

<p>Samaras’ development adjacent to the future Colonel Light Park is now planning to deliver 125 apartments across 11 storeys, significantly greater than original plans of around 50 apartments across four storeys.</p>

<p>The developer is also exploring the potential for additional affordable housing outcomes.</p>

<p>Most of the apartments at Southwark Grounds will be delivered within a master-planned precinct on a large parcel of land on the eastern portion of the site, covering around two-thirds of its 8.4 hectares.</p>

<p>Wingard said detailed precinct planning over the coming months may identify further opportunities to increase yield further that could see total apartment numbers at Southwark Grounds, exceed this number.</p>

<p>Affordable homes at Southwark Grounds will also see a net increase, with Renewal SA maintaining its commitment to a minimum of 20 per cent affordable housing across the development.</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>Civil works have begun across the site, with construction under way on the first new roads surrounding a townhouse precinct in the south‑west corner of Southwark Grounds. This includes Renewal SA’s 17 Founder’s Row homes, which are on track for completion by Christmas.</p>

<p>“We expect to have people living at Southwark Grounds by the end of the year, so delivering roads and public spaces for those residents is among our highest priorities.”</p>

<p>Construction of 40 townhouses off Anderson Street, known as West Village and being delivered by Contour, is forecast to begin in mid‑2026. Kolabb’s Anderson Lane development will follow shortly after, delivering a further 26 townhouses.</p>

<p>Southwark Grounds is a state government‑led urban renewal project now set to deliver around 1,700 homes over the next decade.</p>

<p>Homes will be supported by a supermarket, a range of retail and hospitality offerings anchored by a revitalised Walkerville Brew Tower, a childcare centre, car parking and well‑connected public spaces.</p>


Joel Robinson

400 new homes planned for Adelaide's former West End Brewery site

<p>Brisbane developer&nbsp;<a href="https://www.apartments.com.au/developers/cavcorp">Cavcorp</a> has lodged plans for a new mixed-use residential development at <a href="https://www.apartments.com.au/new-apartments/55-wyandra-street-teneriffe-qld-4005">55 Wyandra Street</a>, Teneriffe, anchored by an 85-metre public laneway designed to reconnect the suburb’s riverfront with the Gasworks precinct.</p>

<p>The buildings, known as Teneriffe House and Teneriffe Lane, would replace the existing Queensland Cotton head office site with a 15-storey residential tower transitioning to eight storeys toward Helen Street. The project has been designed by Plazibat Architects and lodged as a code assessable development application for 93 apartments across a 3,401 sqm mixed-use site within the Newstead and Teneriffe Waterfront neighbourhood plan.</p>

<p>Central to the scheme is the transformation of an existing service easement into a publicly accessible cross-block connection linking Wyandra and Helen Streets. Cavcorp says the new laneway will act as both a pedestrian shortcut and a landscaped civic space between the Teneriffe Riverwalk, ferry terminal, and Gasworks precinct.</p>

<p><img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="26e7f058-b065-4de8-b13d-a2b8cb64dfcc" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/bldg.png?VersionId=sELS0ZKYi361oYipUa1BIKfe_.DLZoFV" /></p>

<p>“The revised proposal delivers a legacy public-realm cross-block link, permanently secured for community use, transforming an existing private easement into a safe, high-quality pedestrian connection between the Teneriffe heritage riverwalk and the Gasworks–Long Island precinct,” the planning report states.</p>

<p>The laneway will sit beneath a large subtropical loggia integrated into the podium levels of the development. The design incorporates deep landscaping, water gardens, lobby spaces, business lounges, and ground-floor apartments to create what Cavcorp describes as a climate-responsive “urban verandah.”</p>

<p>The tower itself has been designed as a slender form with recessed floorplates and curved translucent corners inspired by contemporary Japanese architecture. The building height aligns with the Commercial Road precinct controls, which permit towers up to 15 storeys within proximity to Longland Street.</p>

<p><img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="a8a17d40-43b6-4718-b3fd-67676fcbb485" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/pers%202_1.png?VersionId=i3VwDtp5AmL_8InW7w4qRbDFEpb744Jt" /></p>

<p>The project will comprise a mix of larger-format apartments aimed at owner-occupiers, downsizers, and families. The proposed apartment mix includes 11 loggia apartments across the lower levels, 50 four-bedroom Sky-Terrace apartments from levels three to seven, and 32 Sky-Pool Homes occupying the upper tower levels. The Sky-Pool Homes will feature private thermal plunge pools integrated into oversized balconies.</p>

<p>According to the application, the apartments are intended to reinterpret the scale and character of Teneriffe’s woolstore conversions and Queensland homes within a vertical residential format.</p>

<p>“The sky-pool homes build on Cavcorp’s previous projects and introduce a distinct apartment typology to Teneriffe, informed by both local and international precedent and responding to an identified market demand for enhanced safety, space and amenity,” the planning submission notes.</p>

<p>A major focus of the proposal is its five-level wellness and lifestyle offering, extending from the basement through to the rooftop.</p>

<p>Amenities proposed include a rooftop Swim &amp; Racquet Club with a 25-metre Olympic lap pool and tennis court, coworking spaces and libraries, golf simulators, wine storage, concierge facilities, business lounges, pet wash areas, and rooftop longevity-focused wellness spaces with spas, outdoor fitness zones, and landscaped terraces.</p>

<p><img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="944b352c-49b9-4247-a4c6-5967b4b69fda" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/amenity.png?VersionId=Ed_qKjAtMwFT.5gfl3jiA9QwdWxSMsaX" /></p>

<p>All parking will be concealed within basement levels accessed from Wyandra and Helen Streets. Cavcorp says the deep-basement engineering approach allows the entire ground plane to prioritise landscaping, pedestrian movement, and active frontage rather than vehicle infrastructure.</p>

<p>The development continues Cavcorp’s concentration in Newstead and Teneriffe, where the Brisbane developer has delivered a number of apartment projects including Lucent, Le Bain, and Luminare, as well as the Long Island Wellness Precinct nearby. Several of those projects have received national design and architecture awards, including recognition under Brisbane’s “Buildings that Breathe” program.</p>


Cavcorp unveils wellness-focused Teneriffe House and Teneriffe Lane apartment buildings

<p>Focus Group Investments has lodged plans for a new apartment development at <a href="https://www.apartments.com.au/new-apartments/64-70-hanover-street-fitzroy-vic-3065">64–70 Hanover Street</a> in Fitzroy, seeking to utilise the Victorian Government’s recently introduced Great Design Fast Track pathway to accelerate approvals for the project.</p>

<p>The proposal is among the latest developments to emerge through the state-led initiative, which was established to fast-track well-designed residential projects in activity centres and transport-connected inner-city locations. The pathway allows qualifying developments that meet elevated design and housing benchmarks to bypass traditional council planning timeframes and instead be assessed directly by the Department of Transport and Planning.</p>

<p>Designed by SJB, the development will comprise a mix of apartments above activated lower levels, with a strong focus on architectural articulation, landscaping, and communal amenity. The design response seeks to balance the industrial character of Richmond’s former warehouse precincts with a more contemporary residential form.</p>

<p><img alt="First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Richmond apartments" data-entity-type="file" data-entity-uuid="abea51cc-d85b-479e-9aef-a589f3b37ca7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ground.png?VersionId=e1Kf8EyPWwyiVumtqQ4rM5S4GpOR3CCz" /></p>

<p>Proposed are 63 new dwellings, a wide ranging mix of studio, one-, two-, and three-bedroom apartments, and townhouses and duplexes. They will be spread across a part-three, part-eight storey building.</p>

<p>The Planning and Urban Context Report by Tract says the development is of an "exemplary architectural standard" and has been carefully crafted by SJB Architects.</p>

<p>"Dwellings&nbsp;will benefit from excellent access to natural light, cross-ventilation opportunities and extensive communal space," the report noted.</p>

<p>The architectural material highlights the project’s integration of landscaped elements and communal spaces throughout the building. The proposal also incorporates sustainability initiatives aligned with the Victorian Government’s push for higher-performing apartment developments under the fast-track program.</p>

<p>The Great Design Fast Track was unveiled by the Victorian Government in 2024 as part of a broader housing supply strategy aimed at accelerating the delivery of new homes. Projects assessed through the pathway must demonstrate high-quality architecture, sustainability outcomes, and housing diversity while being located close to public transport and existing infrastructure.</p>

<p><img alt="First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Richmond apartments" data-entity-type="file" data-entity-uuid="afdbe834-8dc4-4a77-a943-ba07bc927348" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/site_11.png?VersionId=0J657j.TaChAZfp93wqJYBTqSsnREJx2" /></p>

<p>Focus Group, founder and led by Paul De Lutiis, is increasingly active across Melbourne’s inner suburbs, targeting well-connected urban renewal locations suited to medium and higher-density residential development. The Fitzroy proposal continues that strategy, leveraging the area’s strong transport links, established retail amenity, and proximity to the CBD.</p>

<p>Fitzroy has been one of the most popular spots for developers and buyers in recent years. The likes of PACE Development Group, SMA Projects, Crema Group and Chapter Group, currently selling projects in the suburb.</p>


First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Fitzroy apartments

<p>The Gold Coast Planning Committee has supported the preliminary approval for the Benowa Gardens Urban Village project following an extensive community consultation and assessment process.</p>

<p>The proposal will now proceed to a full council vote on June 2.</p>

<p>The application sought approval for a masterplanned urban village on the existing Benowa Gardens Shopping Centre site, combining new housing, retail, dining, health and lifestyle amenities within a walkable, integrated precinct.&nbsp;</p>

<p>The proposed redevelopment includes around 413 apartments integrated above a revitalised mixed-use centre featuring a full-line supermarket of 4,000 sqm, 6,000 sqm of specialty retail and dining space across around 30 retailers, a 7,000 sqm health and wellness precinct, and roughly 9,630 sqm of office and medical suites.&nbsp;</p>

<p><img alt="$1b Benowa Gardens Urban Village moves to Full Council following Planning Committee support" data-entity-type="file" data-entity-uuid="fb36ae47-80bc-45f0-9914-31b0c7b6007d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/PR26576%20Ashmore%20Road%20C4%201121%20FI.jpg?VersionId=6mRKk2uU4r67TmTt39DKGUlvFRbTVqWa" /></p>

<p>The broader masterplan also includes very significant traffic and transport improvements, wide pedestrian walkways, upgraded pedestrian and cycle connections, and enhanced public areas designed to create a more connected and walkable community environment.&nbsp;</p>

<p>Centre owner Patrick Lu said the milestone reflected months of detailed planning, technical assessment and ongoing communication with local residents, businesses, schools and stakeholders.</p>

<p>“We appreciate the time, consideration and care Council officers and the Planning Committee have given this proposal throughout the assessment process,” Lu said.</p>

<p>“We also sincerely thank the local community for engaging with us, sharing feedback and participating in the consultation process over many months.</p>

<p><img alt="$1b Benowa Gardens Urban Village moves to Full Council following Planning Committee support" data-entity-type="file" data-entity-uuid="32fd1fc3-d0e6-485f-ac57-9916c9bcb818" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/PR26576%20Ashmore%20Road%20C5%201121%20FI_2.jpg?VersionId=fz8qQKDBLQ7MyFRc856Zccfbh9nFwLOe" /></p>

<p>“We understand projects of this scale bring questions and concerns, which is why we have worked hard to listen carefully, provide information transparently and continue refining elements of the proposal where possible.</p>

<p>“Our vision has always been to create a well-designed, community-focused urban village that responds to the changing needs of the Gold Coast, while delivering improved amenity, housing diversity, healthcare access and local lifestyle benefits.</p>

<p>“This proposal is about creating a genuine live-work-play environment where residents can access everyday services, schools, healthcare, dining, shopping and green space within walking distance, while also supporting local jobs and economic activity.”</p>

<p><img alt="$1b Benowa Gardens Urban Village moves to Full Council following Planning Committee support" data-entity-type="file" data-entity-uuid="50dfbd04-590e-4fc6-983b-766880947867" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Dining%20Day%20Time%20-%20High%20Resolution.jpg?VersionId=BP7ZoKJ0DdL_8iRkkC8VVx99moICV6kg" /></p>

<p>Lu said the proposal had evolved significantly through consultation and technical review, particularly around traffic, pedestrian and student safety and neighbourhood connectivity.&nbsp;</p>

<p>Melissa Griffin, Director at Urbis, said the recommendation recognised the strategic importance of delivering more housing and services within established urban areas already supported by infrastructure.</p>

<p>“This proposal represents the type of thoughtful, integrated growth that planning frameworks across South-East Queensland are encouraging,” Ms Griffin said.</p>

<p>“The project seeks to place housing, retail, healthcare and employment opportunities together in a highly accessible location close to schools, transport and existing services.</p>

<p>“Importantly, the process has involved significant technical assessment and community engagement to ensure local issues and feedback were properly considered throughout the planning pathway.”</p>


$1 billion Benowa Gardens Urban Village heads to council vote following Planning Committee support

<p>Surfers Paradise is officially set for its first new residential development with a 45-storey skybridge connecting the two towers.</p>

<p>John Camilleri’s Celestino Developments has been given the green light by the Gold Coast City Council to develop its major beachfront precinct across its huge 4,000 sqm oceanfront site at <a href="https://www.apartments.com.au/new-apartments/63-79-garfield-terrace-surfers-paradise-qld-4217">63–79 Garfield Terrace</a>, just five months after its <a href="https://www.apartments.com.au/news/qld/first-look-exclusive-billionaire-winx-breeder-s-bold-two-tower-surfers-paradise-play-with-45th-storey-skybridge">submission in late 2025</a>.</p>

<p>The approved scheme will deliver two towers rising 55 and 48 storeys, connected by a skybridge positioned on level 45 that will house a range of resident-only wellness and entertainment spaces.</p>

<p>In its notice of approval, the Gold Coast City Council said the&nbsp;proposed overall built form has been designed to complement the scale, intensity and protect the adjacent amenity and surrounding streets through the use of varied setbacks, site cover and architectural elements.</p>

<p><img alt="First look exclusive: Billionaire Winx breeder’s bold two-tower Surfers Paradise play with 45th-storey skybridge" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-30%20at%209.53.48%E2%80%AFAM.png?VersionId=ADyPJ_TFbJvSU9wZFOiCBnlPtgF7VWqW" /></p>

<p>Designed by <a href="https://www.apartments.com.au/architects/dbi">DBI</a>, the development will comprise 275 apartments across the two towers, including a mix of two-, three-, and four-bedroom residences, as well as several penthouses. The apartments will sit above a landscaped podium featuring more than 90 metres of beachfront pool frontage, private resident lawns, lounges, and wellness spaces.</p>

<p>DBI said the design draws heavily from the movement and form of the coastal environment, with curving balcony lines and sculpted façades intended to soften the scale of the towers while maximising ocean outlooks and passive shading outcomes.</p>

<p>“The project occupies a rare, uninterrupted oceanfront site and has been shaped by a design philosophy that merges architectural elegance with environmental responsiveness and a carefully curated lifestyle experience,” DBI said in planning documents submitted to the Gold Coast City Council.</p>

<p>The most distinctive element of the approved project is the skybridge linking the two towers at level 45. The elevated communal space is planned to include executive lounges, formal dining areas, wellness facilities, and panoramic ocean-facing outlooks.</p>

<p>“The skybridge enhances the identity of the development, promotes social interaction, and delivers a lifestyle experience not found elsewhere on the Gold Coast,” DBI said.</p>

<p>At podium level, residents will have access to a suite of resort-style amenities, including resident lounges, private dining rooms, a yoga lawn, gymnasium, plunge pools, and treatment spaces. The beachfront pool has been designed with separate lap, lounge, and children’s areas extending across the width of the site.</p>

<p>The project will also introduce new food and beverage offerings along the Enderley Avenue and Oceanway frontages, contributing additional activation to the beachfront precinct.</p>


First look: Winx billionaire’s beachfront Surfers Paradise apartment development greenlit

Construction

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<div>The ABS released its <a href="https://www.propertyobserver.com.au/https://www.abs.gov.au/ausstats/abs@.nsf/mf/8755.0" target="_blank">Construction Work Done</a> figures for Q1 2015 which saw total construction work done decline by 2.4% to $48.4 billion.</div>
<div> </div>
<div>It's a bit of an awkward data release with a few moving parts, but let's see if I can simplify a few of the key messages here in three short parts.</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Part 1 - Total construction slips</span></strong></div>
<div>
<br>As you can see from my chart below, private sector building work is responding rather nicely to low interest rates.</div>
<div> </div>
<div>Unfortunately, on the other hand, spend in the public sector is contributing very little to the cause.<br><br>Quarterly public sector expenditure fell to below $2.2 billion, which is far below the more stimulatory levels seen through the financial crisis which peaked at more than $5 billion.<br><br>The economy could evidently use some infrastructure investment, though I'm not at all sure we'll get it.</div>
<div> </div>
<div>Meanwhile engineering construction, largely comprised of resources capital expenditure, continues to capitulate, now more than 20% lower over the past year to $24.8 billion in Q1, from a peak of $33.2 billion in 2012.</div>
<div> </div>
<div class="separator"><img src="/images/2015/05/28/wargent1.jpg" alt=""></div>
<p> </p>
<div>The net result is that total construction work done declined further in the first quarter by 2.4% to $48.4 billion.</div>
<div> </div>
<div>This is still a very high level of activity in historical terms, but now some 8.8% lower than one year ago.</div>
<div> </div>
<p><img src="/images/2015/05/28/wargent2.jpg" alt=""><br><br></p>
<div>The one shining light for construction - which you will have seen with your own eyes if you live in one of the major capital cities - is residential construction, which continues to pulse along.</div>
<div> </div>
<div>House building work done is picking up sharply, while the value of building work done relating to units and apartments (denoted by the red line below) continues to surge to new record highs through this cycle.</div>
<div> </div>
<div>Higher density developments - which tend to be located in cities and come with associated expensive land remediation costs - are contributing a surprisingly high proportion of residential building work done in chain volume measures terms.</div>
<p> </p>
<div class="separator"><img src="/images/2015/05/28/wargent3.jpg" alt=""></div>
<div class="separator"><span style="line-height: 1.3em;"> </span></div>
<div>Major renovations work, denoted by the green line, continues to flatline, and is basically on life support outside Sydney.</div>
<p><strong><span style="text-decoration: underline;">Part 2 - State versus state building</span></strong></p>
<p><span style="line-height: 1.3em;">The value of building work done is being driven by activity in Melbourne, Sydney and Brisbane, in that order, which should continue to support construction employment in those cities, combined with the associated </span><span style="line-height: 1.3em;">multiplier</span><span style="line-height: 1.3em;"> effect.</span></p>
<div>The building boom is largely bypassing the southern states, and this has been reflected in benign (Hobart) or negative (Adelaide) employment growth in the respective capitals of these states. </div>
<div> </div>
<div class="separator"><img src="/images/2015/05/28/wargent4.jpg" alt=""></div>
<div class="separator"> </div>
<div class="separator"> </div>
<div>Looking at the major component parts, Melbourne continues to be the undisputed king of house building, while Queensland and Western Australia saw a decent lift in activity in the first quarter of this year.</div>
<div> </div>
<div class="separator"><img src="/images/2015/05/28/wargeent5.jpg" alt=""></div>
<p><br><span>But the real fun and games are taking place in the apartment construction sector.</span></p>
<p><span style="line-height: 1.3em;">Sydney and Brisbane may be approaching full capacity in this industry, which a dearth of bricklayers and project managers on the eastern seaboard being reported by the Reserve Bank's liaison, despite the legions of construction workers becoming available for transfer as they are released from resources contracts (more on this below). </span><span style="line-height: 1.3em;"> </span></p>
<div>Activity in New South Wales pulled back a little in Q1, but Melbourne apartment construction continues to rip to record high levels, with nearly $6.5 billion of work done over the past year in Victoria, and $1.8 billion in the first quarter of 2015 alone.<br><br>Heady times.</div>
<div> </div>
<div class="separator"><img src="/images/2015/05/28/wargent6.jpg" alt=""></div>
<div class="separator"> </div>
<div class="separator"> </div>
<div>Clearly this is the macro level data only, but the figures clearly imply a looming oversupply of units and apartments in some locations.<br><br>Prospective investors clearly need to understand the property markets at a suburb and micro level in this respect.<br><strong><span style="text-decoration: underline;"><br></span></strong><strong><span style="text-decoration: underline;">Part 3 - The mining cliff</span></strong>
</div>
<div><strong><span style="text-decoration: underline;"> </span></strong></div>
<div>If you were hoping for good news for resources regions from this release, I'm afraid that there is none to report.</div>
<div> </div>
<div>Engineering construction work done held up reasonably well in Victoria, but everywhere else of note saw sharp declines, and particularly so the main mining states.</div>
<div> </div>
<div>The one exception in recent quarters had been the Northern Territory, with heavy spend related to the $34 billion Ichthys project pushing up engineering construction work done to record highs for the Top End over the preceding two quarters.</div>
<div>
<br>However, even the Northern Territory saw engineering construction work done decline from $2.1 billion to $1.7 billion in the first quarter, with some delays to the planned 2017 start-up date having been reported related to Inpex.</div>
<div class="separator"> <span style="line-height: 1.3em;"> </span>
</div>
<div class="separator"><img src="/images/2015/05/28/wargent7.jpg" alt=""></div>
<div> </div>
<div>The chart above tells its own story, and there is little else but woe ahead for a number of mining town economies. </div>
<div> </div>
<div>The ongoing capitulation of house prices in the Pilbara and Moranbah have been well enough documented, but there are many more echo-corrections in the post across regions which have been propped up through the once-in-a-century mining construction boom. </div>
<div>
<br>My chart packs have shown here previously that the pipeline for mining capital expenditure is desperately weak, and there will be further data to report on expected capital expenditure declines later this morning.<br><br>Capex related to Ichthys still has a way to run, granted, while Adani is hoping to proceed with its $10 billion thermal coal project (despite the minor inconvenience issue that at today's prices the project can barely be viable).<br><br>But these monster projects aside, weakening commodity prices will ensure that mining investment is heading all the way back down where whence it came, which is why we call it a commodity <em>cycle</em>.</div>
<p><strong><span style="text-decoration: underline;">The wrap</span></strong></p>
<div>This negative result will breathe very life into the GDP result for the first quarter, while a further decline in Australia's terms of trade will also act as a drag.</div>
<div> </div>
<div>Economic growth may not be stone dead flat in Q1, but it seems unlikely to be a great deal better than that, which could drag the annual result down to well below 2% over the first half of this calendar year.</div>
<div> </div>
<div>With inflation forecasts having been revised down and further macro-prudential tools now being deployed by lenders, futures markets see every chance that the next move in interest rates will be down again to below 2%.</div>
<div> </div>
<div>Perhaps the twist in the tail here is that macro-prudential tools on lending to property investors mean lower interest rates for longer?</div>
<div> </div>
<div>
<em><span>PETE WARGENT</span> is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br><p><em>His book '<a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>' is out now.</em></p>
</div>
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pwargent-M4siyDbqQY

Major renovations work continues to flatline: Pete Wargent

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<div>Total construction work done in Australia has declined by 3.7% over the past year in seasonally adjusted terms. Let's take a look in two short parts at what this actually means.</div>
<div> </div>
<div>
<strong><span style="text-decoration: underline;">Part 1 - Total construction</span></strong><br><strong><span style="text-decoration: underline;"><br></span></strong>
</div>
<div>Total construction work done in the third quarter of 2015 declined by 3.7% to $49 billion on a seasonally adjusted basis. </div>
<div> </div>
<div>Despite a lift in residential building work done (+2.0%), there was a decline in non-residential building (-1.9%), and as widely expected engineering construction fell sharply (-7.3%) to be -11.7% lower over the year.<br><br>The green shaded area which records construction work done in chain volume measures terms shows that the unwinding of the resources construction boom has a way to run yet. </div>
<div> </div>
<div>Quarterly engineering construction work done has declined from a peak of $34 billion to around $25 billion, but given the weakness in commodity prices - and given that in the same quarter a decade ago activity was just $13 billion - the decline surely has a long way to go.</div>
<div> </div>
<div><a href="/images/2015/11/26/A1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/11/26/A1.jpg" alt=""></div>
<div> </div>
<div>
<div>The decline in engineering construction this quarter was driven by an overdue reversal in Western Australia, and to a lesser extent a decline in Queensland, as mega-projects begin to wind down. </div>
<div> </div>
<div>Activity in the Northern Territory continues to track at a historically exceptionally high level of $2 billion, accounted for primarily by the massive Ichthys LNG project.</div>
<div> </div>
<div><a href="/images/2015/11/26/A2.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/11/26/A2.jpg" alt=""></div>
</div>
<div> </div>
<div>
<div>While non-residential building and major renovations have contributed little of significance to the rebalancing of the economy, new house building and "other residential" building (apartments, units, townhouses) have effectively done everything that could have been expected of them in response to low interest rates.</div>
<div> </div>
<div>Total building work done of $24 billion represents a solid 6.4 per cent increase over the year, with no thanks to the non-residential sector.</div>
<div> </div>
<div><a href="/images/2015/11/26/A3.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/11/26/A3.jpg" alt=""></div>
<div> </div>
<div>
<div>These high level numbers should present an idea of some of the challenges facing the economy given that housing starts are projected to decline from pretty much now, while the decline in engineering construction may only be half way done. </div>
<div> </div>
<div>Even now I'm still not sure anyone really has a satisfactory answer for what is going to fill this gaping hole while commodity exports ramp up. Given the expansion of Australia's population the obvious answers should come under the heading of "infrastructure" but if there's a coherent plan for that being discussed anywhere I haven't heard of it.</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Part 2 - Building work by state</span></strong></div>
<div> </div>
<div>Victoria has been the king of building work through this cycle, with New South Wales following in second place, these states being home to the two capital cities with the strongest dwelling price gains.<br><br>Indeed, Melbourne is a fine illustration of why it is important for market analysts to pay close heed to both demand and supply factors when forming their views. The Victorian capital has been building both houses and units like billy-o since 2010 - the source of a thousand crash predictions - yet vacancies and stock on market are both falling, and the market seems to be gathering momentum again.</div>
<div> </div>
<div><a href="/images/2015/11/26/A4.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/11/26/A4.jpg" alt=""></div>
<div> </div>
<div><span>While there has been a reasonable response from the house building sector since 2012, approvals data shows that this market is running out of puff for the cycle, and has probably all but peaked already.</span></div>
<div><span> </span></div>
<div><a href="/images/2015/11/26/A5.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span><img src="/images/2015/11/26/A5.jpg" alt=""></span></div>
<div> </div>
<div> </div>
<div>
<span>On the other hand the "other residential" sector continues to surge to record heights (this has been visible in the largest cities to anyone with a working pair of eyes...always knew those gauges were dodgy!), the new high rise building boom being the defining dynamic of this market cycle.</span><br><br><span>Building work in this sector is at historical highs in Victoria, New South Wales, Queensland, and Western Australia, with over-building of high rise apartments evident in parts of Brisbane and Melbourne.</span>
</div>
<div><span> </span></div>
<div><a href="/images/2015/11/26/A6.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span><img src="/images/2015/11/26/A6.jpg" alt=""></span></div>
<div> </div>
<div> </div>
<div>
<div>If you've been following this blog for the last couple of years, you will appreciate that the systemic risks in the housing market are obviously apparent and buried within this final chart. Would-be market shorters should dig deeper here.</div>
<div> </div>
<div>There have long been indicators of overbuilding in the high rise markets of inner city Melbourne and Brisbane, with a high proportion of new build sales being made offshore, especially to China.</div>
<div> </div>
<div>The storm clouds were gathering for off-the-plan buyers well before APRA's intervention, but recent tightening measures to lending procedures could well be the factor which nails on the correction for this sector. </div>
<div> </div>
<div>How many buyers who put down trifling holding deposits will fail to settle if lenders demand a 20 per cent deposit prior to completion? Perhaps up to a third could be in trouble, and will be juggling personal finances as we speak. </div>
<div> </div>
<div>Could get messy. </div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Construction trends (off-the-plan mess) Pete Wargent

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<p>Christmas always puts a deadline on things. For Property Bloom this year it's completing four development projects before the big man with the white beard arrives.</p>
<p>Of course our builder and all their tradies are under the pump at this time of year and our job as project managers really comes into play.</p>
<p>Our goal is not only to have the dwellings completed with Occupation Certificates (OCs) issued, but also <strong>tenanted</strong> before Christmas. And I've found a way to achieve this.</p>
<p>It's called supporting your site manager.</p>
<p>Rather than micro manage our site managers which just drives people crazy, we try to help them by giving them a hand. They feel supported and at the end of the day, we are all on the same team striving for the same result: Happy clients.</p>
<p>Here's an example. I'm doing two Practical Completion (PC) inspections this week and I have a tool I'm going to take along that should help. It's a bottle of Spray and Wipe.</p>
<p>Because we are pushing the process, we'll often get asked to move the PC date so they can be completely ready. But I don't want to give our builder another few days. Because right now, we literally don't have them.</p>
<p>We want tenants settled in before Christmas, we need the properties to look their best because on the same day we do our PC inspection, our appointed property manager will be taking photos and uploading the properties onto the Internet. This way we can advertise for tenants during the PC and Handover period.</p>
<p>The Handover period is the time after PC when the builder has seven days to complete any outstanding items we've picked up and before the bank pays the builder's final drawdown. Once the builder receives their payment, they release the keys to the owner and the dwellings come off construction key. That is literally the Handover date and of course a tenant can't move in before Handover.</p>
<p>Once asked to pay the final invoice, the bank typically take about a week, sometimes longer to send their valuer to check construction has been completed then transfer the money to the builder.  Before they release the final payment, they will have conditions such as receiving a copy of the OCs, and a copy of a building insurance policy in the name of the owners. </p>
<p>This week or two is valuable and we use it to show potential tenants and hold open homes. We can do this because we have a great relationship with out builder and they will allow access BEFORE Handover. That's pretty unusual for a builder. But it means tenants are lined up as keys are handed over, which results in zero vacancy time for our clients.</p>
<p>So back to the PC inspection. My theory is that we set a date for PC and we do all we can to get the project to that stage. By having a deadline, more action is taken. I've found that there ends up being only minor items to attend to if any at all, because the site manager has done all he could to meet the deadline.</p>
<p>Short of bringing a pair of white gloves, I am fussy at these inspections. But some things just need a bit of elbow grease. So the bottle of Spray and Wipe comes out and we can clean the spots as we go through the property. It's so much easier than adding it to a list and having to wait for cleaners to come back. Of course I do draw the line at mopping floors, but small marks can easily be removed along with the fine layer of dust that always seems to settle on the kitchen benches a day after the construction clean is done.</p>
<p>I'm looking forward to Christmas this year but there's still a bit of work to be finished before the champagne is poured and prawns are peeled. </p>
<p><em>Jo Chivers is chief executive officer of property development project managers <a href="https://www.propertybloom.com.au/about" target="_blank">Property Bloom</a>.</em></p>
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Countdown to construction completion: Jo Chivers

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<p>EXPERT OBSERVER</p>
<p>It's all happening in Brisbane CBD... there's not too much downing of tools or time for smoko around here at the moment!</p>
<p>So while residential construction is now slowing towards multi-year lows, there's plenty happening in the commercial and infrastructure space.</p>
<p>One of the major broadsheets reported this week on its front page that traffic controllers on the Queen's Wharf project are set to earn more than $194,000 per annum, including 10 hours per week of paid overtime.</p>
<p>Meanwhile, including overtime carpenters are expected to earn around $240,000 per year for a 46-hour week.</p>
<p>All of which will feed itself back into Brisbane's economy over the next few years.</p>
<p>We looked at some of the major projects and what they might mean for Brisbane at our buyer's agency website <a href="http://allenwargent.com.au/why-you-wont-recognise-brisbane-5-years-from-now-3-minute-video/" target="_blank">here</a>. </p>
<p><img src="https://1.bp.blogspot.com/-KtQy-K-vC5c/XaPSuPvLbHI/AAAAAAAAyQE/_x0BT6JdDHMFnjRj2rciTcjtK8Svzv69gCNcBGAsYHQ/s640/QW.jpg" width="640" height="320" data-original-height="800" data-original-width="1600"></p>
<p><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>. </em></p>
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Commercial construction booming in the Brisbane CBD: Pete Wargent

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<p>RBA liaison believes it can see through the downturn in construction to the other side.</p>
<p>Below Scutty reports on the latest AiG construction index gauge:</p>
<p class="separator"><img src="https://1.bp.blogspot.com/-XgQZzrxcIIM/XenLm_8jMII/AAAAAAAAzOk/ysAVnkMDPoMCnM41cdRqrZxiiHZVAFM9QCNcBGAsYHQ/s640/AIG1.jpg" width="640" height="136" data-original-height="142" data-original-width="663"></p>
<p class="separator">Apartments (37), engineering (33.3) and commercial (43.7) all came in with very contractionary readings. </p>
<p class="separator"><img src="https://1.bp.blogspot.com/-l136Sd1V4sw/XenLm0vwVNI/AAAAAAAAzOo/L8SgToObOWQzHb4nrfOYEQtYB-oLGwlpACNcBGAsYHQ/s640/AIG2.jpg" width="640" height="204" data-original-height="513" data-original-width="1600"></p>
<p class="separator">Perhaps house building is due to lift soon, but otherwise, it's another stinker.</p>
<p class="separator"><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>. </em></p>
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Construction continues crashing: Pete Wargent

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<p><span>There are times in the development process that just seem to drag on and on. One of these irritating drawn out processes is the period after the Development Application (DA) and Construction Certificate (CC) are approved but before construction can commence.</span></p>
<p><span>After the approvals are received, our clients are then able to finalise their construction loan. Prior to this they have received a preapproval from their bank. For their construction loan to be unconditionally approved, the bank requires all supporting documentation.  This includes stamped plans, consents, signed builder's contract and insurance along with other personal documentation confirming your income.</span></p>
<p><span><em>Property Bloom</em> is in this process with several of our projects right now and it's like riding a bike from a smooth bitumen road into a sand dune. </span></p>
<p><span>The momentum and excitement that builds as we received the DA consent from council gathers speed by the use of a private certifier to fast track the CC process.  So it's just a week or two before we usually obtain the CC consent from lodgement.  It's then the builder's contract is issued to clients for signing and a copy is given to the bank together with the other required documentation to finalise their construction loan.</span></p>
<p><span>Then we hit the sand that bogs us down, slowing momentum. The banks will take their time processing the loan but it's also the application of the Home Builders Compensation Fund (HBCF) policy, formerly known as the Home Warranty insurance that slows the process. HBCF is required to be raised by the builder and covers their client for losses arising from defective and incomplete work where the builder becomes insolvent, dies or disappears.  </span><span><br></span></p>
<p><span>In the past we were able to apply for this insurance as soon as the CC consent was issued, however now the insurance company wants a copy of the <em>signed</em> builders contract and this adds another two weeks to the process as we need to wait for clients to review and sign the contract.</span></p>
<p><span>Even once the bank has all they need, including the insurance policy, it can take them another two weeks to issue the authority to commence construction to the builder. We cannot commence construction without the bank's go ahead in writing.</span></p>
<p><span>Two weeks here and two weeks there can all add up. When you are relying on third parties there is little you can do apart from be a 'squeaky wheel' and keep calling to see how the application is travelling.</span></p>
<p><span>One way to accelerate the process is to avoid using a construction loan. This may not be an option for most developers but if you have enough cash or equity available in other properties then you can look at the option of setting up a line of credit and funding the construction from this. Always get accounting advice on this. The big benefit is that you will avoid the headache the paperwork can cause and you won't be waiting around for the construction finance approval. </span></p>
<p><span>Finally, construction may start as soon as you've signed the contract and the HBCF insurance policy is issued. We have found this to save approximately 6-8 weeks off the time frame of a development. It also has benefits on completion and fast tracks the handover process.</span></p>
<p><em>Jo Chivers is Chief Executive Officer of property development project managers <a href="https://www.propertybloom.com.au/about">Property Bloom</a>.</em></p>
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How to accelerate the pre-construction phase: Jo Chivers

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<p>There was another upbeat result for building approvals in the month of July 2017, with a shade under 18,300 dwellings approved in the private sector.</p>
<p>From a year ago private sector attached dwelling approvals are some 30 per cent lower, leading total approvals to be off by 14 per cent year-on-year.</p>
<p>Approvals are evidently well down from the peak, especially for high-rise apartments as we shall see. </p>
<p>However, detached house approvals have been steadily trending higher over the past five months, and demand for new homes has picked up the pace too. </p>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/07/B3.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/07/B3.jpg" alt=""></p>
<p>Although attached dwelling approvals remained at relatively strong levels in the most populous capital cities in July, the entrenched downtrend is abundantly clear. </p>
<p>In Brisbane, annual approvals continue to drop precipitously as that market grapples with high-rise overbuilding, especially in the inner city.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/07/B1.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/07/B1.jpg" alt=""></p>
<p>Interestingly much of the recent strength in detached house approvals has been accounted for by the regional centres, as house price growth ripples outwards.</p>
<p>At the capital city level detached housing in Brisbane looks robust, but annual house approvals in fundamentally oversupplied Perth are down by 41 per cent from the cyclical peak of December 2014.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/07/B2-1.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/07/B2-1.jpg" alt=""></p>
<p>High-rise boom &amp; bust</p>
<p>Looking at the composition of dwellings approved shows that in annualised terms high-rise apartments have dropped by a quarter since the heady peak of October 2015. </p>
<p>Indeed, the great bulk of the volatility through this cycle has been driven by the heady combination of low interest rates and a surge of Chinese investor demand for high-rise apartments (which has now gone into reverse gear with local financiers having pulled up stumps).</p>
<p>Lately there has been a shift back towards approvals for more boutique apartment blocks, and especially townhouses. </p>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/07/B4.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/07/B4.jpg" alt=""></p>
<p>The boom and subsequent bust in high-rise approvals has followed a markedly similar pattern across each of the three most populous states, thus underscoring the point, although demand in Sydney and Melbourne has held stronger for longer.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/07/B5.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/07/B5.jpg" alt=""></p>
<p>Non-residential steps up</p>
<p>While there have been fears of a disorderly slowdown in construction, the total value of building approvals surged in the month July and has been trending solidly higher for six months, helped along by strengthening performance in the non-residential sector.</p>
<p>In fact, the trend in non-residential approvals smoked a record high in July 2017 - in dollar value terms, if not as a share of GDP - driven by office and education buildings in New South Wales and Victoria.</p>
<p>With public works, infrastructure spend, and engineering construction rising, overall the sector remains in considerably better nick than seemed likely at the back end of last year. </p>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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Rebalancing away from the high-rise construction effect: Pete Wargent

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<p><span style="line-height: 1.3em;">We're at the pointy end of a development and I'm in the middle of coordinating the last three weeks so everything falls into place efficiently. Our job as project managers is to save our clients time and money and sometimes a development can really drag out at the end of construction.</span></p>
<p>I thought I'd share all the things that need to happen as a Property Bloom project nears completion and why it's so importance to manage this carefully. </p>
<p>We have a dual occupancy project that is three weeks out from completion. I can say three weeks confidently as I've worked back from the date of Handover to right now and listed everything that needs to happen. </p>
<p>We define completion not by the construction work finishing, but by the dwellings being tenanted and earning income for our clients. It's one of the most important stages because our clients have been paying the builder's draw downs through the development and now it's time for them to reap the financial rewards. </p>
<p>Our process aims for a zero vacancy period and we do this by using something that is intangible yet very valuable. Strong relationships. </p>
<p>So in these last few weeks we need to micro manage the builder, our client and their bank, a valuer, our property management agency, our private certifier, a landscaper, the estate guidelines manager and our quantity surveyor. </p>
<p>The first step towards the end is to conduct the Practical Completion (PC) inspection  as soon as we can, but not too soon that the builder is not ready. This is when we'll walk through the villas and compile a list of items that still need finishing off. These may include paint touch ups, cleaning, any damage to exteriors (I always check the gutters and fascias closely as sometimes they harbour dents), chips in anything, landscaping, fencing, blinds, carpet and built in robes, shower screens all installed, sliding door and window tracks cleaned of all dirt (my pet hate is dirt left in tracks!) and I make sure everything works right down to a strong flush to the toilets. </p>
<p>The builder has a week to address the items on the PC inspection list and then we'll come back and reinspect. In the meantime, we need our client to send the final builder's invoice to their bank for payment. Before releasing the final funds, the bank will send their valuer to check works have been completed. We must ensure the valuer is booked in quickly and has no problems with access otherwise the final payment can be held up.  When the money is released to the builder, keys can be handed to tenants. So no keys, means no tenants, means no income. </p>
<p>At the same time we ensure that the Private Certifier conducts their final inspection. Once they have done this and have all related documentation,  the Occupation Certificate (OC) will be released.  No OC, means no tenant, means no income.</p>
<p>We've cut a deal with an agency who is going to lease the villas (whether a tenant has actually moved in or not) from the day the OC is received. So it's important we get this as quickly as possible but all Conditions of the DA must be met before the Certifier will release the OC. </p>
<p>We are also coordinating with an external landscaper who is responsible for the front landscaping and it must meet stringent estate guidelines.  This work has to be completed before the OC can be issued.</p>
<p>We brief our Quantity Surveyor to prepare Depreciation Schedules for our client to use at tax time as soon as we've received the builder's final invoice as this completes the actual build costs. However, the Depreciation Schedules cannot be completed until we have a Handover date. Handover is officially when the builder has received the final payment into their account and keys are released. </p>
<p>We need to ensure our builder has completed all works in time and there is a good measure of trust as the builder allows our management agency on site to show the villas to prospective tenants before Handover has occurred. Our client also trusts us to ensure the builder gets everything finished after they've submitted the builders final invoice to the bank. </p>
<p>Communication through this period is key. We talk a lot to our client, their bank and the contractors to ensure everyone completes their tasks when they should - all it takes is for one not to and it can hold up the entire process. </p>
<p>So in exactly three weeks time this dual occ project will be completely finished, our client will be happy with tenants in place, our builder will be happy they've been paid quickly and we'll be happy that it all came together nicely. </p>
<p><em>Jo Chivers is chief executive officer of property development project managers <a href="https://www.propertybloom.com.au/about" target="_blank">Property Bloom</a>.</em></p>
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What happens in the last three weeks of a development? Jo Chivers

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<p>Perhaps our easing cycle is not yet over?</p>
<p>Posssibly so. Markets have all but priced out any further interest rate cuts in this cycle - partly due to worries about cuts bringing more speculators into the housing market, and partly due to one seemingly very strong set of employment data - but it still seems to be very much in the balance to me.</p>
<p>One of several reasons I think that another cut or two might be needed is the decline in mining construction, which has yet to gather any real pace but remains a threat.</p>
<p><strong>Construction phase of the mining boom fading</strong></p>
<p>The Australian Bureau of Statistics (ABS) released its Engineering Construction activity data yesterday, which is something of a proxy for mining construction activity.</p>
<p>We are now clearly beyond the peak of this construction phase of the mining boom as production begins to ramp up in its stead.</p>
<p>The total value of engineering construction work done across all sectors has now declined by 2.3% over the past year on a seasonally adjusted basis.</p>
<p>In chain volume measures terms the charts show that although activity remains at a highly elevated level, the peak of the mining construction boom appears to have been way back in the September 2012 quarter.</p>
<p>And while the decline has not been devastatingly steep, in chain volume measures terms we are now tracking at around 9% lower than we were, with 3.8% of that decline taking place over the past year.</p>
<p><img src="/images/2014/10/2/ENG1.jpg" alt=""></p>
<p>In terms of the construction activity by state, it was the mining states which benefited most from the boom, so it will be the same states which feel most of the pain as the construction boom unwinds.</p>
<p><img src="/images/2014/10/2/ENG2.jpg" alt=""></p>
<p>As recently as March 2014 there were still major resources projects getting underway in Western Australia, but the big ticket items are now largely visible in the rear view mirror.</p>
<p><img src="/images/2014/10/2/ENG3.jpg" alt=""></p>
<p>In terms of the value of activity yet to be completed, work in the pipeline for Queensland has tanked. The full data set for Western Australia is not available from the Bureau of Statistics, but the sub-indices imply that the work in the pipeline is almost certainly declining there too.</p>
<p><img src="/images/2014/10/2/ENG4.jpg" alt=""></p>
<p><em>This article continues on the next page. Please click below.</em></p>
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<p><em> </em></p>
<p>With the weighted index of commodity prices continuing to "ease" by another 2.4% in September (and another 16% over the past year in Aussie dollar terms) according to the Reserve Bank of Australia, marginal projects will certainly not be commenced in the current environment.</p>
<p><img src="/images/2014/10/2/commodity-prices-small.gif" alt=""></p>
<p>In short, mining construction activity has not collapsed, but it is set to keep declining for several years to come.</p>
<p>This leads me to think that another interest rate cut or two could still be at least an each-way bet, but only if the large number of investors pouring into the housing market slows. We will know more in the next week or two on that front.</p>
<p><strong>WA property bust?</strong></p>
<p>There has been some talk of whether or not the collapse in mining construction will result in a property bust in Western Australia.</p>
<p>The answer to that riddle is: that depends.</p>
<p>The Pilbara has transitioned into the export phase of the mining boom. which is the less labour intensive phase of the boom, and unsurprisingly several property markets have crashed, both in terms of rentals and prices.</p>
<p>This is hardly a shock, except to perhaps investors who were lured in by promises of fast returns and sky-high monthly rents.</p>
<p>The Perth property market is a different matter entirely. Western Australia, and especially Perth, has benefited from by far and away the strongest percentage rate of population growth in Australia over recent years.</p>
<p>The key to successful property investment in Perth has always been to own well located land. Unit and apartment prices may well feel some pain ahead, but with rapid population growth having underpinned the market the price of well located houses will fare much better.</p>
<p>Indeed, the median price of land in Perth reportedly "skyrocketed" by $40,000 in the past year.</p>
<p>This represents a 7.5% increase in the median value of Perth land, which outpaced Adelaide (+7.3%) and Sydney (+5.2%).</p>
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Has the market mispriced the odds of a rate cut?

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<p><span>The ABS released its consolidated <a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/8782.0.65.001Main+Features1Mar%202015?OpenDocument" target="_blank"><span>Construction Activity</span></a> data for the March 2015 quarter this week. </span></p>
<div id="post-body-7503557364222292087" class="post-body entry-content">
<div>No real surprises to be found here, based upon what we have already seen.</div>
<div> </div>
<div>Resources construction continues to decline apace, with engineering construction in chain volume measures terms declining by a further 7.0% in the first quarter of the calendar year, to be down by more than 20% year-on-year.<br><br>Recent commodity price action suggests that the pace of the decline may even accelerate from here. </div>
<div> </div>
<div>On the positive side of the ledger, as implied by record high building approvals, residential construction has begun to respond to low interest rates, increasing very strongly by more than 5% in Q1 to be up by 11.9% over the past 12 months.</div>
<div> </div>
<div>Non-residential building was up by 1.3% in the March quarter, but has increased only by a paltry 0.7% over the past year.<br><br>Here's the chart: </div>
<div> </div>
<div><a href="https://1.bp.blogspot.com/-DDxrvVs-G9A/VamSG2DNnHI/AAAAAAAAW_w/9aD2jXo9y1s/s1600/Construction1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/-DDxrvVs-G9A/VamSG2DNnHI/AAAAAAAAW_w/9aD2jXo9y1s/s1600/Construction1.jpg"><img src="https://1.bp.blogspot.com/-DDxrvVs-G9A/VamSG2DNnHI/AAAAAAAAW_w/9aD2jXo9y1s/s640/Construction1.jpg" width="640" height="280"></a></div>
<br><div>Piecing these figures together it's clear that residential construction alone will not fully compensate for the decline in mining capital expenditure, with total construction activity of $48.3 billion now declining back to the levels seen in Q4 2011.</div>
<div> </div>
<div>That said, $48.3 billion is still an elevated level of activity in historical terms...for now at least.</div>
<div> </div>
<div><a href="https://4.bp.blogspot.com/-YDgBofnRhbY/VamSGwEWp2I/AAAAAAAAW_s/O5apxmfsbgQ/s1600/construction2.jpg" target="_blank">Click to enlarge</a></div>
<br><div class="separator"><a href="https://4.bp.blogspot.com/-YDgBofnRhbY/VamSGwEWp2I/AAAAAAAAW_s/O5apxmfsbgQ/s1600/construction2.jpg"><img src="https://4.bp.blogspot.com/-YDgBofnRhbY/VamSGwEWp2I/AAAAAAAAW_s/O5apxmfsbgQ/s640/construction2.jpg" width="640" height="288"></a></div>
<br><div>The full force of the challenge will come when the last of the mega projects finally reaches completion, with a number of massive projects still in the construction phase such as the $34 billion Ichthys LNG project in the Northern Territory.<br><br><strong><span style="text-decoration: underline;">Regional centres</span></strong><br><br>The big picture is that as part of this rebalancing of the economy construction activity - and therefore employment - is shifting back away from the regions and towards the largest capital cities.<br><br>The latest unemployment rate figures for Sydney (4.7%), Brisbane (5.2%) and Melbourne (5.8%) may prove to be seasonally low, but the smoothed rolling 12 monthly data does suggest that unemployment rates in all three of the most populous cities may just be trending steadily down.</div>
<div> </div>
<div>
<a href="https://4.bp.blogspot.com/-7ysRISR7K_4/Varagu2GulI/AAAAAAAAXAw/Qkiq-q3Y2zc/s1600/CAPCITY.jpg" target="_blank">Click to enlarge</a><br><br><div class="separator"><a href="https://4.bp.blogspot.com/-7ysRISR7K_4/Varagu2GulI/AAAAAAAAXAw/Qkiq-q3Y2zc/s1600/CAPCITY.jpg"><img src="https://4.bp.blogspot.com/-7ysRISR7K_4/Varagu2GulI/AAAAAAAAXAw/Qkiq-q3Y2zc/s640/CAPCITY.jpg" width="640" height="290"></a></div>
<br>The economy is Sydney in particular is thriving. Indeed, with employment, retail trade and house prices all booming, monetary policy settings are all too easy for the harbour city.<br><br>Unemployment rates in Newcastle and Lake Macquarie seem to have steadied of late, but the trend in the Hunter is still upwards for now.<br><br>It's likely to be a tough period of adjustment for towns in the Upper Hunter such as Muswellbrook and Singleton, with further job cuts at BHP Billiton's Mr. Arthur reported to be "imminent".<br><br>It is worth noting that directly the mining industry is only a relatively small employer, but the reversal of the mining capital expenditure boom does have significant flow-on effects to other ancillary industries.<br><br>Labour market conditions had seemed to be picking up in the Illawarra, but it is nevertheless the case that the outlook for domestic steelmaking remains potentially bleak.<br><br><em>The Australian</em> put it fairly bluntly, stating that the closure of BlueScope's Port Kembla steelworks is "a matter of when, not if".<br><br>A recent poll in the Illawarra Mercury showed that more than 70% of respondents believe that the closure of the plant would cripple the Illawarra economy.</div>
<div> </div>
<div>
<a href="https://1.bp.blogspot.com/-1QB4q-M4068/Vardl9i8mhI/AAAAAAAAXBE/4CU4N8kIH2Q/s1600/NSW.jpg" target="_blank">Click to enlarge</a><br><br><div class="separator"><a href="https://1.bp.blogspot.com/-1QB4q-M4068/Vardl9i8mhI/AAAAAAAAXBE/4CU4N8kIH2Q/s1600/NSW.jpg"><img src="https://1.bp.blogspot.com/-1QB4q-M4068/Vardl9i8mhI/AAAAAAAAXBE/4CU4N8kIH2Q/s640/NSW.jpg" width="640" height="278"></a></div>
<br>Parts of regional Queensland have similar tales to tell.<br><br>Again, unemployment rates from month to month don't tell us a great deal, and things seem to have stabilised in some regions, but the general trend has been towards unemployment rates reverting higher as the resources investment boom phase falls away.</div>
<div> </div>
<div>
<a href="https://4.bp.blogspot.com/-gQD7HHdogLk/VaragsgYkoI/AAAAAAAAXAo/odZ9tSHh_O0/s1600/QLD.jpg" target="_blank">Click to enlarge</a><br><br><div class="separator"><a href="https://4.bp.blogspot.com/-gQD7HHdogLk/VaragsgYkoI/AAAAAAAAXAo/odZ9tSHh_O0/s1600/QLD.jpg"><img src="https://4.bp.blogspot.com/-gQD7HHdogLk/VaragsgYkoI/AAAAAAAAXAo/odZ9tSHh_O0/s640/QLD.jpg" width="640" height="286"></a></div>
</div>
<br><div>Towns facing something of an uphill struggle include Dalby, Chinchilla, Roma, Moranbah, Emerald., Dysart, Bowen and others.<br><br>Gladstone has also been going through its own transition phase over the past year or two.<br><br>Tourism regions on the other hand should benefit from the ongoing depreciation of the Aussie dollar.</div>
<div> </div>
<div>
<a href="https://3.bp.blogspot.com/-yeRSdxu4_5w/VatfKwQNUBI/AAAAAAAAXCQ/AgVE3IgBslA/s1600/tourism.jpg" target="_blank">Click to enlarge</a><br><br><div class="separator"><a href="https://3.bp.blogspot.com/-yeRSdxu4_5w/VatfKwQNUBI/AAAAAAAAXCQ/AgVE3IgBslA/s1600/tourism.jpg"><img src="https://3.bp.blogspot.com/-yeRSdxu4_5w/VatfKwQNUBI/AAAAAAAAXCQ/AgVE3IgBslA/s640/tourism.jpg" width="640" height="278"></a></div>
</div>
<strong><span style="text-decoration: underline;">The wrap</span></strong><br><br><div>There is not a lot new here, of course, and the rapid decline of engineering construction has evidently been in the post for some time now. </div>
<div> </div>
<div>Although it is generally reported that a decline in construction is a "bad thing", it is also clear that Australia couldn't go on building mines for ever - at some stage they need to produce exports. </div>
<div> </div>
<div>
<em>Reductio ad absurdum</em>, if any decline in construction activity is bad, then Australia would've been better off not having a mining boom in the first place.</div>
<div> </div>
<div>That said, the rising<a href="https://petewargent.blogspot.com.au/2015/07/city-versus-regional-jobs-divide-widens" target="_blank"> </a>levels of regional unemployment reported over the past week represent compelling evidence that many resources-influenced regions are set to be hit hard by declining demand in the years ahead.</div>
<div> </div>
<div>On the other hand the largest capital cities are benefiting from a boom in residential construction in particular together with the associated multiplier effect.</div>
<div> </div>
<div>One consequence of this is that certain inner city areas will evidently end up with an oversupply of apartments, particularly of high rise stock. Unit developments marketed overwhelmingly to investors may include those to avoid.</div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
</div>
</div>
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