Melbourne developer Spacious Group has completed Voyage Altona, one of the closest new apartment developments to Altona Beach.

Off the plan purchasers have started moving into the 49-apartment project on Pier Street, with the remaining move-in-ready one-, two- and three-bedroom apartments starting from just over $500,000.

Display apartments have now been fitted out, allowing prospective buyers to inspect the completed residences by appointment.

[smartcode_project:default project_id=112195 project_image_fid=372638]

The completed apartments feature open-plan living and dining areas which extend onto private balconies and terraces, while full-height glazing maximises natural light throughout the interiors.&nbsp;

Hybrid timber-look flooring, stone benchtops, Miele appliances, porcelain-tiled bathrooms and generous storage feature throughout the building which also features landscaped communal areas, expansive shared terraces, lift access and secure on-grade parking.

Drawing inspiration from its bayside setting, Voyage adopts a restrained palette of warm neutral tones and textured finishes. Many of the apartments take advantage of views across Port Phillip Bay, while the indoor-outdoor living spaces have been designed to make the most of the coastal outlook.

[smartcode_project:default project_id=112195 project_image_fid=3286]

Voyage was developed to address what Spacious Group identified as an undersupply of higher-quality apartment product in Altona, with a focus on owner-occupiers looking to remain within the bayside community.

"Voyage responds to very strong local buyer demand for quality, owner-occupier-focused product," says Barry Plant Projects Director Jarrod Farey, who has handled sales since the project's launch.

"The project delivers an elevated lifestyle proposition, with its design and quality of finish far exceeding anything previously produced in the area, as well as its proximity to Pier Street Village and the beach."

The majority of purchasers have been local downsizers and owner-occupiers looking to stay within the Altona community but who previously had limited opportunities to buy a brand-new apartment.

[smartcode_project_cta:default project_id=112195]

Joel Robinson

Spacious Group completes Voyage Altona in Altona's beachside precinct

Homecorp has secured approval for a $360 million apartment development at Budds Beach, paving the way for one of the Gold Coast's most amenity-rich residential projects to launch later this year.

Gold Coast City Council has approved Lýon Residences, a 32-level tower that will deliver 178 two and three-bedroom apartments across a prominent corner site at 8-10 Acacia Avenue and 25-27 Oak Avenue.

The approval comes as developers continue to invest in premium lifestyle-driven apartment projects on the Gold Coast, where owner occupiers are increasingly prioritising amenity as much as apartment size and location.

<a href="https://www.apartments.com.au/new-apartments/l-on-residences-25-27-oak-avenue-surfers-paradise-qld-4217">Lýon Residences</a> has been designed around a resort-style wellness offering, headlined by a Moroccan-inspired spa precinct featuring treatment rooms, a Nordic sauna and steam room, hot and cold plunge pools, a soaking pool and a residents-only juice bar.

The rooftop will include a heated infinity pool and spa, residents' lounge with private kitchen and bar, gymnasium, yoga and Pilates studio, outdoor entertaining areas and barbecue facilities overlooking the Surfers Paradise skyline.

<img alt="Lyon" data-entity-type="file" data-entity-uuid="2d3e29af-8793-486e-a684-52cef862241f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-15%20at%204.32.26%E2%80%AFPM.png?VersionId=ayG2zpLf3SS6Zy8XmKDcQods4kVWb0gm" />

Homecorp Founder and CEO Ron Bakir said Budds Beach provided the ideal location for the company's latest luxury apartment project.

"Budds Beach represents one of the most unique and sought-after pockets of the Gold Coast, and Lýon Residences has been designed to reflect that sense of rarity and refinement," Bakir said.

The project arrives as wellness continues to become a defining feature of new residential developments both in Australia and internationally.

The latest Global Wellness Institute figures show wellness real estate remains the fastest-growing segment of the global wellness economy and is forecast to exceed $1.8 trillion by 2030. Australia continues to rank among the world's 15 largest wellness real estate markets, with developers increasingly integrating health, recreation and community facilities into apartment projects.

Queensland is also experiencing strong population growth, with the Gold Coast continuing to outperform many other Australian cities as demand for new housing remains elevated ahead of the 2032 Olympic and Paralympic Games.

Bakir said the project had been designed to respond to that shift in buyer expectations.

"Strong population growth and sustained demand across the Gold Coast continue to highlight the need for well-designed new housing supply. Lýon Residences responds directly to this demand while setting a new benchmark for residential living," he said.

Each apartment has been designed to maximise views across the coastline, the Nerang River and the Gold Coast hinterland.

Located just minutes from Surfers Paradise beach and the Broadwater, the development also offers easy access to the light rail network, Broadbeach and Burleigh Heads.

Early site works are underway, with construction expected to commence later this year.

Homecorp approved for Budds Beach apartment tower, Lýon Residences

New apartment developments with uninterrupted, north-facing views over Perth's Swan River are exceptionally rare.

Recognising just how limited those opportunities are, <a href="https://www.apartments.com.au/developers/edge-visionary-living">Edge Visionary Living</a>, one of Perth's most respected builder-developers, targeted <a href="https://www.apartments.com.au/developments/applecross-wa-6153">Applecross</a>, assembling an unrepeatable 6,342 sqm riverfront site on the corner of Moreau Mews and Canning Beach Road to create one of Perth's only new north-facing apartment developments directly overlooking the Swan River.

Today, <a href="https://www.apartments.com.au/buildings/riviere-residences-applecross-59-canning-beach-road-applecross-wa-6153">Rivière Residences</a> offers buyers a unique opportunity to choose between completed residences ready to move into now and off-the-plan homes in the final stage, Rivière West.

[smartcode_project:default project_id=28384 project_image_fid=3823]

Across the completed East and Central buildings, residents are already enjoying the development's luxury amenity, while two of the precinct's hospitality venues are now open.

The completed component of the development gives buyers the advantage of experiencing the finished product firsthand, including its uninterrupted river views, while still having the opportunity to secure a residence in the final stage.

"People are wowed by the view and the quality of the apartments,"&nbsp;Edge Visionary Living Sales Executive, Holly McSweeney, says.

"They're looking for the convenience of lock-and-leave living, but they're not looking to downsize on quality."

[smartcode_project:default project_id=28384 project_image_fid=3826]

The rarity of the development hasn't been lost on prospective buyers, McSweeney says.

For McSweeney, it all comes back to a location that is becoming increasingly difficult to replicate.

"Location, location, location," she says. "We are nestled right on the front of the Swan River. You can never get built out, so wherever you are in Rivière Residences, you've got views of the river forever."

The unique waterfront position has resonated particularly strongly with local downsizers. McSweeney says many buyers are long-time Applecross residents looking to transition from large family homes into a luxury apartment without sacrificing space, quality or the lifestyle they've enjoyed for decades.

<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/N_FowNW0wu8?si=vb25XFq1wZ-iufAW" title="YouTube video player" width="560"></iframe>

A major focus for Edge in recent years has been resident amenity. Across its apartment portfolio, from beachfront developments in Scarborough to luxury towers in South Perth, the developer has increasingly invested in the spaces beyond the apartment itself.

The strategy has largely been shaped by downsizer demand. Many buyers are moving from large family homes with swimming pools and established gardens. While they're looking to leave the maintenance behind, they don't want to compromise on lifestyle.

At Rivière, <a href="https://www.apartments.com.au/architects/hillam-architects">Hillam Architects</a> designed the resident facilities as an extension of each apartment. A 25-metre heated swimming pool takes advantage of the north-facing river outlook, complemented by a large gym, sauna and steam rooms, private dining spaces, residents' lounges, a cinema, games room, and dedicated wine and whisky rooms.

[smartcode_project:default project_id=28384 project_image_fid=372542]

The waterfront location has also proved to be a major drawcard. Residents are within walking distance of the Raffles Hotel, South of Perth Yacht Club, the Heathcote Cultural Precinct and the cafés, restaurants and boutiques along Ardross Street.

Beyond the location and amenity, McSweeney says many buyers take confidence from Edge's fully integrated development model.

Having delivered apartments across Perth for decades, Edge now designs, develops and constructs its projects in-house, giving the company greater control over quality, delivery and the finished product.

"What I love is when people walk through their apartment for the first time and say, 'This is better than what we imagined,'" McSweeney says. "We hear that all the time."

Completed apartments in the East and Central buildings are now available to inspect by appointment, while Rivière West, the final stage of the precinct, is expected to be completed in the first quarter of 2027.

[smartcode_project_cta:default project_id=28384]

North-facing Swan River views drive demand at Rivière Residences in Applecross

Nearly 60 per cent of apartments at McNab Group's $220 million The Tannery development in Brisbane's West End have sold ahead of the project's public launch, including a suburb-record $2.57 million sale for a two-bedroom apartment.

The early sales campaign has secured buyers for 50 of the project's 87 apartments, highlighting continued demand for larger owner-occupier apartments that combine generous floorplans with premium lifestyle amenities in one of Brisbane's most tightly held inner-city suburbs.

[smartcode_project:default project_id=143337 project_image_fid=374768]

McNab Group Executive Chairman Michael McNab said selling more than half the project before launch reflected changing buyer expectations.

"Selling more than half the project before public sales open tells us buyers are actively seeking apartments that offer something genuinely different," McNab said.

"Today's buyers are looking beyond four walls. They want homes that genuinely enhance the way they live, with spaces that support health, connection and everyday wellbeing."

[smartcode_project:default project_id=143337 project_image_fid=374767]

A key point of difference for the project is the adaptive reuse of the heritage-listed Dixon's Tannery building, which will become The Retreat, a residents-only wellness precinct rather than being redeveloped into additional apartments.

The Retreat will feature a sauna and steam room, hot and cold plunge pools, a commercial-grade gym, Pilates studio, cinema, library, co-working spaces and private dining room. Rooftop amenities will include a swimming pool, landscaped gardens, outdoor entertaining areas and dog-friendly spaces.

[smartcode_project:default project_id=143337 project_image_fid=374760]

Designed by Cottee Parker Architects with interiors by Tom Mark Henry and landscape architecture by Aspect Studios, The Tannery comprises 87 two, three and four-bedroom apartments across 11 levels overlooking the Brisbane River.

Cottee Parker principal Dee Passenger said preserving the original tannery building had been central to the project's design.

"The easy option would have been to maximise the site's development potential with additional apartments. Instead, McNab has chosen to preserve the original tannery as a shared wellness retreat, ensuring this important piece of Brisbane's history remains at the heart of the community."

Passenger said sustainability also played a key role in the design, with materials from the original industrial site salvaged and repurposed throughout the development.

[smartcode_project:default project_id=143337 project_image_fid=374761]

Motiv CEO Carly Cottam said buyers had responded strongly to the combination of larger apartments, wellness facilities and the West End lifestyle.

"We are seeing more buyers looking for homes in the sky that provide the space and functionality of a traditional home, while benefiting from the convenience and lifestyle that apartment living brings," Cottam said.

She said purchasers included both owner occupiers and investors, with demand coming from local buyers as well as interstate purchasers.

Coinciding with the public launch, McNab also announced a partnership with Queensland Ballet, whose neighbouring Thomas Dixon Centre shares historical ties with the original Dixon family.

Located on a 4,465 sqm site at 439 Montague Road, The Tannery overlooks the Brisbane River and is around 10 minutes from the CBD.

Construction is underway, with completion expected in the second half of 2027.

[smartcode_project_cta:default project_id=143337]

More than half of residences sold before public sales as McNab announces significant partnership with Queensland Ballet

McNab's The Tannery nears 60 per cent sold before public release, sets two-bedroom West End record

Iwan Sunito's vision for a landmark mixed-use precinct in Sydney's Inner West has taken a major step forward, with approval granted for the $1.9 billion Five Dock development first unveiled earlier this year.

The approved scheme by <a href="https://www.apartments.com.au/developers/one-global-capital">One Global Capital</a> will deliver an 80,500 sqm mixed-use precinct comprising 840 apartments, integrated hotel accommodation, commercial and retail space, alongside publicly accessible open space designed to create a new destination for the growing suburb.

"This is a significant milestone for One Global Capital and for the future of housing delivery in Sydney," Sunito said.

"The Housing Delivery Authority was established to identify major housing projects capable of delivering meaningful supply more efficiently, and we are delighted that Spencer Street has been recognised as one of those projects.”

He said the declaration reflected the rapid progress achieved since acquiring control of the site.

"In less than seven months we have progressed from taking control of the site to securing entry into one of the NSW Government's most important planning pathways. It reflects the experience of our team, the strength of our consultant group led by Urbis, and our long-term commitment to delivering transformational projects that contribute to Sydney's future."

When the project was revealed earlier this year, Sunito described the opportunity as one of the strongest development sites he had worked on.

"I probably hadn't appreciated the uniqueness of the site until more recently when putting together the concept plans," Sunito said.

"The proximity to the water, and the golf course opposite, is unlike any other part of Parramatta Road. We have a unique position and view corridors over the water that makes this one of the best sites I've worked on."

The development has evolved since its initial announcement, with the approved plans increasing the residential component from the originally proposed 750 apartments to 840 homes while retaining the project's focus on creating an integrated neighbourhood rather than a standalone residential development.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/a-city-within-a-city-iwan-sunito-flags-1-5-billion-mixed-use-precinct-in-five-dock">"A city within a city": Iwan Sunito flags $1.5 billion mixed-use precinct in Five Dock</a>

The precinct will combine apartments with hotel accommodation, commercial workplaces, retail offerings and public spaces, creating a mixed-use environment intended to serve both residents and the broader Five Dock community. The proposal also continues the collaboration between One Global Capital and internationally recognised architect <a href="https://www.apartments.com.au/architects/koichi-takada-architects">Koichi Takada</a>, whose previous work with Sunito includes Infinity, Arc and Skye North Sydney.

Takada previously said the design was driven by a philosophy of integrating nature into the built environment.

"The concept for this development is born from our design approach to naturalising architecture," Takada said.

"The public realm benefits from biophilic design that integrates generous landscaping, and the development is optimised for natural daylight, airflow and water views to foster wellbeing, sustainability and spaces that foster community interaction."

Sunito has consistently described the project as a "city within a city", with a strong emphasis on creating a destination that extends beyond housing.

"We want to create a development that's not only to be seen, but to be experienced by the whole local community," he said.

The approval comes as Five Dock continues its transformation ahead of the opening of the Sydney Metro West line, with the new Five Dock station set to significantly improve connections between the Inner West, Parramatta and the Sydney CBD.&nbsp;

The precinct will also benefit from its proximity to the Parramatta Road corridor, nearby waterfront parklands and established retail and dining offerings that have made Five Dock one of Sydney's most tightly held Inner West suburbs.

Iwan Sunito secures approval for $1.9 billion Five Dock mixed-use precinct

Australian Economy

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GUEST OBSERVER
A majority of Australians are optimistic about the state of the property market and will continue to invest in this space, new research has revealed.      According to new data from Mortgage Choice, 64.3% of Australians believe the housing market will continue to perform the same as it has in recent years, if not better.  This data makes it obvious that the majority of Australians remain upbeat about investing in property and will continue to buy and sell dwellings. Over the past few weeks, we have heard endless commentary about an ‘inevitable slowdown’ in the property market.  According to data from CoreLogic, property price growth has started to stagnate in recent months. Over the three months to November, property prices grew just 0.4% across the combined capital cities.  As a result, many market commentators have started to panic and are suggesting that this is the beginning of the end. Some commentators have even gone so far as to suggest we could soon see a property price crash across some of the bigger markets, notably Sydney and Melbourne.  The reality is, property prices are merely stabilising after a few years of runaway growth. This stabilisation is something we have long expected.  The fact is, significant changes have been made to investment lending policy in recent months. Moreover, interest rates have been sitting at historical lows for well over 12 months and will continue to sit at historically low levels for some time yet. Both of these things have combined to take some of the heat out of the market. And while the heat has started to come out of the market, Mr Flavell said there were no signs to suggest a property crash was on the radar in Australia.  For a crash to occur in the housing market, there would need to be a number of economic factors at play.
Firstly, supply would need to be significantly high enough that it exceeded demand. Secondly, the cost of borrowing money would need to rise rapidly in a very short period of time, and unemployment would also need to reach dramatically high levels.  Moreover, there would need to be a large number of people looking to liquidate their properties at the same time.  If all those factors were to occur, a crash could be a possibility, but based on how our economy is travelling at the moment, it is fair to say that we are not in for a crash.  According to the Australian Bureau of Statistics (ABS), Australia’s population grew 1.6% over the year to March 2017 – which is significantly higher than other developed nations.  In total numbers, our population grew by 389,100 over the past year, and all of those people need somewhere to live. If we want to cater to our growing population, we need to build more properties, and that is exactly what we are doing.  So, supply and demand are working in good kilter with one another. At the same time, interest rates are low and we expect them to stay lower for longer. Meanwhile, the unemployment rate is trending downwards, with the latest data from the ABS showing that the unemployment rate fell 0.1% throughout September to 5.5%. When you consider all of the above economic data, there is nothing to suggest that a property price crash is in our near future.  In fact, the opposite is true. With interest rates sitting at all-time lows, lenders competing for business and property price growth stagnating across some markets, now was a good time for prospective buyers to achieve their property goals.  If you have plans to be in the property market, now is the right time achieve your goals.
John Flavell is the chief executive officer of Mortgage Choice.
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jrobinson-rf4aSBido9

What bubble? Majority of Australians ‘optimistic’ about property: John Flavell

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GUEST OBSERVER
Australia continues to grow jobs, but wages aren’t keeping up and policymakers are running out of options.
Let’s begin with an economy that is doing relatively well.
In the US, the data were both predictable and moderately positive.
Consumer prices (as measured by the CPI) were up only 0.1% in October, but this was in line with expectations. Recall that two major hurricanes drove up gasoline prices in September, and those increases rolled off (they were up 13.1% in September and fell 2.4% in October). The year-on-year CPI increase was 2.0% – again, in line with expectations.
The Producer Price Index (PPI) rose by a healthy 2.6% on a year-on-year basis – despite a drop in gasoline prices for producers of 4.6% (note the difference between wholesale and retail price changes). Perhaps most importantly, there were relatively strong increases in elements of the index that the US Federal Reserve cares most about (as they are less cyclical than, say, energy prices), like healthcare costs.
Less expected, but happy news, was the 0.2% rise in retail sales. That puts retail sales up 4.6% on an annual basis. This is further evidence of the solid rebound in the US economy.
And now to Australia.
On the plus side, a fair number of jobs are being created. As Treasurer Scott Morrison was eager to point out on Thursday, 296,400 jobs have been created this year; 236,000 of them full-time.
But the continued depressing news is about wages. The wage-price index was up 0.5% for the third quarter, below market expectations of 0.7%. That puts annual wages growth at 2.0%. With inflation running at 1.8%, that means real wages growth is effectively zero. And it has been like that for a long time.
This is causing enormous problems for Australian households and policymakers.
Recall that Australian households are among the most highly leveraged in the world – with debts at around 190% of GDP. So what is going to reduce that debt?
There are two possibilities: more inflation or more income. Inflation helps reduce the debt in real terms, and income helps for obvious reasons. Right now, both avenues look shaky.
On the former, the Melbourne Institute reported on Thursday that inflation expectations fell this month, providing further evidence that future inflation is likely to be low.
On the latter, there has been a continued run of low wages growth. This is an experience being felt in advanced economies around the world. That suggests it is something to do with technology, or global economic conditions, and therefore not all that amenable to policy.
That leaves us with heavily indebted households, with no obvious way out. This, of course, puts a strain on consumer spending, which in turn affects business investment and employment, and the whole (vicious) cycle loops back on itself.
What is the cut-through for policymakers?
The RBA could drop interest rates from their current 1.50% level – and increasingly some economists are suggesting that. The worry is that a rate cut might further fuel housing prices, making the problem worse, not better.
Federal income tax cuts would be another avenue, but with the budget in structural deficit, and with an economically illiterate crossbench, that looks unlikely.
The government could embark on a major infrastructure spending plan, which could rejuvenate regional employment in areas hit by the forces of globalisation. With interest rates at very low levels, for very long maturities, this seems like a good idea, as long as the projects are assessed on a rational basis.
The concern in this regard is politics. Both major parties have their predilections and bases to pander to. A bad outcome would be, for example, a big coal mine investment by the Coalition, and some uneconomic green-energy boondoggle by the opposition.
<img src="https://counter.theconversation.com/content/87517/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">As I have said before in this column, the US seems to be navigating the post-2008 economic world relatively well, although caution is certainly warranted. Australia is doing much less well. And the narrative that we have “successfully transitioned from the mining boom” seems a lot more like wishful thinking than hard evidence.
Richard Holden, Professor of Economics and PLuS Alliance Fellow, UNSW.
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/vital-signs-australias-mining-boom-transition-is-on-shaky-ground-87517" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

Australia's mining boom transition is on shaky ground: Richard Holden

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Australia’s current expansion is its longest boom.
GDP growth has been continuous for 26 years, with no ‘technical recession’ during that period.
By some measures, Australia’s is the longest boom of any developed economy, although there is some debate about that. What it means can also be disputed.
For example, Australia has had contractions in per capita GDP, so part of the boom is due to strong population growth. Although the cycle is not dead, its amplitude has been tamed, at least for now. It is also important to understand how it happened. Luck and good management have both played a role. There may also be lessons that can help sustain growth in the future, as well as for other countries. Fiscal reform is a priority if the longest boom is to continue.
Recessions are nasty. They usually result in a rise in unemployment, which is highly positively correlated with ill-health, high crime rates, and other negative social and political outcomes. Recessions can also have lasting effects. Long-term unemployment can lead to skill atrophy, making it harder to find a job even once the economy recovers. Deep and long recessions, like the Great Recession, have had a lasting negative effect on a generation of workers.
Although not recent, examples from Australia’s recessions are still powerful and worth recalling. The impact of Australia’s early 1990s recession (1991) on the labour market was deep and damaging. The unemployment rate rose significantly and did not return to its pre-recession level for 14 years. It caused significant harm. For example, many middle-aged workers who lost their jobs in Victoria’s manufacturing industry, which was hard hit, never worked again. Designing policy to avoid recessions has been the macroeconomist’s ‘Holy Grail’.
Australia’s 26 years of growth are important and worth acknowledging. They will also hopefully yield lessons for the future. However, it is important to be clear about what Australia’s experience is not. It does not mean that the cycle is dead. The world has had a number of periods where sensible observers claimed that this was the case. In 2003, Nobel prize-winning economist, Robert Lucas, famously stated that the ‘central problem of depression-prevention has been solved’, ahead of the Great Recession in 2008. Harking back to earlier days, there was a strong belief in Australia in the 1960s that the Keynesian prescription of active demand management, using fiscal policy, had solved the macroeconomic problem of that time. This was before significant recessions in the 1970s, 1980s, and 1990s. These accounts proved to be hubris.
Australia will almost certainly have a recession at some point. However, what is clear is that over the past 26 years, the volatility of Australia’s economy has been much lower than at any other time in the country’s history and most other countries experiences. This is worth studying. Australia has managed to dodge a number of global shocks, including: avoiding a recession during the Asian financial crisis in 1997/1998, the IT bubble of 2000, and the Global Financial Crisis of 2008/2009. Australia also avoided having a recession at the end of a housing credit and price boom in 2002/2003, during a drought of the early 2000s and at the end of the recent mining investment and commodity price boom, which peaked in 2011/2012.
Part of it has been luck. Australia’s geography has become a blessing. What Australian historian, Geoffrey Blainey, famously described in 1967 as a ‘tyranny of distance’ from Western markets has become the ‘power of proximity’ as global growth has shifted towards Asia. Australia has also been fortunate to have a large stock of high-quality resources, such as iron ore, coal, and gas that have been in high demand.
However, it is not all luck. A strong rule of law has helped. While many other large mining economies, with weaker institutional foundations, have suffered from the ‘resources curse’, Australia has managed to benefit from its large resource endowment. Market reforms in the 1980s and 1990s, including the floating of the Australian dollar, made the economy more flexible and better able to deal with global shocks. There may be lessons for other countries. Although the Global Financial Crisis raised questions about the ability of market-based systems to deliver widespread benefits, Australia stands out as a successful market-based economy.
Good economic management has also played a role. An independent central bank with a clear mandate to flexibly target inflation has proved to be an appropriate institutional arrangement for a medium-sized commodity-producer. The RBA has adeptly managed the cycle maintaining on- target inflation and financial stability and deserves significant credit for the long boom.
There have also been challenges. In recent times it has proved difficult to run balanced budgets, with the federal budget approaching its tenth consecutive year of deficit, despite the earlier boost to national income from the mining boom. Economic reform has also proved difficult, particularly of the tax system, which is becoming increasingly inefficient. Housing supply, energy, and climate policy also need reform and policymakers ought to continue to focus on ramping up infrastructure investment. The lack of reform may, itself, be a consequence of the long boom as policymakers and voters may have become complacent. It would be disappointing to think that Australia might need a recession, with all of its damaging effects to the economy and communities, in order to motivate reform.
Eventually, Australia’s long boom will end. The trigger will most likely be a negative shock from overseas. A sharp downturn in Asia, when one arrives, would prove harder for Australia to deal with than the Global Financial Crisis, which was centred on the developed world. Australia’s high levels of household debt would be likely to exacerbate any downturn.
Australia needs reform to support productivity growth and prepare for the next downturn. The priority should be fiscal reform, which leads to sustained budget surpluses. Measures should include, shifting the tax mix towards more efficient taxes, such as consumption tax, and cutting back on public spending commitments that do not deliver strong economic returns.
If there is one clear lesson from the long boom it is that Australia has benefited from a key part of the policy apparatus that is used for managing the cycle and securing the economy – the Reserve Bank of Australia – being independent from the political process. With this in mind, policymakers ought to consider ceding more authority for reform of other policy areas, such as transport and social infrastructure, energy and tax policy, to independent agencies. This could involve making recommendations by agencies such as the Productivity Commission, Infrastructure Australia, or Australia’s Parliamentary Budget Office, more binding. While politically challenging, the government could consider setting up an independent fiscal authority, akin to the RBA, but aimed at managing fiscal spending and taxation decisions.
As the global economy finally recovers from the lingering effects of the financial crisis, now is the time to focus on reform. It is clear that reform would help if the longest boom is to continue.
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Paul Bloxham is the <a href="https://www.about.hsbc.com.au/hsbc-in-australia/management-team" target="_blank">chief economist</a> of Australia and New Zealand for HSBC.
 
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Australia’s longest boom: How Australia did it and can it keep growing?

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Household debt and an increase in income-to-debt ratios add to macro-economic risks, suggests new research.
The study by researchers from the University of Sydney for the Australian Housing and Urban Research Institute reveals how the housing market is one contributing factor to these macro-economic risks. 
Titled ‘Housing prices, household debt and consumer spending’, the study examined the effects of house prices and house-price-induced increases in debt on general consumption spending in Australia, focusing specifically on how such links were affected by the GFC.
The study suggests that policymakers should consider the potential risks that high levels of household debt and rising household income-to-debt ratios bring to the economy.
It points to the dangers, saying a number of countries have regulations that “limit the growth of household indebtedness, while the need to ensure robust prudential regulation remains an important policy priority”.
The study identified the consumption patterns for homeowners and home owning investors at different ages and who had greater or smaller amounts of debt or equity in their properties. 
Before the GFC, a rise in housing prices were associated with increases in consumption (i.e. spending or borrowing) for homeowners, particularly because they borrowed a larger fraction of the property price (i.e. had a higher ‘Loan to Value’ (LTV) ratio). 
However, after the GFC households with high LTVs turned more conservative and were no longer increasing their debt to increase consumption as a response to increases in house prices, the research noted.
“Our findings are relevant for macro-economic stability in Australia,” says associate professor Stephen Whelan, from the University of Sydney," it said.
“In particular, the finding that households with higher levels of debt are most responsive to increases in house prices highlights a potential systemic risk. Financing higher consumption through taking debt among highly leveraged households exposes those households to the risk of significant loss if house prices fall or if interest rates rise. This is in contrast to a general belief in Australia that debt is held by those most able to service it, namely, higher income and higher wealth households.
"Before the GFC, for every $100,000 increase in house values old-aged households increased their consumption by $1,000 per year and middle-aged households increased consumption by $1,700. After the GFC, consumption by old- and middle-aged households dropped to $600 and $1,600 per year respectively.
"The significance of this is seen if we consider there are 1.69 million households aged 65 and over who are homeowners (90% of these households do not own another property), then just $400 less being consumed each year by each household means a loss to the economy of approximately $608 million when compared to pre-GFC household consumption."
The report also finds differences in the consumption responses of home owning investors with and without debt.
Following the GFC, home owning investors with no debt became more conservative, reducing their consumption response from around $3,000 to approximately $2,600 per annum for every $100,000 increase in house prices. Whereas investors with mortgage debt became more responsive as their consumption response rose from $1,700 per annum to almost $2,900 per annum for a $100,000 increase in house prices.
The conclusion of this finding was that these investors with mortgage debt are not as risk-adverse when compared to other homeowners.
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jonathanchancellor-7SQnKwU6yx

Soaring household debt poses risks to economy: AHURI

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GUEST OBSERVER
For the last two weeks, I have been in the US visiting investors; hedge funds; corporates and officials.
I still have more meetings to complete, including with other Fed officials, but I would like to set out some assessments so far.
One debate is whether current pricing for interest rates; the USD; and the stock market is dependent on a successful fiscal policy outcome for Trump. Alternatively, pricing might be factoring in some economic reform (particularly banking) and not much more. The answer is probably that the share market is more optimistic about a successful policy outcome than the bond market. Bank deregulation (freeing up bank lending) would be stimulatory as long as confidence holds and, with the Fed now proclaiming that the US economy is at full employment, the higher bond rates are justified. However, if the share market needs a successful fiscal plan (centred on tax cuts) to hold current levels, then equities would be vulnerable to a marked sell off in the share market should the plan prove to be elusive.
The problems with a significant tax cut are manifest. It seems that there are around five Republicans in the deficit hawk camp who are firmly opposed to any policy that is not "revenue neutral" and five are "soft no's". The current controversy over Russia will only harden opposition within the party.
Failure to deliver a package by the summer would expose the initiative to a Democrat filibuster. The Ryan/Brady Plan, which was laid out last summer when the Republicans appeared unlikely to win the Presidential Election, does deliver a revenue neutral result (after assuming a fairly optimistic growth response to the plan) but it requires the Border Tax (featuring no tax deduction for costs of import_s and no tax on export sales). This would be an effective tax on the trade deficit. Such a tax would be hugely disruptive and is encountering significant opposition, we understand, from within the White House. Other "nasties" in the Ryan/Brady Plan are to allow interest cost or state tax deductions and no real allowance for retaliating moves from trading partners.
Another possible funding channel might be to impose large tariffs to help fund the tax cuts and achieve some of Trump’s protectionist objectives. Tariffs can be introduced by Executive Order without the need to go through Congress, although they may be subsequently challenged in the courts and by the WTO.
Overall, arbitrary tariffs are likely to be a more distortive mechanism than the Border Tax. However, that option, linked with some unpopular entitlement reform, might be back-end loaded and more modest tax cuts might constitute a plan that could be manipulated to “look” revenue neutral.
In such circumstances, the USD would rise further but the inevitable response from other trading countries would likely trigger a disruptive trade war – the recent encouraging lift in global PMI's and global equity markets would soon dissipate.
It was disappointing to hear generally, that infrastructure reform was a low priority well behind dismantling the Affordable Care Act, tax cuts, banking deregulation and trade. For instance, Trump could establish an infrastructure bank capitalised with $150-$200 billion in Federal funds. That would be funded by the repatriation of deferred foreign profits (taxed at 7.5% - 10.0%) and geared at 6x1 with a Federal government guarantee (the impact on the deficit would only be the funding cost). That would deliver on a key promise and probably gain full Democrat support along with enough Republicans to pass Congress. Such an initiative would encourage growth optimism and, if well managed, boost productivity expectancy.
Alternatively, there could be a national effort to privatise current infrastructure (for example, most toll roads are state owned) with a commitment that funds would be reinvested in other infrastructure assets (not used to fund other contingent liabilities of the state). Complex issues between city/local/state/federal governments would need to be resolved with a likely solution being that the Federal government would need to provide incentives to the cities and states to sell the assets.
There are solutions to the successful implementation of an infrastructure plan. If markets saw genuine progress in banking and other sectorial deregulation along with an infrastructure plan, the inevitable shock to confidence that is likely to occur in the summer if trade and unfunded tax initiatives dominate the agenda could be avoided.
So where does the Fed stand in all of this uncertainty? I expect that it will be comfortable to "skip" a March move until we see more clarity on these issues and, more import_antly, the impact such developments have on confidence and markets. For example, the Fed sees that "financial conditions" have eased due to narrowing credit spreads and a rising stock market despite higher rates and a higher USD. A reversal in markets would tighten financial conditions and associated drop in confidence would force a review of the growth outlook.
I also expect that the "asymmetric" approach to policy-setting is still a key majority view amongst FOMC members - better to err on the side of higher inflation than risk entrenched low inflation. With the slow response from wages to "full employment", there is little risk of getting too far behind the curve. On the other hand, I assess that the Chair now believes that the US has reached full employment and, therefore, the normalisation process should proceed (but with two hikes not three in 2017).
I remain comfortable with the June/December call for Fed policy in 2017.
What do investors think of all these issues for Australia? In short, the key channel will be Trump’s trade policies. Any indiscriminate large tariff or Border Tax would pressure China's foreign reserves and growth outlook. This would likely trigger a protectionist response from China, which while not impacting our resource exports, would most likely threaten our services exports to China.
My central thesis is that the Australian economy is likely to slow in 2018 due to a construction downturn and falling terms of trade. Commodity prices are likely to fall sharply under the weight of a supply response from Australian and Chinese (private) producers; an unwinding of speculative positions in China; and a slow-down in growth associated with a resumption of reform in China following the November Congress.
Downward pressure on the AUD will only intensify in the event of Mr Trump taking the “trade option”. 
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>. 
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