Repeat buyers are one of the strongest measures of confidence in any apartment development.

At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.

Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.

<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/FH_1EzB-1vs?si=XScVlP1ERsTDJoME" title="YouTube video player" width="560"></iframe>

"I had some boxes I wanted to tick," he says.

Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.

“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.

He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.

[smartcode_project:default project_id=135096 project_image_fid=356818]

After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.

"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."

Today, Keith says the move has completely changed how he experiences Newcastle.

"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."

[smartcode_project:default project_id=135096 project_image_fid=356828]

Beyond the location, he says it's the sense of community that has surprised him most.

"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."

For Aimee and Lyle Goodman, the journey started almost by chance.

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The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.

"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."

As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.

"We actually catch up more as a family now," Aimee says.

"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."

[smartcode_project:default project_id=135096 project_image_fid=356829]

Lyle says their confidence came from GWH's reputation within Newcastle's building industry.

"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."

That confidence only grew throughout the buying process.

"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."

[smartcode_project:default project_id=135096 project_image_fid=351104]

Aimee says one moment stood out.

"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."

The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.

Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.

[smartcode_project:default project_id=135096 project_image_fid=356822]

ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;

The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.

[smartcode_project:default project_id=135096 project_image_fid=356826]

For Keith, the appeal remains straightforward.

"You feel at home even before you've moved into your home."

For Aimee, the change is measured in time.

“I just felt like I had more time,” she says.

[smartcode_project:default project_id=135096 project_image_fid=351102]

Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.

ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.

[smartcode_project_cta:default project_id=135096]

Joel Robinson

From ONE to ERA: Why buyers are choosing GWH again in Newcastle West

Virgate Property Group is preparing to commence construction of Verdé, its new apartment development in Melbourne's Arts Precinct at Southbank, following a strong run of sales that has seen more than half of the project's 173 apartments secured.

Verdé has attracted a broad mix of first home buyers, owner-occupiers upgrading from nearby inner-city suburbs and investors, with younger owner-occupier couples aged between 28 and 45 accounting for the strongest enquiry. Many are already living in Southbank, South Melbourne, Albert Park, Port Melbourne, South Yarra and the CBD.

"Verdé is located in one of the most desirable pockets of southern Melbourne," Blair Property Group Director Darren Blair, who is managing sales at Verdé, said.

"It's within walking distance of the Arts Centre, Royal Botanic Gardens, Albert Park Lake, and Southbank's restaurants and retail. It's a great lifestyle location with strong amenity and liveability, which made it a very attractive choice for the project."

[smartcode_project:default project_id=4661 project_image_fid=372549]

Virgate was already familiar with the precinct, having previously delivered the successful Domain House development in neighbouring South Melbourne. That experience gave the developer confidence to acquire the Coventry Street site and continue expanding its presence in Melbourne's inner south.

"We had been keeping an eye on the site and the broader precinct for a few months before deciding to move forward with the acquisition," Virgate said.

The project was ultimately secured in 2020 following feasibility studies, planning assessments and due diligence, with the brief centred on delivering "a high-quality, considered design that feels both refined and fit for purpose."

[smartcode_project:default project_id=4661 project_image_fid=314259]

Designed by <a href="https://www.apartments.com.au/architects/bruce-henderson-architects">Bruce Henderson Architects</a>, Verdé comprises 173 one, two and three-bedroom apartments priced from $599,000. The architecture is distinguished by a faceted glass façade that responds to both the site's outlook and Melbourne's changing light conditions.

According to Bruce Henderson Architects, the coloured glazing gives the building a distinctive identity while also providing privacy and solar shading, with residences oriented to capture views across the bay, city skyline and surrounding parklands.

Inside, <a href="https://www.apartments.com.au/interior-designers/designoffice">DesignOffice</a> has created interiors focused on natural light, efficient planning and enduring materials. Apartments feature engineered oak flooring, natural stone benchtops, floor-to-ceiling glazing and SMEG appliances, while a restrained material palette aims to complement the expansive outlooks rather than compete with them.

[smartcode_project:default project_id=4661 project_image_fid=372550]

Resident amenity has also been designed around everyday functionality rather than occasional use. Facilities include a concierge-serviced lobby, residents' lounge with fireplace, library and co-working space, gym, terrace garden with barbecue facilities, ground-floor café, and package delivery management.

The project's location continues to be one of its strongest drawcards. Positioned on Coventry Street, Verdé sits within walking distance of the National Gallery of Victoria, Arts Centre Melbourne, Royal Botanic Gardens and Albert Park Lake, while Southbank's dining precinct, Sturt Street trams and the new ANZAC Station are all nearby. The surrounding education catchment also includes Melbourne Grammar, Melbourne Girls Grammar, Mac.Robertson Girls' High School and several major university campuses.

The sales team says buyers have responded particularly well to the combination of location, design quality and long-term liveability.

"They're responding really positively to the quality of the design, premium resident amenities and the uninterrupted views. Many also appreciate the location and how connected it is to everything they need."

The ability to secure stamp duty savings before completion has also been a key factor for purchasers, alongside the opportunity to personalise finishes ahead of settlement.

With construction set to commence soon and more than half the apartments already sold, Verdé enters its next phase as one of the Arts Precinct's more established apartment developments, offering remaining buyers an opportunity to secure a residence before construction advances further. Expected completion is scheduled for late 2027.

[smartcode_project_cta:default project_id=4661]

Virgate's Verdé Southbank moves toward construction as sales fly past halfway stage

Downsizer-focused apartment development Kooyongkoot in Hawthorn has been recognised at the 2026 Better Future Melbourne Design Awards, taking home Gold and Silver awards in two categories.

<a href="https://www.apartments.com.au/new-apartments/kooyongkoot-hawthorn-1-kooyongkoot-road-hawthorn-vic-3122">Kooyongkoot</a>, currently being delivered by developer PQD and designed by Cera Stribley, received Gold in the Interior Design – Proposed category and Silver in the Architecture – Proposed category.

The dual recognition reflects the design approach behind the boutique development on prestigious Kooyongkoot Road, where the focus has been on creating homes for downsizers seeking the space, quality and functionality of a detached house within a low-rise apartment building.

Rather than maximising apartment numbers, <a href="https://www.apartments.com.au/developers/pqd">PQD</a> and <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a> limited the development to just 18 residences, allowing for larger floorplans, greater privacy, generous landscaping and expansive communal spaces.&nbsp;The majority of the apartments also benefit from corner aspects, allowing for dual sources of natural light.

Now around 70 per cent complete and on track for completion in November 2026, Kooyongkoot will comprise a mix of garden residences, ter​race apartments, sub-penthouses, and is crowned by two half-floor penthouses with direct lift access and private rooftop terraces.

[smartcode_project:default project_id=102717 project_image_fid=355297]

The Silver Award for Architecture recognised the way the building responds to its prominent corner position at the ent​rance to Hawthorn's Scotch Hill precinct, one of Melbourne's most established residential neighbourhoods.

Rather than competing with the grand homes that line Kooyongkoot Road, the architectural approach focused on restraint and longevity, using curved brickwork, generous landscaping and carefully considered proportions to integrate with the existing streetscape.

"The form feels fluid and timeless, as though shaped by the landscape itself – architecture that belongs, rather than competes," said Chris Stribley, Co-Founder and Managing Principal of Cera Stribley.

The judging submission also highlighted practical innovations throughout the building, including lift cores servicing only nine homes each, a central landscaped lightcourt designed to bring daylight and ventilation into the building, and fully enclosed private storage rooms with lighting, power and shelving to better accommodate residents transitioning from larger family homes.

[smartcode_project:default project_id=102717 project_image_fid=355293]

The Gold Award for Interior Design recognised the project's focus on long-term liveability rather than display-home aesthetics.

According to the awards submission, the interiors were designed from the inside out, prioritising how homes would function over decades of daily use through generous proportions, practical storage, durable natural materials and flexible layouts.

The specification includes natural stone throughout, upgraded acoustic glazing, V-ZUG appliances and fully enclosed storage rooms, alongside an amenity offering focused on wellness, entertainment and everyday convenience.&nbsp;

Residents will have access to a gym and yoga studio, a wellness centre featuring traditional and infrared saunas, a cold therapy shower and treatment room, as well as a residents' lounge and golf simulator/cinema room for entertainment.&nbsp;Kooyongkoot has also considered the everyday convenience of its residents by offering a private carwash and pet wash facilities on site as well as dedicated parcel lockers and oversized fully enclosed storage rooms.&nbsp;

[smartcode_project:default project_id=102717 project_image_fid=355303]

The project's attention to detail has already resonated with buyers. Earlier this year, Kooyongkoot recorded one of Boroondara's highest apartment sales when an $8 million penthouse was purchased by a Melbourne CEO downsizing from a nearby family home.

"Every detail feels deliberate, from the overall design down to the smallest touches," the purchaser said.

"The level of quality and refinement is exceptional, but what really sold it was how liveable it felt... It felt like a place where everything had been considered, not just a luxury building."

[smartcode_project:default project_id=102717 project_image_fid=355304]

Sustainability also formed a key part of both award submissions. Kooyongkoot is targeting a minimum 7.5-star NatHERS rating across all residences, supported by passive design principles, high-performance glazing, EV charging infrastructure, water reuse systems and a wellness model focused on lower-energy dry facilities rather than pools and large wet areas.

Located within walking distance of Scotch College, Methodist Ladies' College, Koo​yong Lawn Tennis Club, Aubur​n Village and Camberwell Junction, Kooyongkoot continues to target owner-occupiers looking to remain in Melbourne's inner east without compromising on space or quality. A limited selection of two, three and four-bedroom residences remains available, with prices starting from $1.9 million.

[smartcode_project_cta:default project_id=102717]

Kooyongkoot wins Gold and Silver at Better Future Melbourne Design Awards

New apartment supply has become increasingly constrained across <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a> in recent years, with fewer projects progressing through to completion as development conditions have become more challenging.

It makes <a href="https://www.apartments.com.au/developers/novm">NOVM</a>'s 2021-completed <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> one of the most recently completed residential towers on the Parramatta River, and among the newest apartment developments in Sydney's second CBD.

With the project largely completed before the sharp escalation in construction costs and inflation following the pandemic, The Lennox is now offering pricing that would be difficult to replicate in a comparable new development in Parramatta today, or across much of Western Sydney.

The majority of the 413 apartments at The Lennox sold before and shortly after completion. A limited release of the remaining apartments has recently been brought to market by capital partner <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a>, with entry-level pricing from $700,000 and two-bedroom apartments available from under $1 million.

Rising above the Parramatta River at 12 Phillip Street, The Lennox comprises one, two, three and four-bedroom apartments, appealing to first home buyers, young professionals, families, downsizers and interstate investors seeking a completed apartment in one of Australia's fastest-growing economic centres.

[smartcode_project:default project_id=5743 project_image_fid=372394]

Rather than positioning Parramatta as an alternative to Sydney's CBD, Equitifund believes the city has reached a point where it stands on its own merits.

"Parramatta is no longer simply an alternative to Sydney CBD, it's becoming a destination in its own right," Equitifund Executive Chairman Greg Huxley said.

"The Lennox captures that evolution with a level of quality and amenity that's difficult to match at its price point."

[smartcode_project:default project_id=5743 project_image_fid=953]

Designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, the tower responds directly to its riverfront setting through expansive glazing and open-plan layouts that maximise views across the Parramatta River and city skyline. Interiors feature engineered timber flooring, stone benchtops, stainless steel appliances and floor-to-ceiling glazing, while generous balconies extend the living spaces outdoors.

Marchese Partners says the project was conceived to balance high-quality apartment living with practical, long-term functionality, pairing larger, efficient floorplans with amenities more commonly associated with five-star hotels.

That emphasis continues through the resident facilities, which include a 20-metre rooftop swimming pool, fully equipped gym and wellness spaces, full-time concierge, a residents' lounge, function room, private lifts, secure basement parking and rooftop communal areas overlooking the Parramatta River. Ground-floor boardwalk retail and dining further activate the riverfront and integrate the building into the surrounding public realm.

[smartcode_project:default project_id=5743 project_image_fid=925]

Australian housing and finance group Equitifund has secured the remaining apartments, believing there are few completed apartment opportunities in Parramatta that offer the same combination of location, amenity and pricing.

Equitifund National Sales Director Ben Hamblett says buyers are increasingly recognising that premium apartment living no longer needs to come with Sydney CBD pricing.

"The Lennox is where aspirational living becomes attainable," Hamblett said.

"Wake to river and mountain views, step into Sydney's Second CBD, and arrive home to resort-calibre amenities, all without the harbour price tag."

Hamblett says owner-occupiers are also attracted by the convenience of having Westfield Parramatta, Church Street's dining precinct, Parramatta Park, Riverside Theatres, Western Sydney University and major transport connections all within walking distance.

"At The Lennox, lifestyle is not an afterthought, it is the foundation."

[smartcode_project:default project_id=5743 project_image_fid=5374]

The Lennox places residents within walking distance of Parramatta Square, Westfield Parramatta, Church Street Eat Street, Parramatta Station, the ferry wharf, Light Rail, the future Sydney Metro West, Parramatta Park and CommBank Stadium, reinforcing Parramatta's position as one of Australia's most connected metropolitan centres outside Sydney's CBD.

Equitifund says buyers visiting the display suite consistently comment on the quality of the finishes, generous floorplans, river and skyline views, and the walkability of the location. The project has attracted a broad mix of local professionals, upsizers, downsizers, buyers relocating from Sydney's inner suburbs and interstate investors seeking long-term growth opportunities.

That demand aligns with Parramatta's continued evolution as an economic powerhouse. Equitifund Research and Market Insights specialist John Bekiaris says sustained population growth, infrastructure investment and expanding employment opportunities continue to support long-term housing demand across the city.

"Parramatta has evolved from a satellite city into one of Australia's most important economic centres. Population growth, infrastructure investment and employment are all supporting sustained long-term housing demand."

[smartcode_project_cta:default project_id=5743]

The apartment price gap drawing Sydney buyers west

A luxury beachfront apartment at Rainbow Bay has more than doubled in value since it sold off the plan six years ago, setting a new local apartment record in the process.

The three-bedroom apartment in the Flow development on Petrie Street, the first of four new projects locally by Paul Gedoun's S&amp;S Projects, has sold for $7.4 million, after originally selling for $3.27 million when the project launched in 2020.

The seventh-floor apartment, comprising 187 sqm of internal living space and a 54 sqm balcony overlooking Froggies Beach and Snapper Rocks, was purchased by a local family.

The transaction was negotiated by Pezet Matheson director Kerry Pezet and equates to more than $30,000 per sqm.

Pezet said the sale reflected the limited opportunities to buy into the boutique beachfront development.

"The sale highlights the rarity of opportunities within the boutique beachfront development, where residences seldom become available," Pezet said.

"Flow is one of the Gold Coast's most tightly held buildings. Buyers from our database move quickly when residences become available, and achieving an off-market sale at $7.4 million demonstrates the depth of demand for property of this calibre."

<img alt="Flow" data-entity-type="file" data-entity-uuid="c585b206-2130-4eee-a50c-3f27c51a7c70" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-06%20at%208.33.25%E2%80%AFPM.png?VersionId=m3pHRDV62Y3fvN.XQuQHq.52ilTWpRLf" />

Flow was the first of four luxury apartment developments delivered by Paul Gedoun's S&amp;S Projects at Rainbow Bay and was completed in 2023.

Positioned on the beachfront overlooking Snapper Rocks, the residence includes three bedrooms, three bathrooms, a powder room and views stretching north along the coastline towards Surfers Paradise.

Pezet Matheson Residential principal Mitchell Lambert said buyers continued to prioritise quality beachfront apartments in tightly held locations.

"Flow Residences offers a rare combination of elevated beachfront positioning, architectural excellence, comprehensive resident amenity and premium finishes, which is exactly what discerning purchasers are seeking," Lambert said.

"The transaction further reinforces Rainbow Bay's reputation as one of Australia's premier coastal lifestyle destinations, where limited supply and growing demand continue to support strong market performance."

Pezet Matheson originally marketed and sold out Flow off the plan, making the latest transaction a return to one of the project's original buyers.

Paul Gedoun is selling his third project, <a href="https://www.apartments.com.au/new-apartments/radia-rainbow-bay-271-boundary-street-coolangatta-qld-4225">Radia Rainbow Bay</a>, after recently completing, and selling out, <a href="https://www.apartments.com.au/buildings/esprit-217-227-boundary-street-coolangatta-qld-4225">Esprit</a>. He has plans for a <a href="https://www.apartments.com.au/news/qld/first-look-s-s-projects-proposes-88-apartment-wellness-tower-at-coolangattas-boundary-street">fourth building</a>, 88 apartments on <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">Boundary Street</a>.

Rainbow Bay apartment doubles in price since off the plan sale during pandemic

Coronavirus

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EXPERT OBSERVATION
Headline GDP rose by 0.5 per cent in Q4 to be 2.2 per cent higher over the year, a moderate result ahead of an expected virus-driven fall in output in Q1.
 Notwithstanding a significant contribution from the recovery in housing turnover and small improvement in consumer spending, private domestic demand remains weak with falling residential construction and business investment subtracting 0.3ppt from growth. Net exports and stocks helped offset this weakness. 
While the focus of policy-makers has turned to the impact of the coronavirus on both the global and domestic economies, today’s outcome confirms a below trend pace of growth as a starting point even with the strong recovery in housing turnover, with a turnaround unlikely for some time given residential investment has yet to trough, consumer spending is constrained by weak wage growth and businesses outside of mining remain reluctant to invest.
 Factoring in an initial hit from the virus outbreak, this leads us to forecast growth to remain below trend over the next year or so, before seeing a small improvement. There is significant uncertainty about the extent and duration of the shock from the outbreak, but this outlook points to rising unemployment over 2020 and likely further action from the RBA beyond our expected rate cut in April. 
We will update our forecasts for growth, the labour market and the policy outlook next week.
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In Q4, weak private demand growth was driven by a fall in dwelling investment which is now down 9.7 per cent over the year, and a decline business investment. While consumption growth improved, it also continues to track well below its long- run average, reinforcing our long-held view that tax rebates have failed to provide a significant boost to household spending.
 Indeed, part of the increase in consumption reflects extreme price discounting. Public-sector spending made no contribution following the solid outcome in Q3. Offsetting some of this weakness was a 0.1 contribution from exports - though this is a little weaker than recent quarters. A significant (though likely) temporary boost to the expenditure side came from the recovery in housing turnover which saw a boost to real estate margins. 
Both the production and income measures of GDP were slightly stronger than the expenditure measure in the quarter.
Looking forward, the magnitude of the bushfires and especially the coronavirus impact on the March quarter will be a focus, as will the ongoing impacts of the latter in subsequent quarters. For now, we have factored in a decline in March quarter GDP, but for a small recovery in quarterly growth thereafter on the assumption that the virus is quickly contained. 
As a result, we see year-average growth of 1.2 per cent in 2020 before an improvement in 2021 to around 2.7 per cent. Should the impact of the virus become more protracted this will necessarily see a down grade to our forecasts for growth. 
Notwithstanding the impact of the virus, our read is that the sluggish pace of underlying growth already warrants further policy action, with below-trend growth over the next 18 months likely to see a deterioration in the labour market with further downside risk as a result of ongoing impacts from the coronavirus.
 Indeed, we see the RBA cutting rates for a second time in 2020 at the April meeting and a significant risk of unconventional policy going forward depending on the severity of the uptick in the unemployment rate as well as the magnitude and impact of any response from fiscal policy.
Household consumption growth improved slightly in Q4, rising 0.4 per cent q/q but remains weak at 1.2 per cent y/y – the weakest pace since the GFC. The drivers of consumption growth in the quarter were increases in discretionary categories including clothing &amp; footwear, household goods and recreation and culture – possibly reflecting some impact from the earlier tax cuts.
Nonetheless, spending on discretionary items has remained weak over the year, with spending on essentials having driven the bulk of consumption growth. 
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Underlying business investment declined by -0.8 per cent q/q, similar to Q3 (-1.1 per cent q/q). Unlike Q3, however, weakness in business investment was driven by non-mining investment which fell 3.6 per cent, while mining investment increased by 5.0 per cent q/q.
Mining investment in Q4 was 3.2 per cent higher than the same time a year ago – the first time annual growth has been positive since 2013 other than one-off gain posted in Q3 2017. The turnaround in mining was not unexpected, but the decline in commodity prices that started towards the end of last year, now reinforced by the coronavirus shock to the world economy, casts doubt on whether this will be sustained. At the same time, weak business conditions remain a headwind for non-mining sector investment.
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<div class="column">
 Dwelling investment fell 3.4 per cent in the quarter driven by a fall in investment in construction (-4.1 per cent) and a fall in alterations &amp; additions (-2.2 per cent). Over the year dwelling investment has fallen 9.7 per cent. This result is unsurprising given the weakness in work done, and the ongoing weakness in dwelling approvals. These data also confirm the downturn in construction is not over. The decline was driven by a fall in NSW and QLD, though construction also declined in WA and Tas. Vic saw a small improvement in the quarter.</div>
<div class="column">
 Government demand growth slowed considerably from Q3. Underlying public demand grew by 0.1 per cent q/q, well down from 2.0 per cent in Q3. However, growth over the last year was a still solid 5.1 per cent y/y. Government consumption growth was 0.7 per cent q/q – the lowest growth since Q2 2018 due to a fall in defence spending (a volatile component) and another quarter of very modest state/local government consumption growth. In contrast, Federal non-defence spending grew by 2.4 per cent q/q (10 per cent y/y), likely reflecting disability and aged care spending.</div>
<div class="column"> </div>
<div class="column">Underlying public investment declined 2.3 per cent q/q, but this followed a 6 per cent increase in Q3, and it was 4.2 per cent higher than a year ago. Overall, the roll-out of the NDIS and large infrastructure programs still appear to be supporting the economy – and a fiscal package expected in the next week or so, will also provide additional support to Q2 data.</div>
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 Net exports made a 0.1ppts contribution to quarterly GDP growth even with export volumes basically unchanged in the quarter, as imports declined (-0.5 per cent q/q). Exports and imports of non-monetary gold declined substantially masking growth, overall, in other trade flows.</div>
<div class="column"> </div>
<div class="column">On the export side, there was a large increase in manufacturing exports (7.6 per cent q/q), with smaller increases in commodity exports – both rural and non-rural. Capital and intermediate goods imports increased, but services imports fell (driven by travel, which has declined in each of the last four quarters), and there was a small decline in consumption goods imports.</div>
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<div class="column">Over the last year, total imports have declined by 1.5 per cent, consistent with the weakness in domestic demand. Travel exports and imports will decline sharply in Q1.</div>
<div class="column"> </div>
<div class="column"><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/2020/3/5/3_export.jpg" alt="" width="541" height="345"></div>
<div class="column">
 Compensation of employees rose by 1.0 per cent in the quarter (5.1 per cent y/y). While employment continued to rise, average COE per employee also increased by a moderate 0.5 per cent in the quarter. COE per hour continued to track above the WPI but saw a moderation in year-ended growth in the quarter. The boost to household income growth from tax cuts in Q3 faded in the quarter which also saw the household savings rate tick down.</div>
<div class="column">
 By industry, real estate services saw the strongest quarterly growth (up 2.7 per cent on a quarterly basis), likely reflecting the improvement in housing sales. Manufacturing (notably in food products), transport, healthcare and social assistance and mining also grew strongly, as did mining. Construction contracted 2.3 per cent on a quarterly basis, with building construction, engineering and construction services all hit down. Mining, manufacturing, transport, real estate services, public administration and health care each contributed 0.1 per cent to GDP growth in the December quarter, while construction detracted 0.2 per cent from growth.</div>
<div class="column"> </div>
<div class="column"><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/2020/3/5/1_Industry%20growth.jpg" alt="" width="629" height="406"></div>
<div class="column">
 By state, the ACT experienced the fastest growth in state final demand (+0.8 per cent q/q), followed by NSW (+0.5 per cent), with the latter result largely reflecting growth in public consumption and investment spending. NT SFD rose by 0.3 per cent, its first increase since Q3 2017, reflecting a big boost in public investment and to a lesser extent petroleum exploration (perhaps driven by the end of the NT’s fracking ban). Queensland recorded growth of 0.2 per cent q/q, while Victoria saw a fall of 0.1 per cent, largely reflecting a slowdown in major road construction. SA and WA both contracted 0.2 per cent, driven by falls in private and public investment. Tasmania fell 1.0 per cent on lower public and private investment; non-dwelling construction fell 18.6 per cent on reduced energy and accommodation project spending.</div>
<div class="column">
 The slide in farm GDP was arrested in Q4 on a quarterly basis, up 0.4 per cent, although it remains lower on an annual basis (down 3.0 per cent). While the drought continued to wreak havoc in New South and Queensland in Q4, this led to higher cattle and sheep slaughter and therefore higher meat production. 2020 has brought a deluge to many Australian agricultural regions, which is very welcome relief indeed. However, this may be slow to show up in 2020 GDP as graziers rebuild herds and flocks – reducing meat production. It remains too early to say how the 2020-21 winter cropping season will perform.</div>
</div>
</div>
</div>
ALAN OSTER is the Chief Economist at NAB Group
</div>
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j.ballantyne1990-6AQqhLzZaK

Coronavirus to slow Australian GDP significantly: NAB's Alan Oster

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The University of Sydney has announced new measures to reduce the growing financial impacts of the COVID-19 crisis, demonstrating the widespread effect the epidemic is having on economic confidence.
Current estimates predict that the University is facing a shortfall of more than $200 million as part of the $2.8 billion budget, according to Vice Chancellor Dr Michael Spence.
“We’ve always made responsible financial planning a priority and have a range of strategies in place to allow us to respond to a number of different financial scenarios, including this current one,” Mr Spence said.
“Our focus remains on the health and welfare of all our students and staff, both on campus and overseas, and in ensuring our world leading research and teaching can continue.”
“We know these measures will create some challenges, but they are aimed at ensuring we can continue to contain the financial impact of this ongoing global health crisis.”
The Vice Chancellor said the measures, which are drawn from the University’s longstanding financial risk mitigation plan, include a pause on all capital spending, project spending, recruitment, international travel, and a basis-by-basis revaluation of a contractors and consultants.
Two scenarios were modelled, with the first based on whether 8700 affected international students would have to defer one semester (Scenario 1) or 15,000 affected international students deferred the whole year (Scenario 2).
Under Scenario 1 we would see a reduction of approximately $1.4 billion to the NSW Gross State Product (GSP) with approximately 10,700 full time jobs impacted.
Under Scenario 2 we would see a reduction of approximately $2.2 billion to the NSW Gross State Product (GSP) with over 15,000 full time jobs impacted.
The top four affected sectors would be retail trade, accommodation and food services, professional, scientific and technical services and administrative and support services.
“This modelling makes clear that the benefits international students bring when they choose to study in Sydney go far beyond the university sector. For the state more broadly, for retailers, hospitality workers and tradespeople, international students are helping to keep the NSW economy turning,” the Vice Chancellor added.
“As always, the health and safety of our staff and students, whether here on campus or overseas, remains our highest priority and we will continue to follow NSW Health advice. As part of that we’ve stepped up the frequency of cleaning across campus; put up signage regarding hygiene practices and installed a large number of hand sanitiser units.”
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wdavis-8cCN98p7xp

Coronavirus threat compels Sydney University to introduce protective measures 

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EXPERT OBSERVER
Never has a virus featured so prominently in a Reserve Bank statement.
<a href="https://images.theconversation.com/files/318243/original/file-20200303-18287-3jgff.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip" target="_blank"><img src="https://images.theconversation.com/files/318243/original/file-20200303-18287-3jgff.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=237&amp;fit=clip" alt=""></a>
Source: <a class="source" href="https://www.rba.gov.au/media-releases/2020/mr-20-06" target="_blank">Reserve Bank of Australia</a>
The word “coronavirus” is mentioned <a href="https://www.rba.gov.au/media-releases/2020/mr-20-06" target="_blank">nine times</a> in the governor’s seven-paragraph statement.
His board cut the cash rate from an all-time low of 0.75 per cent to a new all-time low of 0.50 per cent “to support the economy as it responds to the global coronavirus outbreak”.
Up until the coronavirus, it had looked as if “the slowdown in the global economy that started in 2018 was coming to an end”.
The coronavirus has “clouded” that outlook.
It is “too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path”.
Financial markets have been volatile “as market participants assess the risks associated with the coronavirus”.
In most economies, including the United States, there is an expectation of further rate cuts.
The coronavirus is having a “significant effect” on Australia’s real economy, particularly in the education and travel industries.
The uncertainty is “also likely to affect domestic spending”.
GDP growth in the March quarter (but not the December quarter whose figures will be released on Wednesday) is likely to be “noticeably weaker than earlier expected”.
Once the coronavirus is contained, the Australian economy is expected to return to an improving trend.
But given the evolving situation, it is difficult to predict how large and long-lasting the effect will be.
Summing up, the bank says the global outbreak is “expected to delay progress in Australia towards full employment and the inflation target”.
It decided to cut rates to provide “additional support to employment and economic activity”. Importantly, it will continue to monitor developments closely with a view to doing more.
The final sentence, the one which usually carries the key message, says: “the board is prepared to ease monetary policy further to support the Australian economy”.
<h2>Would it have cut without the coronavirus?</h2>
It probably wouldn’t have cut without the coronavirus. It most likely would have had to cut at some point because the economy is weak. We will get an update about how things were in the three months to December on Wednesday, but the news up to the end of September was awful.
Household spending, which accounts for more than half of gross domestic product, barely budged. Over the year to September it grew just 1.2 per cent in real terms, the least since the global financial crisis. Australia’s population grew 1.6 per cent in that time, meaning the volume of goods and services bought per person went backwards.
Early figures on private new capital expenditure which will be incorporated into the national accounts released on Wednesday show business investment went backwards over the December quarter (down 2.8 per cent) and over the entire year (down 5.8 per cent).
The May budget and the December budget update forecast a jump in business investment, which it is hard to see happening.
Governor Philip Lowe has been reluctant to cut in part because he is running out of traditional ammunition.
He has said that for practical purposes the next step – 0.25 per cent – is zero, a point beyond which he would <a href="https://www.rba.gov.au/speeches/2019/sp-gov-2019-11-26" target="_blank">need to use unconventional measures</a> (which have been used so much overseas they are no longer that unconventional) to stimulate the economy further.
The most likely one is buying government and mortgage bonds from investors in order to <a href="https://theconversation.com/now-we-know-the-reserve-bank-has-spelled-out-what-it-will-do-when-rates-approach-zero-127697" target="_blank">force money into their hands</a>, making the cash rate graph the bank has been updating for 30 years now no longer relevant as an indicator of what it is doing to stimulate the economy.
<hr>
Reserve Bank cash rate
<a href="https://images.theconversation.com/files/318234/original/file-20200303-18270-1bjl5b0.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/318234/original/file-20200303-18270-1bjl5b0.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
<hr>
He has decided to cut because he is contractually obligated to do what he can to contribute to “<a href="https://www.rba.gov.au/about-rba/our-role" target="_blank">the economic prosperity and welfare of the people of Australia</a>”, which is at risk.
<h2>What good will the cut do?</h2>
Westpac and the Commonwealth Bank announced they were passing the cut on to borrowers straight away after an appeal by Prime Minister Scott Morrison to their better natures.
The government would absolutely expect the four big banks to come to the table and to do their bit in supporting Australians as we go through the impact of the coronavirus. I don’t see it any different to what Qantas did when we called out to Qantas and we said, we need your help, we need to get some people out of China.
Before today’s decisions the average standard variable mortgage rate was 4.7 per cent The average basic variable mortgage rate was 3.05 per cent. Today’s cuts will take it to 2.8 per cent.
They will save many mortgage holders an extra A$30 per month on repayments on top of the $150 saved since June. That will allow them to spend more or to borrow more by extending their mortgages, further increasing the financial attractiveness of investments such as solar panels or home insulation, and perhaps further supporting home prices which have turned up since the bank began cutting.
Where mortgage holders direct the proceeds of the cuts to Australian businesses, it’ll help keep them afloat or give them the confidence to borrow for expansion at record low interest rates.
Although it is often said that interest rate cuts have less effect when interest rates get low, there is no particular reason to believe this is the case. There is reason to believe interest rate cuts have little effect when consumers and businesses have other reasons for not borrowing or spending much, which might well be the case at the moment.
<h2>What will the government do?</h2>
The government is drawing up a stimulus plan. Just don’t call it that.
Morrison says it will:
<blockquote>
be a targeted plan, it will be a measured plan, it will be a scalable plan, we will ensure that we do not make the same mistakes of previous stimulus measures that have been put in place.
</blockquote>
That probably means he won’t be delivering cheques to households as Labor did during the global financial crisis. The Coalition tried something similar, delivering out-sized tax refund cheques after the May budget, and it didn’t work that well.
He’ll almost certainly announce new investment allowances for businesses; if necessary, ones that effectively pay them to borrow.
And he and his ministers will be surveying the economy sector by sector.
He has spoken personally with the bosses of Coles and Woolworths seeking assurances they won’t run low on supplies. He says if necessary they can talk to each other, something normally not allowed by competition rules.
They have already talked to Kimberly Clark, which manufactures toilet paper. It has set up a line of production in South Australia to ensure shops don’t run out.<img src="https://counter.theconversation.com/content/132871/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/peter-martin-682709" target="_blank">Peter Martin</a>, Visiting Fellow, <a href="https://theconversation.com/institutions/crawford-school-of-public-policy-australian-national-university-3292" target="_blank">Crawford School of Public Policy, Australian National University</a>
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/one-word-repeated-9-times-explains-why-the-reserve-bank-cut-its-coronavirus-132871" target="_blank">original article</a>.
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One word repeated nine times explains why the Reserve Bank cut: it's ‘coronavirus’

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Experts fear the Reserve Bank of Australia (RBA) will need to take action in the wake of the COVID-19 (coronavirus), according to Finder.
In this month’s Finder RBA Cash Rate Survey™ 20 economists specifically called out the threat the virus poses.
Graham Cooke, insights manager at Finder said, “house prices are still rising in an almost unsubstantiated way, the effect of the smouldering bushfires is still to be felt, and inflation is still sluggish – but it’s the coronavirus above all that is concerning economists right now.
“Specifically, whether the affected countries can keep a lid on the spread of the virus. With COVID-19 now spreading through Europe and the Middle East, that looks unlikely.”
The major fears of the panel centred around education, tourism and property. This follows last week’s news that the Aussie dollar had dipped to 65 US cents, a low-water mark last seen in March 2009.
A budget surplus, as promised by the federal government, now looks unlikely, according to economists.
Nineteen experts (66%) said a surplus was unlikely, with a further two (7%) saying it was very unlikely.
Since the outbreak started to affect Australian markets on Feb 21st, the ASX200 has fallen 10%.
Cooke said COVID-19 fears, along with the uncertainty of the impact of the bushfires, has driven overall economic confidence down amongst the panel to an all-time low of 8% across the five metrics tracked. This is down from a high of 31% in April of 2019.
90% predict a cash rate cut in 2020
Nearly all experts (90%, 35/39) in Finder’s RBA Cash Rate Survey expect an RBA rate cut to happen in 2020, while just 15% (6/39) are predicting a cut on Tuesday.
Cooke said he was surprised to see even 15% of our experts predict a cut this month.
“With the resurgence of the housing market still happening, coronavirus hitting markets hard and general economic figures remaining stagnant, the general consensus is that it’s too turbulent a time to make the call for a rate easing.
“However, all experts, bar four, are predicting that a cut is on the horizon,” Cooke said.
Seven respondents (18%) expect a 0.25% cash rate by the end of the year, and 28 (72%) expect 0.50%.”
April and May are the most likely months for a cut, cited by ten (26%) and nine (23%) experts respectively.
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Coronavirus economic impacts have only just begun: Finder.com.au

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The Australian Academy of Science has just published a new fact-checked video explainer on the coronavirus answering the following questions.
What is a pandemic? 
How close are we to finding a vaccine? 
How is COVID-19 transmitted? How do I protect myself?
 How is COVID-19 different from other diseases like SARS?
 How concerned should we be? 
Watch the video here: <a href="https://www.youtube.com/watch?v=GCUZ0Bg-k-0&amp;t=" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">https://www.youtube.com/watch?v=GCUZ0Bg-k-0&amp;t=</a>
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The facts on the Coronavirus: Australian Academy of Science

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EXPERT OBSERVER
The Australian property market – particularly Melbourne and Sydney – has gone from boom and FOMO in 2017 to slump and FONGO into mid last year only to rebound again with a degree of FOMO returning! (FOMO = fear of missing out, FONGO = fear of not getting out.)
The boost from the election result, RBA rate cuts, the relaxation of the 7% mortgage rate serviceability test along with a greater willingness to lend by banks are continuing to drive home prices higher as demand that was pent up over the period of falling prices between September 2017 and June last year has been unleashed.
 The strength in demand continues to be evident in strong auction clearance rates in Sydney and Melbourne.
While this initially came on very low volumes, listings have now picked up following the normal pattern that sees clearances lead volumes. As a result sales at auctions are now running around double depressed year ago levels.
The high level of auction clearance rates points to a continuing strength in home prices in Sydney and Melbourne in the months ahead and this is likely to be aided by further interest rate cuts and strong population growth.
 However, the pace of growth is likely to slow with home price gains more constrained than what we saw through the 2012-17 property price boom because: 
Household debt to income ratios are very high, bank lending standards are much tighter than in the last boom, APRA may move to tighten lending standards again if housing credit growth accelerates; there are still more units to hit the Sydney and Melbourne property markets and unemployment is likely to drift up as overall economic growth remains weak. 
For 2020 as a whole average capital city property prices are expected to rise by around 10%, with continuing strong gains in the first quarter giving way to a more constrained pace from around April-June.
We also anticipate a broadening out of the property price gains beyond Sydney and Melbourne as Brisbane and Adelaide our relatively cheap and Perth looks to have bottomed and will be helped by a recovery in mining projects.
However, a big and rising risk to the property market outlook is now posed by the global coronavirus outbreak. 
At this stage apart from the possible absence of some Chinese buyers I doubt coronavirus is having much impact on the property market.
 However, if the situation badly worsens globally and the virus takes hold in Australia then it could become a big short term negative as the economy slows even further potentially into recession, the loss of share market wealth drags on property demand and if people put off buying property along with other activities for fear of catching the virus.
 More RBA rate cuts could partially help in the other direction and help boost buying once the virus fear comes under control though, but in the interim it could drive renewed falls in property prices. 
This is not our base case but given all the unknowns around Covid-19 it is worth monitoring as the risk is rising.
SHANE OLIVER is the Head of Investment Strategy and Chief Economist at AMP Capital 
<a name="_Hlk7176352" style="margin: 0px; padding: 0px; border: 0px; font: inherit; vertical-align: baseline;" href=""></a>The Australian property market – particularly Melbourne and Sydney – has gone from boom and FOMO in 2017 to slump and FONGO into mid last year only to rebound again with a degree of FOMO returning! (FOMO = fear of missing out, FONGO = fear of not getting out.)
The boost from the election result, RBA rate cuts, the relaxation of the 7% mortgage rate serviceability test along with a greater willingness to lend by banks are continuing to drive home prices higher as demand that was pent up over the period of falling prices between September 2017 and June last year has been unleashed. The strength in demand continues to be evident in strong auction clearance rates in Sydney and Melbourne. See the next two charts.
 
<table style="font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 15px; line-height: inherit; font-family: 'Segoe UI', 'Segoe UI Web (West European)', 'Segoe UI', -apple-system, BlinkMacSystemFont, Roboto, 'Helvetica Neue', sans-serif; color: #323130; border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0"><tbody><tr>
<td style="width: 233.75pt; padding: 0px 5.4pt; border: 1pt solid windowtext;" valign="top">
<img src="data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAAC0lEQVQYV2NgAAIAAAUAAarVyFEAAAAASUVORK5CYII=" style="margin: 0px; padding: 0px; font: inherit; vertical-align: baseline; color: inherit; width: 364.79pt; height: 221.4pt; cursor: pointer;" data-imagetype="AttachmentByCid" data-custom="AAMkADQ3ZGM4MTFjLTUzM2MtNGRlMy1hNTRkLTVlMTg5NTg1MTZjNABGAAAAAACwVkXUIRtYR67gBrMt3wq%2FBwDeQoafX1oGQ7i8PLrB5m%2FDAAAAAAEMAADeQoafX1oGQ7i8PLrB5m%2FDAAGX6uVdAAABEgAQAKCx7jCjebxJntP04tMxgUM%3D" data-outlook-trace="F:1|T:1">
</td>
<td style="width: 233.75pt; padding: 0px 5.4pt; border-width: 1pt; border-style: solid solid solid none; border-color: windowtext;" valign="top">
<img src="data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAAC0lEQVQYV2NgAAIAAAUAAarVyFEAAAAASUVORK5CYII=" style="margin: 0px; padding: 0px; font: inherit; vertical-align: baseline; color: inherit; width: 365.4pt; height: 221.99pt; cursor: pointer;" data-imagetype="AttachmentByCid" data-custom="AAMkADQ3ZGM4MTFjLTUzM2MtNGRlMy1hNTRkLTVlMTg5NTg1MTZjNABGAAAAAACwVkXUIRtYR67gBrMt3wq%2FBwDeQoafX1oGQ7i8PLrB5m%2FDAAAAAAEMAADeQoafX1oGQ7i8PLrB5m%2FDAAGX6uVdAAABEgAQAJqCdDsOBpVDkmUCWbIwRTY%3D" data-outlook-trace="F:1|T:1">
</td>
</tr></tbody></table>
<span style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 7pt; line-height: inherit; font-family: inherit; vertical-align: baseline; color: inherit;">Source: Domain, CoreLogic, AMP Capital
<span style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 7pt; line-height: inherit; font-family: inherit; vertical-align: baseline; color: inherit;"> 
While this initially came on very low volumes, listings have now picked up following the normal pattern that sees clearances lead volumes. As a result sales at auctions are now running around double depressed year ago levels.
<img src="data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAYAAAAfFcSJAAAAC0lEQVQYV2NgAAIAAAUAAarVyFEAAAAASUVORK5CYII=" style="margin: 0px; padding: 0px; font: inherit; vertical-align: baseline; color: inherit; width: 353.99pt; height: 215.39pt; cursor: pointer;" data-imagetype="AttachmentByCid" data-custom="AAMkADQ3ZGM4MTFjLTUzM2MtNGRlMy1hNTRkLTVlMTg5NTg1MTZjNABGAAAAAACwVkXUIRtYR67gBrMt3wq%2FBwDeQoafX1oGQ7i8PLrB5m%2FDAAAAAAEMAADeQoafX1oGQ7i8PLrB5m%2FDAAGX6uVdAAABEgAQAL7iZEfT4%2FpKhNddj9J8F%2BI%3D" data-outlook-trace="F:1|T:1">
<span style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 7pt; line-height: inherit; font-family: inherit; vertical-align: baseline; color: inherit;">Source: Domain, AMP Capital
The high level of auction clearance rates points to a continuing strength in home prices in Sydney and Melbourne in the months ahead and this is likely to be aided by further interest rate cuts and strong population growth. However, the pace of growth is likely to slow with home price gains more constrained than what we saw through the 2012-17 property price boom because: household debt to income ratios are very high, bank lending standards are much tighter than in the last boom, APRA may move to tighten lending standards again if housing credit growth accelerates; there are still more units to hit the Sydney and Melbourne property markets and unemployment is likely to drift up as overall economic growth remains weak. For 2020 as a whole average capital city property prices are expected to rise by around 10%, with continuing strong gains in the first quarter giving way to a more constrained pace from around April-June.
We also anticipate a broadening out of the property price gains beyond Sydney and Melbourne as Brisbane and Adelaide our relatively cheap and Perth looks to have bottomed and will be helped by a recovery in mining projects.
However, a big and rising risk to the property market outlook is now posed by the global coronavirus outbreak. At this stage apart from the possible absence of some Chinese buyers I doubt coronavirus is having much impact on the property market. However, if the situation badly worsens globally and the virus takes hold in Australia then it could become a big short term negative as the economy slows even further potentially into recession, the loss of share market wealth drags on property demand and if people put off buying property along with other activities for fear of catching the virus. More RBA rate cuts could partially help in the other direction and help boost buying once the virus fear comes under control though, but in the interim it could drive renewed falls in property prices. This is not our base case but given all the unknowns around Covid-19 it is worth monitoring as the risk is rising.
Please feel free to call if you wish to discuss.
 
Regards
Shane
 
<span style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 8pt; line-height: inherit; font-family: inherit; vertical-align: baseline; color: #0070c0;">Shane Oliver<span style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 8pt; line-height: inherit; font-family: inherit; vertical-align: baseline; color: #0070c0;"> <span style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 8pt; line-height: inherit; font-family: inherit; vertical-align: baseline; color: #212d69;">| Head of Investment Strategy and Chief Economist | AMP Capital 
<span style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 8pt; line-height: inherit; font-family: inherit; vertical-align: baseline; color: #212d69;"> 
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soliver-smf6LQXgW9

Capital city home prices up however Coronavirus risk is low but growing: Shane Oliver

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<h2>OPINION: </h2>

Australia’s housing market is a topic which I regularly encounter, whether with our customers, readers or even just friends. Whether you are a homeowner, investor or potential buyer, the housing market will impact you in one form or another.

Since the start of 2020, the market has been <a href="/guides/overwhelming-sales-statistics-last-week-reveal-reinstated-confidence-in-the-off-the-plan-market">performing strongly</a>, where we saw last week’s clearance rate around 80% in both Melbourne and Sydney. The number of properties going under the hammer was also the strongest since 2019, with 1000 and 800 respectively. This statistic was also reflected by the significant increase in listings in our weekly magazine.

While the signs look positive locally, how will the Coronavirus impact Australia’s property market? The main thing to look at is the impact on Australia’s economy. The Coronavirus is set to be declared a pandemic, due to the ease at which it appears to be spreading worldwide. If it can’t be contained quickly, then the impact on economic growth would look dire.

The way I see it, the impact of the virus on Chinese interests in Australian property will be both good and bad. <a href="https://firb.gov.au/">Foreign Investment Review Board (FIRB) reported</a> that foreign investment plunged by 58% year-on-year from $30 billion to $13 billion in the 2017/18 fiscal year – the lowest level in nearly a decade. This will be compounded by the uncertainty around the virus, so in the short term, we will definitely see a drop in demand.

The <a href="https://dfat.gov.au/news/news/Pages/continuing-travel-ban-to-protect-australians-from-the-coronavirus.aspx">current travel ban</a> has limited many Chinese nationals to enter Australia, especially the international students with many either buying for the short term or buying when they continue living in Australia after graduation. Also, if China continues to restrict the flow of funds out of their country to protect their own economy, it limits the ability of Chinese investors to <a href="/guides/2019/06/17/urbans-first-home-buyer-guide">buy property in Australia</a>. 

On the other hand, in the long term, many more Chinese may want to migrate overseas, as the virus has made them feel vulnerable in China. If so, we will see a resurgence of strong demand from Chinese foreign buyers in the near future. But a lot is dependent on how the Chinese Government limits the flow of funds to overseas if the economy is doing poorly and also if any easing of Australia’s policy towards foreigner buyers. 

Unfortunately, no one has a crystal ball to be able to accurately predict the future. We can’t be sure how the Coronavirus health crisis will pan out globally. We also can’t be exactly sure how it will affect the Australian economy or our property market until we see an end to the crisis.

<div class="rtecenter">Read next: <a href="/news/first-home-buyers-snap-up-property-due-to-fear-of-missing-out">First home buyers snap up property due to ‘fear of missing out’</a>
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Olivia Round

How will the Coronavirus impact Australia’s property market?

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GUEST OBSERVATION
Australia’s catastrophic bushfire season has done immense damage to Australia’s tourist industry. Then, just as heavy rain began to bring the situation under control, came the coronavirus outbreak in China – now the top source of international visitors to Australia. Tourism from China, already greatly reduced, ended with the ban on non-citizens travelling from China.
The general assumption has been that, once the immediate crises are over, Australia’s tourist numbers will bounce back.
Optimists point to examples such as Japan following the March 2011 earthquake and tsunami that killed more than 15,000 people, resulted in the <a href="https://www.iaea.org/newscenter/focus/fukushima" target="_blank">Fukushima Daiichi nuclear disaster</a> and forced more than 500,000 people to evacuate.
Tourism to Japan took a hit. International visits in 2011 fell 28%, to <a href="https://theconversation.com/making-it-safe-tourism-after-japans-earthquake-5691" target="_blank">6.2 million</a> from 8.6 million in 2010. By the end of 2012, however, numbers were back to more than 8.3 million. Tourism to the devastated Fukushima region took a little longer to bounce back, but by fiscal 2015 had recovered to nearly <a href="http://www.fukushimaminponews.com/news?id=709" target="_blank">90% of numbers in fiscal 2010</a>.
The same was true of the 2004 Boxing Day tsunami that wreaked catastrophic damage and killed an estimated 230,000 people in Indonesia, Sri Lanka, India, Thailand and other countries in the Indian Ocean region.
Terrorist attacks in major cities have a similar immediate impact on travel, but this soon dissipates.
There are, however, good reasons to think this time is different.
Unprecedented duration
First, most disasters of this kind have been single-day events. Relief efforts and damage assessments can dominate the news for a week or more, but other events soon take their place.
By contrast, Australia’s bushfire emergency ran for months, generating extensive worldwide coverage for much of this time. The COVID-19 outbreak epidemic is still front-page news and will probably remain so until it has been contained.
Second, the typical shock of this kind has no long-term effect on perceptions of the country where it takes place. The vulnerability of the Pacific Rim to earthquakes and tsunamis has long been known, and the occurrence of an earthquake in Japan does not make another one any more likely (if anything the opposite).
Similarly, terrorist attacks can and do happen anywhere. While there are countries where terrorism risks discourage most tourists – Afghanistan, Iraq, Nigeria and Syria being <a href="http://visionofhumanity.org/app/uploads/2019/11/GTI-2019web.pdf">the top four</a> – in most of the world no possible destination is more or less at risk than any other, and the risk remains even if you stay at home.
By contrast, the bushfire cataclysm has been unprecedented in terms of duration and the areas in southeast Australia destroyed. Sydney, Melbourne and Canberra were all cloaked in smoke.
The image of Australia as a clean, green destination for outdoor fun – promoted in an advertising campaign in Britain featuring Kylie Minogue even as the disaster raged – has been replaced by burnt-out landscapes where the next fire may be even worse than the last.
The Australian government’s handling of the issue has added to negative perceptions. International coverage of the bushfires has repeatedly mentioned the “<a href="https://www.washingtonpost.com/climate-environment/as-fires-devastate-australia-a-coal-loving-leader-faces-an-early-test/2020/01/08/a7827ebc-3178-11ea-91fd-82d4e04a3fac_story">coal-loving</a>” Australian government’s failure to deal with the fact its fossil fuel exports contribute to the conditions that make catastrophic fires more likely.
Washington Post <a href="https://www.bloomberg.com/opinion/articles/2020-01-06/bushfires-reap-what-australia-s-carbon-exports-have-sown">columnist David Ickling</a> put it like this:
"It’s a rude dose of reality for Prime Minister Scott Morrison, a former tourism-promotion bureaucrat whose lackadaisical, image-obsessed initial response to the fires has caused him to be lampooned on social media as #scottyfrommarketing."
"And yet a generation before Morrison came on the scene, Australia was already lying to itself and the world about its role in the climate change that has fuelled this disaster. If any goodness can sprout from the devastation of these fires, it will start with a more honest reckoning about how successive governments have sold off Australia’s future for a handful of coal."
Finally, the bushfires affected as many tourists as locals. The fires in southern New South Wales and eastern Victoria in particular trapped thousands of tourists taking Christmas-New Year holidays in normally pleasant seaside resorts.
This is not usually the case with disasters, with some exceptions. Most of the 202 people killed in the 2002 Bali bombings were tourists, for example, as were the majority of more than 4,000 people killed in Thailand by the Boxing Day tsunami.
Memories will fade over time, at least until they are rekindled by another disaster. But we should not expect this to happen quickly. The damage the bushfire catastrophe has caused to Australia’s position in the international tourism market is likely to last for years to come.<img src="https://counter.theconversation.com/content/131894/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
<a href="https://theconversation.com/profiles/john-quiggin-2084">John Quiggin</a>, Professor, School of Economics, <a href="https://theconversation.com/institutions/the-university-of-queensland-805">The University of Queensland</a>
This article is republished from <a href="http://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/this-time-is-different-australias-tourist-numbers-may-take-years-to-recover-131894">original article</a>.
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This time is different, Australia's tourist numbers may take years to recover

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CommSec senior economist, Ryan Felsman, predicts that the RBA will cut interest rates in the coming months to support the economy.
Pressure was also building on the Federal government to announce significant fiscal initiatives in the May Budget, the analysis suggested.
It noted consumer confidence has dropped by 0.7 percent according to the weekly ANZ-Roy Morgan rating system, representing an eight-month low in public economic trust.
Falling to 108.3 points, sentiment remains below both the average of 114.1 points held since 2014, and the longer-term average of 113.1 points held since 1990.
<img src="https://www.urban.com.au/images/2020/2/24/cc%20CONSUMER%20CONFIDENCE.png" alt="">
Three of the five major components of the index rose last week; Economic conditions over the next 12 months was up from -12.6 points to -10.5 points, economic conditions over the next 5 years was up from +1.3 points to +4.0 points, the measure of whether it was a good time to buy a major household item was up from +20.3 points to +22.4 points, and the measure of inflation expectations was up from 3.9 per cent to 4.1 per cent.
<img src="https://www.urban.com.au/images/2020/2/24/cc%20JOB%20INSECURITY.png" alt="">
Meanwhile, the estimate of family finances compared with a year ago was down from +8.6 points to +4.3 points, and the estimate of family finances over the next year was down from +27.7 points to +21.1 points.
Analysis by Mr Felsman suggests that Australia’s horrific fire-season over the Summer, and concerns among investors about to the growing threat of the Novel Coronavirus (COVID-19) epidemic outside of mainland China, are largely responsible for this downturn.
<img src="https://www.urban.com.au/images/2020/2/24/cc%20SPENDING%20.png" alt="">
CommSec's report notes that the Coronavirus’s cost to the Aussie economy is still largely unknown, however even minor reductions in Chinese demand for iron ore, coal, natural gas and agricultural produce could hurt Aussie exporters and producers.
The timing of the outbreak has raised particular concerns, due to its overlap with the current post-ceasefire recovery following the 2-year long US-China trade war.
Bloomberg has estimated that just 50-60 per cent of Chinese factories and businesses have reopened after the enforced extension to the Lunar New Year holiday break, however the Aussie dollar’s current weakness – at 11-year lows against the greenback – is acting as a ‘shock absorber’ for the national economy.
<img src="https://www.urban.com.au/images/2020/2/24/cc%20HOLIDAYS.png" alt="">
 
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Coronavirus denting consumer confidence; CommSec's Ryan Felsman

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EXPERT OBSERVER
The past week has seen a renewed escalation in concern that the coronavirus outbreak (Covid-19) has become or is becoming a global pandemic. This is first and foremost a human crisis and our thoughts are with all those affected and those trying to combat the outbreak.
Naturally though investment markets are starting to become increasingly concerned about the disruptive impact on economic activity. A
As a result, while most share markets recovered their initial decline on the back of the virus with some hitting new highs last week, we are now seeing renewed sharp falls. This note updates our initial analysis from three weeks ago as to the impact of the outbreak.
Scenarios
Our assessment three weeks ago saw as our base case with 75% probability that the outbreak would be contained within the next month or two. This could still see more downside in share markets &amp; bond yields but there would be a rebound by the June quarter as growth rebounds.
The downside case saw a full-blown pandemic with delayed containment resulting in sharp drawn out slump in economic activity, the risk of recession and a 20% or so fall in share markets with the $A falling to around $US0.60. Of course, there are lots of variations around this. We thought the key things to watch are the daily number of new cases and the spread of new cases in developed countries.
Where are we with the Covid-19 outbreak so far? 
First, while the total number of reported cases is now around 80,000 worldwide there has been some good news in that the daily number of new cases is down from its peak earlier in February. This is due to a sharp fall in the reported number of new cases in China.
This has been confused by definitional changes in China – with Hubei initially reporting lab confirmed results, then including clinically tested results, then reverting to lab tested results only. However, both approaches have issues &amp; even if it’s roughly right it’s good news if China is starting to get the outbreak under control.
Against this, the number of new cases outside China has spiked – particularly in South Korea, Japan, Italy and Iran.
The mortality rate has increased to 3.3% - although there is uncertainty about it. Some argue it’s higher because it’s wrong to divide deaths into all cases as there is a lag from getting the disease to dying. Others argue it’s much lower because only those who are seriously ill are showing up for help and being measured. The mortality rate does look to be below the 9% for SARS but above that for swine flu though and it’s mainly the old and sick who are most vulnerable.
There is still much uncertainty about how it’s spread – with leaky plumping and aerosolising of toilet water or contaminated water possibly playing a role in the spread of the virus in the Diamond Princess cruise ship in Japan.
Containment measures in China have been aggressive and if the declining number of new cases in China is correct maybe they are working. Australia’s quick toughening in entry and quarantine conditions may also have helped in contrast to other countries that now have many more cases. However, some governments may not be able to implement and enforce such tough measures.
The spread of cases beyond China has raised increasing concerns that Covid-19 is become a global pandemic. While we and others have made comparisons to the SARS outbreak of 2003, the swine flu pandemic of 2009 is also relevant. Despite efforts to contain the disease it is estimated to have ultimately infected 700million to 1.4billion people but because its death rate was low at around 0.02-0.04% it doesn’t get referred to much.
Partly due to this swine flu had little impact on the global economic recovery of 2009 although it did occasionally rattle share markets. Though Covid-19’s mortality rate looks to be greater than that of swine-flu its worth noting that swine-flu’s mortality was initially reported to be as high as 9.5%
A big hit to global growth
Whether Covid-19 is soon contained, turns into a re-run of swine-flu or something a lot more deadly remains to be seen. Our base case remains one of containment by the end of March. But the risk of it taking longer is significant and in any case it’s increasingly clear that the economic impact will be quite severe as containment measures spread globally disrupting supply chains and spending. 
Some estimates suggest that as much as 50% of China’s economy has been locked down for the last three weeks which means nearly 12% knocked off Chinese GDP this quarter.
While the Chinese Government is refocussing on efforts to restore economic activity outside Hubei and highrisk areas, so far there is only mixed evidence of that. Coal consumption at power stations, migrant flows to cities, property sales and steel demand are up from their lows but remain well below normal levels for this time of year. And there has been no pickup in traffic congestion.
Numerous companies globally are reporting disruption to supply chains or reduced demand flowing from Covid-19.
Containment measures including travel restrictions in countries like Japan, Korea and Italy will spread the economic disruption globally.
Our rough estimate is that March quarter global GDP could now be zero or slightly negative. 
Australian GDP is likely to go backwards this quarter (with our current estimate being -0.1%) thanks to the bushfires and the hit from coronavirus. The vulnerability of the Australian economy to China is apparent from the next chart. Exports to China make up nearly 9% of Australia’s GDP including hard commodities at nearly 5%, tourism at 0.2% and education at 0.6%.
For other major countries it’s less than 3%. Chinese tourist arrivals stopped with the travel ban, education is under threat although there is a bit more time and bulk commodity shipments are showing signs of being impacted (although this has been distorted by storms).
Clearly the longer it drags on and the more the outbreak and disruption spreads globally the bigger the impact on Australia including the risk of two negative quarters, ie recession. The rising threat to the Australian economy from coronavirus is adding to the likelihood that the RBA will cut rates in March or April and the pressure for more fiscal stimulus in the May budget is increasing.
Concluding comments
The increasing global spread of the coronavirus has increased the risk of greater economic disruption for longer resulting in say a 20% fall in share markets. However, our base case of containment is that Chinese, global and hence Australian growth will rebound in the June quarter (avoiding recession in Australia’s case) although the risk of a delay is significant.
Against this background share markets, commodity prices and the $A remain at high risk of more downside in the short-term, but assuming some containment and a growth rebound in the June quarter markets should rebound by then. Easier than otherwise monetary and fiscal policies - with ever more stimulus measures announced in China and more monetary and fiscal easing globally - would add to this.
The key things to watch for remain a further downtrend in the daily number of new cases globally and a peak in new cases in developed countries. In a big picture sense, the fall in share markets should be seen as just another correction after markets ran hard and fast into record highs this year from their last decent correction into August last year.
Finally, for most investors given the obvious difficulty in trying to time any of this – whether it’s a further share market fall of 5% or 20% or no further fall at all and then when to get back in - it makes sense to turn down the noise around the virus and stick to a long-term investment strategy.
DR SHANE OLIVER is the Head of Investment Strategy and Chief Economist at AMP Capital
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