Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

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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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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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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