Local developer Harridan is seeking to turn its Woolloongabba apartment project into the first stage of a broader transformation of Burke Street, using a new 16-storey mixed-use building to establish a greener pedestrian connection toward the rapidly evolving Boggo Road transport and knowledge precinct.

The South East Queensland developer has filed plans for 154 apartments on the <a href="https://www.apartments.com.au/new-apartments/4-burke-street-woolloongabba-qld-4102">southern side of Burke Street</a>, where its proposal has been designed alongside a wider vision by LatStudios for the street.

That vision positions the southern side of Burke Street for buildings of 15 storeys and above, while envisaging lower-rise development of up to five storeys on the northern side to transition into Woolloongabba's existing character housing. It also proposes wider pedestrian verges, deep planting, new street trees and upgrades to the pedestrian approach to Boggo Road Station.

The Harridan development itself has been designed by Brisbane-based Arqus Design and will comprise 154 apartments across 16 storeys. The mix is weighted heavily toward two-bedroom apartments, with 121 proposed alongside 10 one-bedroom and 23 three-bedroom residences. There will typically be around 14 units per floor.

A lower-ground car park and three podium levels will accommodate 156 resident parking spaces, along with visitor and commercial parking. There will also be 154 resident bicycle spaces and 40 visitor bicycle parks.

&nbsp;

Harridan is a family-owned developer and part of the Holmwood Highgate Group, with more than three decades of development activity across South East Queensland. Its portfolio spans residential, commercial and industrial property, with current residential projects including Riverbank on Byron in Bulimba, Esperance Residences in Carina and The Precinct at Kinross Road in Thornlands.

Wooloongabba has been popular for apartment developers, particularly since the announcement of the 2032 Summer Olympics games in Brisbane.

While there have been a lot of development applications, it has failed to materialize into real supply.&nbsp;

Sarazin has been the major player in the area. They are under construction at Murcia Residences, on the fringe of East Brisbane and Woolloongabba. They have just launched <a href="https://www.apartments.com.au/new-apartments/the-stanley-residences-woolloongabba-8-trafalgar-street-woolloongabba-qld-4102">The Stanley Residences</a>, in Woolloongabba on Trafalagar Street. They also have Nuage coming soon on the nearby <a href="https://www.apartments.com.au/new-apartments/nuage-woolloongabba-14-wellington-road-woolloongabba-qld-4102">Wellington Road</a>.

Joel Robinson

First look: Harridan plans Burke Street transformation beside Boggo Road transport hub

IN BRIEF

<ul>
	<li>
	Just three double-storey Sky Homes sit at the top of The Waterline, each with its own private marina berth and rooftop terrace.
	</li>
	<li>
	Construction on The Waterline is complete, with the first residents expected to move in from mid-October.
	</li>
	<li>
	Sky Homes range from 282 sqm to 367 sqm and are priced from $3.65 million.
	</li>
</ul>

<hr />
Lewis Land has opened the first completed sky home for inspection at Harbour Shores, giving buyers their first opportunity to step inside one of just three double-storey residences crowning The Waterline.

Each sky home comes with its own private marina berth, rooftop terrace and Broadwater views, combining the scale of a larger home with direct access to the boating lifestyle that underpins the wider <a href="https://www.apartments.com.au/new-apartments/harbour-shores-biggera-waters-564-oxley-drive-biggera-waters-qld-4216">Harbour Shores</a> masterplan.

[smartcode_project:default project_id=113271 project_image_fid=366708]

Lewis Land Head of Development Michael Long said the inclusion of a berth with every Sky Home had become increasingly valuable as marina access across the Gold Coast tightened.

“Marina berths are becoming increasingly difficult to secure across the Gold Coast, so including one with every Sky Home makes this a genuinely rare offering,” Long said.

“The private 70-berth marina will accommodate boats up to 12 metres in length and is positioned just 2.5 kilometres from the Broadwater, placing the open ocean only 15 minutes away.

“Being able to step out of your home onto your boat is a rare luxury, and it’s something residents here can look forward to when it opens later this year.”

[smartcode_project:default project_id=113271 project_image_fid=366709]

The display opening comes as construction completes on The Waterline, with the first residents expected to move in from mid-October.

The three Sky Homes range from 282 sqm to 367 sqm and each feature three bedrooms, three bathrooms, multiple living zones, expansive kitchens with butler's pantries and large balconies taking in the Broadwater outlook.

Each residence also has three secure basement car spaces and additional storage.

“This is the first opportunity the Gold Coast has had to step into Harbour Shores and see, touch and feel what we’re bringing to life here,” Long said.

“There are only three Sky Homes within The Waterline, ranging in size from 282sqm to 367sqm, with each residence featuring three large bedrooms, three bathrooms, multiple living zones, expansive custom-built kitchens with butler’s pantry, and large balconies capturing Broadwater views.”

<img alt="Harbour Shores" data-entity-type="file" data-entity-uuid="bab65e10-4fab-45e1-92d8-fc56e2ab98ff" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%202.00.16%E2%80%AFPM.png?VersionId=XT8q76LsPkw3cYTsvN3JfFDaPLud90PN" />

Residents of The Waterline will have access to a private pool, along with Harbour Shores' wider collection of amenity including a lagoon pool, social clubhouse, tennis court, gym, yoga facilities and sauna.

Lewis Land partnered with Studio Collective to furnish the completed display, with the interiors designed to demonstrate how the residences could function as permanent homes rather than simply as show apartments.

Studio Collective Director Melissa Park said the surrounding waterways informed the interiors, but in a more restrained way than a traditional coastal scheme.

“We drew inspiration from the canals and coastal surrounds, but our approach was to interpret that subtly through layered materials and a grounded palette of earthy tones, rather than literal coastal references,” Park said.

“We introduced hero moments of green and teal to reference the surrounding waterways, while mirrored elements help reflect natural light.

“The result is a residence that feels elevated yet comfortable, somewhere buyers can genuinely imagine themselves living, entertaining and unwinding.”

Sky Homes are priced from $3.65 million.

Lewis Land is also offering private marina berths with The Residences, its limited collection of three and four-bedroom villas positioned directly along the Harbour Shores waterfront boardwalk.

Three-bedroom villas are priced from $2.99 million, while four-bedroom residences start from $3.19 million.

Harbour Shores is being marketed by Colliers International.

[smartcode_project_cta:default project_id=113271]

Lewis Land opens sky home display as The Waterline completes at Harbour Shores

St Vincent de Paul Society Housing Australia has filed plans for a major mixed-use housing precinct on the southern edge of the North Sydney CBD, adding another significant proposal to a pocket around North Sydn​ey Station that is quickly becoming one of the LGA's busiest development zones.

The State Significant Development Application covers a 5,990 sqm site at <a href="https://www.apartments.com.au/new-apartments/1-19-mackenzie-street-lavender-bay-nsw-2060">1-19 MacKenzie Street and 211 Blues Point Road in Lavender Bay</a>, immediately south of Nor​th Sydney Station and between the commercial core and the lower-rise Lavender Bay Heritage Conservation Area.

Designed by Wardle, the proposal would deliver a new residential tower comprising 88 build-to-sell apartments and 19 affordable apartments, alongside a separate co-living building with 57 rooms and a building manager's studio.

It would also see the significant restoration and upgrade of St Francis Xavier Catholic Church, the adaptive reuse of the former school building, new parish facilities, retail, a new public square and around 1,000 sqm of publicly accessible open space.

<img alt="Vinnies North Sydney" data-entity-type="file" data-entity-uuid="d5dd7f87-a617-463e-b577-17541e01f0e9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.10.13%E2%80%AFAM.png?VersionId=4R8TsFN3P_LrrXO2HswTOIrx2blil8lh" />

The project is seeking a concurrent rezoning of the site to R4 High Density Residential and an increase in the maximum building height to allow a tower reaching RL120, or up to 20 storeys. The proposal was progressed through the NSW Government's Housing Delivery Authority pathway.

The build-to-sell component will be weighted toward larger apartments, with just six one-bedroom apartments compared with 31 two-beds, 43 three-beds and eight four-bedroom residences.

The 19 affordable apartments will comprise two studios, 15 one-bedroom apartments and two two-bedroom apartments, taking the total apartment component to 107 residences before the 58 co-living rooms are included.

<img alt="Vnnies" data-entity-type="file" data-entity-uuid="7d568ca5-cb90-4e18-96c6-d9795dba0c56" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.10.05%E2%80%AFAM.png?VersionId=GY2R5M9VtQh0EKy1vajaea19PSLOPuRD" />

Wardle's design for the Vinnies site has sought to negotiate that emerging high-rise context while retaining the lower-scale character of MacKenzie Street and the adjoining heritage conservation area.

The main building adopts a three-storey podium and tower arrangement, with the podium aligned to the ridgeline and front setback of St Francis Xavier Church.&nbsp;Wardle has designed the podium with colonnades, seating, recessed entries and active ground-floor frontages, with sandstone-toned precast concrete and face brick referencing the materiality of the existing church.

The tower then steps back eight metres to the south and six metres to the north before rising in a sculpted form comprising four interlocking quadrants. Wardle has also introduced rounded forms and chamfered corners to reduce the tower's perceived bulk and improve view sharing with neighbouring development sites.

Resident facilities and outdoor areas are planned at the separation between the podium and tower at Level 3, oriented toward Sydney Harbour and the CBD skyline.

The tower itself will feature a glass reinforced concrete facade, with recessed balconies and deep reveals used both to provide shading and privacy and frame views toward the harbour and city. The lower levels take a different architectural approach, using brick and sandstone-toned finishes intended to establish a stronger relationship with St Francis Xavier Church. The Church itself will be conserved and upgraded for its continued use, while the former school building will be adaptively reused as part of the co-living component.

<img alt="Lavendar Bay" data-entity-type="file" data-entity-uuid="2d4418ad-90aa-4d49-af93-c80b140aea80" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.09.47%E2%80%AFAM.png?VersionId=Kv4gzbsACaGvZSRuaqcfGC54jEJRXIDJ" />

&nbsp;

The proposal adds to an increasingly concentrated pipeline of residential development around Blue Street, MacKenzie Street and Lavender Bay.

Just west of the site, Central Element lodged plans earlier this year for one of the most significant residential developments proposed in Lavender Bay in recent years.

Central Element's SJB-designed scheme at 64-66 Lavender Street and 3-7 Middlemiss Street would deliver 163 apartments across two towers rising 23 and 32 storeys, replacing five existing apartment buildings containing 32 homes. The project also forms part of the Housing Delivery Authority pathway.

<a href="https://www.apartments.com.au/news/nsw/first-look-central-element-reveals-lavender-bay-apartment-plans?utm_source=chatgpt.com" rel="noopener" target="_blank">First look: Central Element reveals Lavender Bay apartment plans</a>

Immediately around North Sy​dney Station, another two significant proposals have emerged at 5 and 15 Blue Street.

Zurich Australian Insurance Properties is seeking to adaptively reuse its longstanding commercial building at 5 Blue Street, directly above North Sydney Station, rather than demolishing the structure.

Its SSDA proposes converting the building into a 14-storey mixed-use development with 62 apartments and 86 co-living rooms, together with ground-floor retail and a major refurbishment of Blue Street Plaza. The application is currently at the Response to Submissions stage.

<a href="https://www.apartments.com.au/news/nsw/first-look-zurich-targets-north-sydney-office-conversion-with-148-unit-proposal-above-metro-station">First look: Zurich targets North Sydney office conversion with 148-unit proposal above Metro station</a>

&nbsp;

First look: Vinnies files for 20-storey Lavender Bay apartment tower as North Sydney housing pocket heats up

When the opportunity arose for South Australian developer Palumbo to return to Kent Town, where it had previously delivered East Park Apartments and the East 
Rundle Apartments, it wasn't one the longstanding developer-builder was going to pass up.

The decision was quickly vindicated, with more than 30 apartments sold within the first month of launching <a href="https://www.apartments.com.au/new-apartments/royal-apartments-kent-town-2-8-north-terrace-kent-town-sa-5067">Royal Apartments</a> to the market.

The 206-apartment development, which will bring significant new supply to Adelaide's tightly held eastern city fringe, also gives <a href="https://www.apartments.com.au/developers/palumbo">Palumbo</a> the opportunity to bring new life to one of Kent Town's most recognisable watering holes.

[smartcode_project:default project_id=6109 project_image_fid=376073]

Royal Apartments incorporates the historic Royal Hotel, a venue Palumbo Managing Director Daniel Palumbo said has a longstanding connection with the local community.

"Everyone in the area has history with the Royal Hotel," Palumbo told Apartments.com.au.

"It was quite an active pub and social gathering place for locals. We want to bring it back to its former glory."

[smartcode_project:default project_id=6109 project_image_fid=376072]

The wider development will comprise two residential towers alongside the restored hotel, sitting on North Terrace opposite the Adelaide Park Lands.

For Palumbo, the project also marks a return to familiar territory.

The developer completed East Park Apartments next door more than a decade ago and jumped at the opportunity to develop in Kent Town again when the Royal Hotel site became available.

"The opportunity emerged, and we moved to secure the site," Palumbo said.

"We were approached by the previous landowner, who said they had extensive commitments in Sydney and weren't in a position to deliver the project.

"We took over the site and within six months recut the design scheme to be more in keeping with the type of development we want to bring to Adelaide.

"Now we're on the market and those changes have really resonated with local buyers."

That has translated into a strong start to sales, with 33 apartments transacting in the project's first 35 days.

Palumbo said the early purchaser profile had been consistent with the group's traditional focus on owner-occupiers rather than investor-led apartment stock.

"Local owner-occupiers have always been our market," he said.

"There are always some investors, but we've never developed what would be called traditional development stock. Owner-occupiers are very much our market."

[smartcode_project:default project_id=6109 project_image_fid=376068]

The buyer mix has been diverse so far, with downsizers and younger professionals both accounting for a significant portion of early sales.

South Australia's current stamp duty settings, which allow&nbsp;eligible homeowners in South Australia aged 60 savings of up to $103,830 on stamp duty when they downsize to a new property valued at up to $2 million,&nbsp;have helped encourage downsizer activity, while younger buyers in their late 20s and early 30s have been attracted to the opportunity to live immediately outside the CBD while still being able to walk into the city.



Location has been a major part of the proposition for both buyer cohorts.

[smartcode_project:default project_id=6109 project_image_fid=376075]

Royal Apartments sits on North Terrace directly opposite the Adelaide Park Lands, with residents able to walk through the parklands toward the East End, Rundle Street and Rundle Mall.

Apartments have been positioned to capture views across the parklands, Adelaide skyline, Botanic Gardens and Adelaide Hills.

Palumbo believes the scarcity of developable land along this section of the Park Lands makes the site particularly difficult to replicate.

"There's very few allotments on that side that can be developed," he said.

"If this location was in New York and you were sitting on Central Park, you'd be talking about a $60 million apartments."

Royal Apartments will offer a broad mix of residences, ranging from one-bedroom apartments through to four-bedroom sub-penthouses and penthouses.

Current listings include one-bedroom apartments from $680,000, while larger three and four-bedroom residences are priced around $2.5 million.

Residents will have access to a swimming pool, gym, barbecue and recreation areas, residents' lounge and dining space, and a communal deck.

[smartcode_project:default project_id=6109 project_image_fid=376067]

The apartments will feature generous balconies, while secure parking, bicycle storage and storage cages will also be provided.

A porte-cochère-style arrival and drop-off area has also resonated with buyers, particularly those attracted to being able to walk into the CBD during the day while retaining secure vehicle access at home.

Palumbo is acting as developer, architect and builder on Royal Apartments, continuing the vertically integrated model it has used across its South Australian portfolio.

The group was also behind the $150 million Sofitel Adelaide, the 251-room five-star hotel and residential tower which opened in 2021.

Palumbo said Royal's launch had come at an interesting time for the broader Adelaide apartment market.

Buyer confidence had initially been impacted by uncertainty surrounding the Federal Budget and broader economic conditions, but Palumbo believes sentiment is beginning to improve against a backdrop of significant investment flowing into South Australia.

He pointed to increased activity across defence and resources, including Olympic Dam, as potential long-term drivers of the state's economy and housing market.

"Money is starting to flow into Adeliade, significant amounts as Adelaide bucks the trend of the rest of the country.," Palumbo said.

"There's a lot of activity in the economy over the next decade. I think more investment will come into this market."

Early works on Royal Apartments are expected to commence this year, with major construction activity and cranes anticipated on site from early next year.

[smartcode_project_cta:default project_id=6109]

Palumbo's return to Kent Town strikes early chord with buyers

Go-to builder-developer <a href="https://www.apartments.com.au/developers/graya">GRAYA</a> is continuing to bulk out its already impressive and diverse apartment portfolio across South East Queensland. Their latest milestone is securing development approval for Silk, its boutique riverfront apartment development in St Lucia.

The approval clears&nbsp;the way for the team to begin construction planning for the 22-residence project.

<a href="https://www.apartments.com.au/new-apartments/silk-st-lucia-16-18-sandford-street-st-lucia-qld-4067">Silk</a> will rise 15 levels from an 810 sqm site at 16-18 Sandford Street, occupying a prominent bend of the Brisbane River with a prized northern aspect across Orleigh Park toward the Brisbane CBD.

The approved scheme will comprise 16 split-floor and six full-floor residences, continuing GRAYA's move into larger-format apartment developments targeting Brisbane's prestige owner-occupier market.

The project has been designed around the site's broad river frontage and dual-direction views, with GRAYA prioritising larger residences, privacy and outlook over apartment yield.

<img alt="Silk St Lucia" data-entity-type="file" data-entity-uuid="aa5c2349-f96c-4914-a812-1f2cd6827af8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%208.25.44%E2%80%AFAM.png?VersionId=WY0vEU_7vYjeRJKQHiCwFdMxu8PvFh52" />

GRAYA Co-founder and Chief Executive Officer Rob Gray said the project had been shaped around local homeowners wanting to remain in St Lucia without maintaining a traditional family home.

"St Lucia is one of those suburbs people do not want to leave," Gray said.

"They know the river, the trees, UQ, the golf course, Toowong and Indooroopilly, and that familiarity is hard to replace.

"True riverfront opportunities here are exceptionally scarce. What we have designed at Silk is a way to stay in the suburb people love, with the scale and privacy of a private home and far less to maintain.

"This is not typical apartment product. It is a proper home on the river, and that is exactly what this market has been missing."

The approval comes as new apartment development continues to increase across the St Lucia and neighbouring Toowong corridor, although direct riverfront sites remain considerably more tightly held.

GRAYA Co-founder and Managing Director Andrew Gray said securing the approval had removed a significant element of development risk from Silk.

"Genuine riverfront sites of this quality in St Lucia are not something that comes up regularly," Gray said.

"The approval removes a substantial layer of execution risk, and the location underwrites demand in a way very few inner-city sites can.

"The fundamentals here are as strong as anything we have assessed in Brisbane."

<img alt="Silk St Lucia" data-entity-type="file" data-entity-uuid="d0f3d734-65e1-48e8-8ed3-2e0715ffcdd9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%208.25.56%E2%80%AFAM.png?VersionId=sOLSs_jdHkXLWbBKzRyayf5BfTb2vPsD" />

Silk will see GRAYA return to a stretch of the Brisbane River where it already has recent construction experience. The vertically integrated group recently completed ARC in neighbouring Toowong as builder for developer Spyre, delivering the riverfront project on a constrained site.

GRAYA will take a different role at Silk, controlling the project from design and development through construction and aftercare under its vertically integrated model.

The development will include a gym and resident leisure areas at ground level, integrated with the river's edge.

Silk joins a growing pipeline for GRAYA across Brisbane and the Gold Coast, which includes Enclave, The Gallery, Coral and Ripple.

The developer-builder has also recently lodged plans for its largest project to date, <a href="https://www.apartments.com.au/new-apartments/the-silo-19-chester-street-newstead-qld-4006">The Silo</a>, a proposed <a href="https://www.apartments.com.au/news/qld/graya-buys-frasers-newstead-site-plans-the-silo-between-james-street-and-gasworks-precincts">$700 million mixed-use development</a> in Brisbane's James Street precinct.

Silk is expected to predominantly target local owner-occupiers and prestige buyers seeking a permanent riverfront home in Brisbane's inner west.

Registrations of interest are now open, with further details on the project and construction program to be released as it progresses.

<hr />
<h2>SILK PROJECT FACTS</h2>

Developer-builder: GRAYA

Project: Silk

Location: 16-18 Sandford Street, St Lucia

Apartments: 22

Built form: 15 levels

Site: 810 sqm riverfront holding

Mix: 16 split-floor and six full-floor residences

Status: Development approved

Next step: Construction planning underway

[smartcode_project_cta:default project_id=152168]

GRAYA greenlit for riverfront St Lucia apartment development, Silk

Property market

<html><body>
EXPERT OBSERVATION 
Australian capital city dwelling prices rose 2% in November according to CoreLogic. This was their strongest monthly increase since September 2003.
After a 10.2% decline over 21 months, average prices have now had their fifth rise in a row. Capital city dwelling prices are now up 0.4% from a year ago.
Sydney dwelling prices surged 2.7% and Melbourne prices rose another 2.2%. This is the sixth gain in a row for both cities. 
As a result Sydney prices have now risen 8.2% from their May low and have recovered 46.5% of the fall since their 2017 high. 
Melbourne prices have now risen 8.3% from their May low and have now recovered 66.6% of the fall since their 2017 high.
Just as house prices fell faster than unit prices on the way down they are now rising faster.
Price gains are continuing to gather pace and are broadening out from Sydney and Melbourne with Brisbane up 0.8%, Adelaide up 0.5%, Canberra up 1.6%, Hobart up 2.3% and even Perth up 0.4% (where prices had a 21.6% from their 2014 high). Darwin prices fell 1.2%.
<a href="https://www.propertyobserver.com.au/images/2019/12/2/price%201.png" target="_blank">Click here </a>to enlarge:
<img src="https://www.urban.com.au/images/2019/12/2/price%201.png" alt=""> 
Source: CoreLogic, AMP Capital
The Australian property market – particularly Melbourne and Sydney – has gone from boom and FOMO in 2017 to slump and FONGO last year and now looks like its heading back to boom again with FOMO returning! (FOMO = fear of missing out, FONGO = fear of not getting out.)
The boost from the election result, RBA rate cuts and the relaxation of the 7% mortgage rate serviceability test are continuing to drive a surge in home prices as demand that was pent up over the period of falling prices between September 2017 and June this year has been unleashed. 
The rebound in demand continues to be evident in strong auction clearance rates in Sydney and Melbourne. See the next two charts.
<a href="https://www.propertyobserver.com.au/images/2019/12/2/price%202.png" target="_blank">Click here</a> to enlarge:
<img src="https://www.urban.com.au/images/2019/12/2/price%202.png" alt="">
<a href="https://www.propertyobserver.com.au/images/2019/12/2/price%203.png" target="_blank" style="font-size: 12.16px;">Click here </a>to enlarge: 
<img src="https://www.urban.com.au/images/2019/12/2/price%203.png" alt=""> 
Source: Domain, CoreLogic, AMP Capital
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 70 to 80% up on year ago levels.
<a href="https://www.propertyobserver.com.au/images/2019/12/2/price%204.png" target="_blank">Click here</a> to enlarge: 
 <img src="https://www.urban.com.au/images/2019/12/2/price%204.png" alt="">
Source: Domain, AMP Capital 
The high level of auction clearance rates points to a continuing rebound in home prices in Sydney and Melbourne into early 2020. Based on past relationships the current level of clearances points to annual house price growth of 10 to 15% over the next six to 12 months. In fact over the last four months annualised price growth in Sydney and Melbourne has been running at 23%.
Our base case remains that after an initial bounce house price gains will be more constrained than what we saw through the 2012-17 property price boom.
Compared to past recovery cycles household debt to income ratios are much higher, bank lending standards are much tighter, 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. This should see property price gains slow to a more moderate pace of say around 5% per annum once the initial rebound runs its course.
However, this looks unlikely to occur until around April-June next year by which time property prices will have surpassed their 2017 highs in Melbourne and Sydney (by around February and May respectively on our estimates).
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. 
However, the rapid rebound in Sydney and Melbourne property prices since mid-year poses the risk that we will see much stronger gains for longer as price gains feed on themselves attracting more buyers back into the market who fear that they will miss out. 
The extent of the rebound in the last few months also highlights ongoing issues around the undersupply of housing relative to strong population driven demand.
There are three key things to watch going forward:
<ul type="disc">
<li>First, if auction clearances remain elevated as listings continue to pick up into next year then it will be a “positive” sign that the pick-up in the property market has more to go. So far this has been happening.</li>
<li>Second, housing finance commitments – recent months have shown an upswing and this will need to pick up a lot further for rapid price gains in Sydney and Melbourne to be sustained. Total credit is less relevant as it reflects both the flow of new lending and the flow of repayments, with the latter having been strong in recent times as existing borrowers focus on paying down debt in the face of economic uncertainty.</li>
<li>Finally, unemployment will be critical. If it picks up significantly in response to slow economic growth then it will be a big constraint on house prices and could result in forced property sales and another leg down in property prices. A sharp rise in unemployment is not our base case but is the key downside risk in terms of the property outlook. But we do see weak economic growth and an upwards drift in unemployment ultimately constraining property prices gains.  </li>
</ul>
A big issue remains whether the rebound in the Sydney and Melbourne property markets will present a problem for the RBA in terms of further easing whether by rate cuts, quantitative easing or both. This will no doubt cause some consternation at the Bank. But as we saw over the 2012-17 period the RBA will do what it believes is right for the “average” of Australia as opposed to a couple of cities.  
However, it may have to return to tighter regulatory controls again if housing credit growth starts to get out of hand again.
In other words, we don’t see the rebound in the Sydney and Melbourne property markets as a barrier to further monetary easing, but if it continues to gather pace leading to a rebound in credit growth to levels that causes the RBA to worry about financial stability then expect a new tightening of the screws from bank regulators.
With housing credit currently benign at 3% year on year any such tightening looks at least six months away.
Shane Oliver is Head of Investment Strategy and Chief Economist AMP Capital.
</body></html>

soliver-smf6LQXgW9

Australian capital city home prices up 2% in November: Shane Oliver 

<html><body>
Things are hotting up in the Red Centre, but sadly that is true only for the weather and the real estate market in Alice Springs remains decidedly cool, according to a recent Herron Todd White (HTW) residential report. 
The report notes sales numbers continue to show a downward trend and there has been minimal change in median prices for both units and houses.
Demand continues to be somewhat soft and the tightening of bank lending policies in the wake of the Royal Commission has further impacted on a market that is lacking impetus.
"Houses at the lower end of the market ($350,000 to $400,000) continue to move quickly if reasonably priced, with some bargains out there for those not scared of a bit of hard work, but the lack of capital gain in the market place is proving to be a deterrent to flippers," the valuation firm said. 
A recent sale was a four bedroom house in Araluen. 
The home at <a href="https://www.realestate.com.au/sold/property-house-nt-araluen-128025878" target="_blank">39 Kempeana Crescent </a>(pictured below) comprises four bedrooms, two tiled living areas, open plan kitchen and back veranda. 
<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/2019/12/2/araluen.jpg" alt="">
Older two-bedroom units continue to slide in value, due in part to the recent abundance of new or near new units coming on line in recent years.
A two bedroom room unit at <a href="https://www.realestate.com.au/sold/property-unit-nt-gillen-131546194" target="_blank">25/111 Bloomfield Street, Gillen</a> (pictured below) has been sold for $225,500.
The unit comprises two upstairs bedrooms, open plan living area, and undercover parking.
<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/2019/12/2/gillen.jpg" alt="">
This oversupply has seen a number of unit developments stall or be deferred in the absence of sufficient pre-sales.
Locals can expect to see cranes in the skyline in the future however as the tender for construction of a five-level, 70-unit accommodation complex for hospital staff has been awarded.
Construction is believed to be commencing in the first half of 2020.
During construction, the project is expected to provide 240 jobs, which will provide a boost to the local economy, at least in the short term.
Tourism operators have experienced a bumper season, purportedly on the back of a rush of visitors wanting to climb the rock before the Uluru climb was permanently closed in late October.
"The area has gained both positive and negative coverage from the media during this time but in the absence of any catalyst for migration to the area, the population base is expected to remain largely stagnant," the valuation firm said. 
"In the coming months, there seems little to get excited about as far as an upturn in the real estate market is concerned and the market is expected to continue to bounce along at (or near) the bottom in the foreseeable future."
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j.ballantyne1990-6AQqhLzZaK

Alice Springs property sales numbers on a downward trend: HTW residential 

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The recent trend across the regional markets of Australia has seen a clear improvement in the performance of housing across the major centres adjacent to Sydney and Melbourne, as well as rising values in many of the coastal lifestyle markets, according to the latest CoreLogic home value index for October.
Conversely, the report found drought-affected areas have seen a drop in demand for housing with values falling sharply across many of the rural sub-regions associated with crops and grazing.
Mr Lawless said focusing on housing market conditions across the broad value-based cohorts highlights that the market recovery is being led by the most expensive quarter of the market, although values are also rising across the more affordable strata as well, just not as rapidly.”
"Across the combined capital cities, values within the top quartile were up 5.3% over the three months ending October 2019, while the broad middle of the market was up 2.6% and the lower quartile was up 0.7%."
“These ‘macro’ figures are influenced by stronger housing market conditions in Sydney and Melbourne where housing values are inherently higher, however the trends are reflected at a sub-regional level as well,” Mr Lawless said.
Over the three months ending October 2019, the fastest appreciation in capital city home values has been across the top quartile of Melbourne and Sydney where values were 7.1% and 5.9% higher.
The next best performing sectors were also in Sydney and Melbourne, with the broad ‘middle’ of the market recording a 4.6% rise in Sydney and 4.5% rise in Melbourne.
The lower quartile of Sydney and Melbourne dwelling values were the sectors that recorded the third largest rise over the past three months, up 3.2% across Sydney’s lower quartile and 3.8% higher across Melbourne’s lower quartile.
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Sydney and Melbourne property markets take top three spots in recovery: CoreLogic

Strengthened property turnaround evidence seen by RBA: August RBA minutes

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EXPERT OBSERVER
The Sydney and Melbourne property markets are showing ‘clear signs of recovery’ with auction clearance rates hitting more than 70 per cent in both the capital cities.
According to CoreLogic, Sydney hit 77.2 per cent and Melbourne delivered 73.6 per cent.
The trend now is very clear with interim results in the 60s and 70s in the past four weeks and final clearance rates above 60 per cent for that period. This is significantly higher than the clearance rate of 52 per cent a year ago.
A combination of the surprise election results, the RBA interest rate cuts, APRA's changes to floor assessment and tax cuts, which would deliver more funds to households, all contributed to the confidence of the market and, consequently, higher clearance rates that were also connected to higher prices.
While volumes are still low, in this context it means sellers, generally, don't feel the rush to sell.
However, further improvement in auction results and the turnaround in the market are likely to lead to an increased volume as sellers expect stronger demand for their properties and, therefore, are more confident to put them on the market.
The high end of the market continued to lead the way with extremely strong results in Sydney’s eastern suburbs with 90 per cent clearance rates, and both Sydney Inner West and Inner South West reaching 87 per cent.
In Melbourne the lucrative areas of the Inner East and Inner South continued with their consistently strong results this week delivering 77.3 per cent and 76.9 per cent, respectively.
DORON PELEG is CEO of RiskWise Property Research.
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Seller numbers expected to increase as Sydney & Melbourne property markets show positive signs: Doron Peleg

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EXPERT OBSERVER
The past financial year saw a roller coaster ride for investors.
Share markets plunged into Christmas only to rebound over the last six months. This note reviews the last financial year and takes a look at the investment outlook for 2019-20.
 A volatile but good year for diversified investors The past financial year saw pretty good returns for investors. 
But it didn’t feel so good around Christmas as a combination of worries – President Trump’s trade war with China, a slowdown in China, Fed rate hikes, an end to quantitative easing in the Eurozone, falling property prices and election fears in Australia saw share markets fall sharply.
In fact, from its September high to Christmas Eve US shares plunged 20%. But in the last six months share markets have rebounded as while the trade threat has run hot and cold and tensions in the Middle East have escalated central banks have turned dovish with many either easing (like the RBA and PBOC) or signalling that monetary easing is likely (such as the Fed and ECB).
This has seen global share markets rebound sharply with Australian shares having their best June half since the early 1990s – helped along by the return of the Coalition Government. So for the financial year as a whole global shares returned 6.6% in local currency terms and thanks to a fall in the Australian dollar they returned 12% in Australian dollar terms.
Australian shares returned 11.6% touching an 11-year high. Cash and bank deposits had poor returns not helped by the RBA cutting the cash rate to a new record low in June.
But bonds had a spectacular turnaround as rising bond yields on the back of Fed tightening a year ago gave way to plunging yields – to record lows in many countries - as inflation subsided and central banks turned dovish resulting in Australian bonds returning 9.6%.
The plunge in bond yields reinvigorated the search for yield and so helped yield-sensitive listed property and infrastructure have strong returns.
Unlisted property and infrastructure continued to do well, despite a rougher ride for retail property. Balanced growth superannuation funds are estimated to have returned around 7% after taxes and fees.
For the last five years their returns have averaged around 7.4% pa, which is not bad given sub 2% inflation.
Australian residential property fared poorly though with average capital city prices down 8%, but signs of stabilisation have emerged recently helped by the election result and rate cuts.
Key lessons for investors from the last financial year
1. Turn down the noise – despite the endless predictions of financial disaster it turned out okay again. 2. Maintain a well-diversified portfolio – while shares had a rough ride, bonds, unlisted assets and exposure to foreign currency for Australian investors provided some stability. 3. Cash is still not king – while cash and bank deposits provided safe steady returns, they remain very low.
The negatives which will likely constrain returns…
There are a bunch of threats which are likely to lead to bouts of volatility and constrain returns. 
First, President Trump’s trade war with China and threats against other countries is adversely affecting business confidence and investment. Trade talks with China have resumed and both sides have a strong incentive to resolve the issue but there is a risk that they may not. 
Second, global growth indicators are well down from their highs at the start of last year. And the yield curve in the US is flashing a recession warning.
Third, the risk of conflict with Iran has escalated after the US ditched its commitment to the 2015 Iran nuclear agreement. As roughly 20% of global oil demand flows through the Strait of Hormuz its disruption would threaten sharply higher oil prices. 
Fourth, US political risk is likely to ramp up with the debt ceiling needed to be increased around September (remember the debt ceiling/US ratings downgrade of 2011!) and Democratic presidential debates highlighting a sharp leftward lurch at a time when the top Democrat nominees are polling ahead of Trump. 
Fifth, Eurozone risks remains with an increased risk of a no deal Brexit which would be a big drag on the UK economy as 46% of its exports go to the EU and a small drag on European growth as 6% of its exports go to the UK. More important for the Eurozone is the ongoing tensions around the still worsening Italian budget deficit. 
Finally, in Australia while house prices are showing signs of being at or near the bottom, rising unemployment risks resulting in a negative feedback loop and another leg down, which in turn would further weigh on economic growth.
…but a bunch of things should keep returns positive
However, there are a bunch of positives providing an offset. 
First, while global growth indicators are soft, there has been a loss of downwards momentum in the Eurozone and globally it still looks like the growth slowdowns of 2011-12 and 2015-16. 
Second, the fall in global inflation has seen central banks move from tightening to easing to various degrees, providing a renewed stimulus to growth. This is a big difference to a year ago when it was thought that the hurdle for central bank easing was high. •
Third, while the US yield curve is flashing red it’s not always reliable, it may be distorted by central bank quantitative easing and it has long lead times. What’s more there is still little sign of the sort of excess that normally precedes recessions – there is still spare capacity globally, growth in private debt remains moderate, investment as a share of GDP is around average or below, wages growth and inflation remain low and we are yet to see a generalised euphoria in asset prices. The current growth slowdown globally maybe seen as extending the investment cycle by delaying the build up of recession driving excesses. 
Fourth, while Trump’s trade wars and maximum pressure on Iran may reflect the pursuit of international relevance at a time when his ability to do anything in the US is constrained (having lost Congress) it is in his interest to resolve both in a non-disruptive way as American’s don’t re-elect presidents when unemployment is rising and oil prices are surging. 
Fifth, share valuations are not excessive. While price to earnings ratios are moderately above long-term averages in developed countries, this is to be expected in a world of low inflation. Valuation measures that allow for low interest rates and bond yields show shares to be fair value or cheap.
Finally, while unemployment is expected rise to 5.5% this year in Australia it should be limited as infrastructure spending remains strong, mining investment bottoms out, export demand holds up with overall growth helped by monetary and fiscal stimulus and the low Australian dollar.
What about the return outlook?
The threats around trade and geopolitical risks along with the tendency for seasonal weakness out to September/October could see a pull back in share markets and returns are likely to be constrained. But easy money and the absence of large-scale economic excess should help extend the cycle and keep returns positive at around 6% over the next 12 months from a well diversified portfolio.
Looking at the major asset classes:
Cash and bank deposit returns are likely to be poor at around 1% as the RBA is expected to cut the cash rate to 0.5% by early next year. Investors still need to think about what they really want: if it’s capital stability then stick with cash but if it’s a decent stable income flow then consider the alternatives with Australian shares and unlisted commercial property and infrastructure still offering attractive yields.
Sovereign bond investors benefit from falling yields but once they stop falling expect returns to slow again as yields are now very low. Bonds are good portfolio diversifiers though. 
Listed and unlisted commercial property and infrastructure are likely to benefit from the ongoing “search for yield” and okay economic growth. 
Residential property still has a bit more short-term downside risk but expect flattish prices through calendar 2020 as an upwards drift in unemployment constrains returns. 
Shares are at risk of a correction into the seasonally weak September/October period, but okay valuations, reasonable economic growth and profits and even easier monetary conditions should see the broad trend in shares remain up.
Finally, the $A is likely to fall to around $US0.65 by year end as the RBA eases, but with significant short positions, the Fed easing too and the sharp 39% $A fall already seen since 2011 it has become a closer call.
Things to keep an eye on:
Global business conditions PMIs for any deeper slowing; the trade war – this needs to be resolved soon; Middle East tensions around Iran; US political risks; risks around Chinese growth; and Australian unemployment and house prices.
Conclusion
Returns are likely to be okay over 2019-20 as conditions are not in place for recession. But expect constrained returns - say around 6% for a diversified fund - and bouts of volatility.
SHANE OLIVER is the Head of Investment Strategy and Chief Economist at AMP Capital 
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2018-19 saw a rough ride for investors but it turned out okay: Shane Oliver

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GUEST OBSERVATION
The latest data from the Australian Bureau of Statistics confirms household wealth has fallen, on the back of falling house prices, in the past year.
But it’s not all bad news. There are signs of hope in the portents for the next six months.
During the first quarter of this year, the net worth of all Australian households rose 0.2% to A$10.2 trillion. Total household net worth in March 2019 was 0.7% lower than in March 2018, largely because of steep falls over the final six months of 2018.
The per capita annual decline was larger, falling by about 2.4%, because of population growth. This means the average wealth of Australians dropped by about A$9,500, from A$414,400 to A$404,900.
<a href="https://images.theconversation.com/files/281542/original/file-20190627-76734-mgok7i.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/281542/original/file-20190627-76734-mgok7i.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
(Source: ABS)
This household “balance sheet event” – defined as an annual decline in household sector net wealth – is the third in the past 30 years. The other two were through the Global Financial Crisis of 2008 and immediately after.
Housing (land and dwellings) comprises 52% of household-sector assets. Superannuation comprises 24%. Property values fluctuate with real estate prices, while superannuation is highly exposed to volatility within the financial markets.
Consumer spending
The next chart highlights the relationship between changes in household net worth and spending on discretionary items and durable goods.
<a href="https://images.theconversation.com/files/281543/original/file-20190627-76705-1x1u3cv.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/281543/original/file-20190627-76705-1x1u3cv.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> 
(Source: ABS)
But what is interesting is that consumer sentiment has not been significantly affected.
The following chart shows household net worth vs Westpac’s consumer sentiment data. This is the first major downturn in household net wealth in 30 years that has not coincided with weaker consumer sentiment.
<a href="https://images.theconversation.com/files/281544/original/file-20190627-76743-j7e3bv.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/281544/original/file-20190627-76743-j7e3bv.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
(Source: ABS &amp; Westpac)
It’s hard to know for certain why consumer confidence has remained relatively steady, but two things stand out.
First, the consumer financial adjustment has been orderly and deliberate as opposed to rapid and forced. It appears people have consciously adjusted spending and savings patterns to achieve long-term savings goals.
Second, there has been ongoing strength in the labour market. Despite falling wealth, people still have jobs and this reinforces confidence.
Shares and housing stocks
It is safe to say consumers will start spending more once they feel their asset position has stabilised.
Strong equity markets have played a big role in shoring up household wealth since the start of this year. As the next chart demonstrates, they could continue to do so over the period ahead.
<a href="https://images.theconversation.com/files/281545/original/file-20190627-76701-g5i77p.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/281545/original/file-20190627-76701-g5i77p.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
(Source: ABS &amp; Bloomberg)
But the big swing factor is house prices – specifically land values. The Reserve Bank’s interest rate cuts should help stabilise house prices over the second half of 2019.
Our last chart suggests this appears to have started, with auction clearance rates improving in recent months.
<a href="https://images.theconversation.com/files/281548/original/file-20190627-76722-ruuein.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/281548/original/file-20190627-76722-ruuein.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
(Source: ABS &amp; CoreLogic &amp; Bloomberg)
This all suggests household wealth could start growing again in the second half of the year. That should go a long way to stabilising the economy.<img src="https://counter.theconversation.com/content/119001/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;">
Warren Hogan, Industry Professor, University of Technology Sydney.
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/australian-household-wealth-has-taken-its-biggest-dive-since-the-gfc-but-things-are-looking-up-119001" target="_blank">original article</a>.
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Australian household wealth has taken its biggest dive since the GFC, but things are looking up: Warren Hogan

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The number of consumers who don’t think will be a good time to sell their home or investment property continues to out-weigh those who think it is, according to a new survey. 
NAB's latest Australian Consumer Anxiety Survey for Q2 2019 noted these results suggest many consumers still think the housing downturn could still have more to run.
In net terms, +32% said they thought now was a good time to buy a property to live in and +34% to renovate their home.
With house prices continuing to fall across the country, consumers who thought it wasn’t a good time to sell their home (-35%) or investment property (-33%) also continued to significantly out-weigh those who thought it was a good time to sell.
However, the net number who thought so was somewhat lower than in the previous quarter, suggesting that some consumers may believe the market is close to the bottom.
With downward pressures on interest rates, it also noted a large increase in the net number of consumers who thought it was a good time to get a mortgage on their home (+13).
<img src="https://www.urban.com.au/images/2019/6/26/Good%20time%20NAB%201.JPG" alt="">
Source: NAB Anxiety Report Q2 2019
On balance, slightly more consumers (+29%) believe it will be a good time to buy a property to live in over the next 12 months (+25% in Q1 2019), and +24% to renovate their home (+23% in Q1 2019).
The number of consumers who don’t think it will be a good time to sell their home (-15%) or investment property (-14%) continues to out-weigh those who think it is - but this has fallen since Q1 2019, suggesting more consumers are expecting market conditions to improve.
With widespread speculation for further interest rate cuts in 2019, those who think it will be a good time to take out a mortgage a mortgage for their own home (+10) also rose.
<img src="https://www.urban.com.au/images/2019/6/26/Good%20time%20NAB%202.JPG" alt="">
Source: NAB Anxiety Report Q2 2019
Consumer intentions around property are still overwhelming conservative.
The net number of consumers who said they didn’t intend to sell investment property (-83%), renovate an investment property (-81%), take out an investment loan (-79%), sell their home (-78%), buy investment property (-75%), take out a home loan (-74%) or sell the home they live in (-66%) far outweighed those who said they would.
Consumers were least negative about renovating their homes (-49%). Intentions remain overwhelmingly negative and conservative in all states - see table below.
<img src="https://www.urban.com.au/images/2019/6/26/Good%20time%20NAB%203.JPG" alt="">
Source: NAB Anxiety Report Q2 2019
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Australians still fear the property market has further to fall: NAB

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The Melbourne office market vacancy rates, in particular in the Melbourne CBD, city fringe and inner east, are lower than the long-term average vacancy levels and are anticipated to further decline in the second half of 2019, according to the latest Commercial Market report from Herron Todd White.
The Melbourne CBD’s overall office vacancy rate was at 3.2% in January 2019, the lowest of all of Australia’s CBDs. according to the Property Council of Australia’s Office Market Report. 
According to HTW's property valuation reporters, there is limited new supply and available stock in the market until 2020. 
The robust leasing market is also being fuelled by healthy tenant demand driving strong rental growth in both face and effective levels.
Due to the rise in CBD rentals, the city fringe precinct continues to gain popularity from the creative, technology and professional services sectors.
Tenant demand is also strong in the inner east markets, particularly in highly soughtafter suburbs such as Richmond, Cremorne and Hawthorn. The inner east has a vacancy rate of 3.58%, the lowest amongst all of the metro precincts in Melbourne.
The June report stated, "It is expected that rental growth will continue for the remainder of 2019 in these precincts for well-located, good quality stock. Sales demand is particularly strong for well-located, land-rich investment assets."
"A circa 1990 double storey office building at 79-83 High Street, Kew (pictured in title) sold off-market ahead of the launch of an EOI campaign for $19 million in April 2019, reflecting a passing yield of approximately 6.2%. The property comprised 19 strata units with a total lettable area of approximately 3,361 square metres situated on a 3,760 square metre Commercial 1 zoned land allotment."
"The building had 10% vacancy and was sold to fund manager, Terraplex, with intentions to refurbish the building and potentially add extra floor space," they noted.
In the outer suburban market, the sale at 347-351 Burwood Highway, Forest Hill represents the largest metropolitan office transaction this year.
The property was sold to an adjoining owner, a Melbourne based developer, for $45.85 million in April 2019.
The property is situated opposite the Tally Ho Business Park and comprises a 2.62 hectare Commercial 1 zoned allotment improved with two office buildings with a combined net lettable area of approximately 10,692 square metres.
The property is approximately 70% leased to a variety of tenants including NEC, Bolton Clarke and Hamilton Morello.
The HTW valuers said, "we highlight that the purchaser elected to purchase the property as is without a 30% rental guarantee from the vendor and without deduction of outstanding incentives. The property has a WALE (by income) of 3.4 years and a reported reversionary yield of approximately 7.32%."
"The relatively low yield for an asset of this nature with sizeable leasing risk demonstrates the confidence buyers currently have in the Melbourne metropolitan office market."
"Due to the slowdown in the residential market and tightening lending criteria, demand for development sites within the inner suburban region has declined somewhat, however we are aware of ongoing, albeit subdued demand from developers seeking to secure well located sites to establish mixed use developments within close proximity of neighbouring retail strips, amenities and public transport."
"It is uncertain when residential market conditions will begin to recover and purchasers are cautious that any future downturn in economic activity may lead to a reduction in demand and market value, however we note that demand for commercial development sites, particularly sites with holding income, is strong in inner city areas such as Richmond, Cremorne and South Melbourne where developers are intending to deliver commercial office projects instead of apartment projects in the current market to capture the strong office leasing and sales conditions," they concluded.
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Melbourne CBD office vacancy rate lowest in Australia: HTW Commercial

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EXPERT OBSERVER
Today, for the first time in 34 months, the Reserve Bank of Australia (RBA) decided to reduce the official cash rate by 25 basis points to 1.25 per cent. This represents the lowest cash rate on record and is the first time since August 2016 that the RBA board has shifted rates.
Why did they cut?
Despite the current strength of employment markets, the outlook for the Australian economy has softened. In addition, an escalation in the trade war between the US and China combined with the ongoing delay and dispute over Brexit has increased headwinds for global economic growth. The domestic economy has seen inflation track well below the RBA’s target of 2-3 per cent for some time, with low levels of household spending, soft wage growth, a slump in dwelling approvals and resistance from banks to lend all driving today’s RBA decision.
What it means for property markets?
Today’s interest rate decision, if passed on in full by the banks, will assist mortgage holders and encourage buyers that have disengaged from the property market to re-evaluate their situation. The past few weeks have seen buyers re-engage with enquiries and attendance at open homes both lifting. The increase in confidence comes off-the-back of the Coalition win at the federal election, ensuring there are no changes to negative gearing or capital gains tax concessions for property investors.
In addition, a new first home buyers deposit scheme, announced prior to the election, and the relaxation of finance restrictions by banking regulators provides a positive outlook for property markets leading into the second half of the year.
For property buyers
Today’s RBA decision along with the recent announcement by APRA that they are looking to relax lending restrictions, should help lift mortgage affordability. This will help up-sizers, down-sizers, investors and first home buyers re-engage with property markets after a period of indecision and uncertainly.
For property sellers
Today’s RBA decision bodes well for property owners looking to sell in the second half of 2019. The past two weeks has seen demand from buyers increase and a reduction in interest will help drive increased attendance at open homes and buyer enquiry levels. Despite higher levels of interest from buyers, the number of properties coming onto the market for sale has yet to rise to meet this demand. This will help drive competition for well-located and accurately priced properties that are listed for sale over coming months.
MATHEW TILLER is the Head of Research at LJ Hooker
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