National developer Time &amp; Place appears to have settled on a design for its long-anticipated Potts Point project.

After several years of back and forth with local council and the NSW Government, the developer, which has spent close to a decade targeting the former The Chimes site on Macleay Street, has now progressed its plans.

Following a concept design submission last year by SJB, Time &amp; Place has lodged a full State Significant Development Application with the NSW Government, this time for a scheme designed by Kerry Hill Architects.

<img alt="Time &amp; Place" data-entity-type="file" data-entity-uuid="504d2a27-d65f-4227-8189-1e35e3376e62" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-20%20at%209.38.24%E2%80%AFAM.png?VersionId=_XqFKATYHF30KnVByPxhaI9UBzmkmfn7" />

The 16-storey proposal includes 44 apartments, 21 of which will be build-to-sell. These will comprise 19 three-bedroom apartments and two four-bedroom penthouses.

More than 50 per cent of the development will be dedicated to affordable housing, with 23 one- and two-bedroom apartments delivered in line with the NSW Government’s Housing SEPP.

Kerry Hill Architects said the proposal is driven by a strong response to place.

“Our proposal for a new residential building for Potts Point in Sydney is driven by a deep consideration of place,” the practice said in its submission.

“This operates on multiple levels, including a landscape approach that reinstates endemic flora of the Sydney peninsula and provides a ground-floor garden for residents, reconnecting the site to its pre-European history. A brick podium further strengthens this relationship to context, integrating planting and fine bronze detailing that references the predominant material language of Macleay Street.”

The three-level podium will be topped by a communal resident space, featuring a covered pool designed to receive direct afternoon sun in winter, a neighbouring reflection pool, dining and event areas oriented to maximise sunset views, and an outdoor exercise zone.

<img alt="Time &amp; Place" data-entity-type="file" data-entity-uuid="8d3eedc1-babb-44a3-bd96-d8a42f3adf1f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-20%20at%209.37.48%E2%80%AFAM.png?VersionId=Ii7.4dvqNatu5GQi6bhqNjAswrMB998." />

The design also incorporates highly crafted shopfronts and a clearly defined residential entry to activate the street. Juliette balconies to the podium residences will provide passive surveillance and a strong sense of habitation.

Above, the larger apartments are housed within a light-coloured masonry and bronze tower.

“The tower steps back in a series of gently curved volumes that reference the rich Art Deco context of Macleay Street,” the architects said. “Carefully calibrated vertical fins frame the views while providing privacy and a sense of refuge.”

<img alt="Time &amp; Place" data-entity-type="file" data-entity-uuid="6fab60f4-3140-4469-b47a-48c781e0a30b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-20%20at%209.28.44%E2%80%AFAM.png?VersionId=e5XxrM3kzdASdKlcIACHAHbOSZhSKC9O" />

Time &amp; Place has been one of the most active developers nationally in the last 12 to 24 months. Late last year they completed&nbsp;The Queensbridge in&nbsp;<a href="https://www.apartments.com.au/developments/southbank-vic-3006">Southbank</a>, a mixed-use tower with 353 apartments and a hotel. They are currently selling Park Modern, 246 apartments near the famous Botanic Gardens in South Melbourne.

The developer has approval for The Burke, a mixed-use project in&nbsp;<a href="https://www.apartments.com.au/new-apartments/glen-iris-vic-3146">Glen Iris</a>&nbsp;being delivered in partnership with Woolworths. The 60 apartments, positioned above a new Woolworths supermarket, are expected to launch in the coming months. Time &amp; Place is also progressing plans for the redevelopment of&nbsp;<a href="https://www.apartments.com.au/developments/northcote-vic-3070">Northcote</a>&nbsp;Plaza, and have recently submitted plans for a <a href="https://www.apartments.com.au/news/vic/time-place-unveils-plans-22-storey-south-melbourne-tower">22-storey tower</a>, another in South Melbourne.

In&nbsp;<a href="https://www.apartments.com.au/developments/sydney-nsw">Sydney</a>, the developer has two projects in Manly: Two Tides, which is currently under construction, and an ultra high-end building on&nbsp;<a href="https://www.apartments.com.au/buildings/shoreline-manly-beach-89-90-north-steyne-manly">North Steyne</a>, fronting the beach. It is also continuing to work through the redevelopment of The Chimes building on Macleay Street in&nbsp;<a href="https://www.apartments.com.au/developments/potts-point-nsw-2011">Potts Point</a>, as well as Marlborough House, the redevelopment of the original David Jones warehouse building in&nbsp;<a href="https://www.apartments.com.au/developments/surry-hills-nsw-2010">Surry Hills</a>.

Joel Robinson

First look: Time & Place settles on design for The Chimes, Potts Point redevelopment

<a href="https://www.apartments.com.au/developers/develotek">Develotek</a> is joining the likes of TOGA, Deicorp, and One Global Capital, betting on a boom in Five Dock ahead of the 2032 mooted opening of the Five Dock Metro Station.

Develotek, which is currently developing Bianca on the Drummoyne waterfront and has plans approved for a tower in Chatswood, has filed a State Significant Development Application for a <a href="https://www.apartments.com.au/new-apartments/79-81-queens-road-five-dock-nsw-2046">two-building project in the evolving Kings Bay precinct</a>.

The buildings, one more boutique just five storeys and the other 26 storeys, will rise from an 3,158 sqm site across&nbsp;79–81 Queens Road and 2–8 Spencer Street, will home 134 one-, two-, and three-bedroom apartments, above ground-floor retail and five basement levels of parking.

A key component of the proposal is the inclusion of 15 per cent of residential floor space as in-fill affordable housing, unlocking additional height and density under the Housing SEPP.

<img alt="First Look: Develotek lodges State Significant shop top housing project in Five Dock precinct" data-entity-type="file" data-entity-uuid="3ee31bf7-75ba-4bc5-b190-49885193219f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/podium_2.png?VersionId=730UbrduuwK3C1sO28RHjiLPUPqXqjkh" />

Designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a>, the scheme adopts a podium-and-tower configuration, with a five-storey street wall along Queens Road transitioning to a 26-storey tower set deeper into the site. The ground plane prioritises activation and permeability, with retail frontages and a new through-site link connecting Queens Road to Spencer Street.

At the upper levels, the tower façade has been conceived using a modular system to support prefabrication and reduce construction waste, while improving build efficiency. The splayed form draws on the geometry of surrounding industrial rooftops, reinterpreting the area’s heritage in a contemporary expression while also helping to reduce solar heat gain to east and west-facing apartments.

“This project aspires to transform a former industrial site into a connected, resilient and people-focused urban community, grounded in Country, shaped by history, and designed to enrich everyday life within the evolving Kings Bay Precinct,” said John Walsh, Principal at Plus Studio.

The proposal reflects the broader transformation of the Kings Bay Precinct under the Parramatta Road Corridor Urban Transformation Strategy, marking a shift from its industrial past to a higher-density, mixed-use urban neighbourhood.

<img alt="First Look: Develotek lodges State Significant shop top housing project in Five Dock precinct" data-entity-type="file" data-entity-uuid="abde734c-1e31-4a97-a1d2-fa9bcf31c380" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/building%20podium.png?VersionId=fNUupP6u146yEytQT31kKVRxwtACgPpP" />

Develotek is emerging as an active participant in the state’s affordable housing-led uplift pathway. The developer recently secured approval for a 34-storey mixed-use tower in Chatswood, where it similarly leveraged the in-fill affordable housing provisions to increase scale and deliver a 101-unit scheme with dedicated affordable apartments.

Their entry into Five Dock places them alongside a growing list of developers targeting the suburb ahead of its anticipated transport uplift, with Sydney Metro set to extend into the area. Major players including TOGA, Deicorp, and One Global Capital are all progressing large-scale precinct-style developments nearby, collectively reshaping the low-rise industrial fabric into a higher-density mixed-use corridor.

The Five Dock site sits within the Kings Bay Precinct, a key renewal area under the Parramatta Road Corridor Urban Transformation Strategy, where planning controls support significant uplift tied to affordable housing delivery. The consolidated 3,158 sqm site is currently occupied by low-rise industrial uses, including warehouses and vehicle workshops, earmarked for transition.

First Look: Develotek joins in Five Dock apartment boom

Ascot’s Racecourse Road continues to be a hive of activity for Brisbane developers.

Following Fortis and GRAYA, which are both preparing new projects along the key strip connecting Kingsford Smith Drive and Eagle Farm Racecourse, local developer <a href="https://www.apartments.com.au/developers/skyhold">Skyhold</a> is the latest to lodge plans for its own development.

The group is proposing One One Two Residences, a boutique project comprising just seven apartments, named after its address at 112 Racecourse Road.

The proposal outlines a five-storey building on an 810 sqm site. The built form slightly exceeds the four-storey expectation under the neighbourhood plan, aligning instead with the emerging character of the strip. As the planning report notes, “the locality is characterised by a transition toward medium-rise residential development, with a number of recent developments… above the stipulated height limits.”

<img alt="First Look: Skyhold lodges plans for boutique Ascot apartments as Racecourse Road revival gathers pace" data-entity-type="file" data-entity-uuid="ec577631-8c51-4163-960e-e7b3a77d655b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Ascot.png?VersionId=iAzQ46D4Uu1UqiS0mVnlcy9jeFKBpJIj" />

Designed by 111 with landscape architecture by <a href="https://www.apartments.com.au/landscape-architect/paul-bangay-garden-design">Paul Bangay Studio</a>, the scheme adopts a layered architectural approach with strong articulation and a subtropical response. Deep balconies, integrated planters, and a mix of masonry and textured finishes define the façade, while upper-level setbacks reduce perceived bulk. The architectural statement describes “a series of horizontally expressed layers, defined by deep balconies and a consistent robust material palette,” aimed at delivering a refined streetscape presence.

Apartments are configured as large-format residences, including multiple three-bedroom layouts and a full-floor penthouse, supported by ground-level parking. A rooftop terrace will provide communal amenities including a pool and landscaped recreation areas. The design prioritises privacy, natural ventilation, and greenery, with planting integrated across all levels to soften the building form and contribute to the public realm.

<img alt="First Look: Skyhold lodges plans for boutique Ascot apartments as Racecourse Road revival gathers pace" data-entity-type="file" data-entity-uuid="1e1219bd-b45a-4d7f-bbc7-7207d7b2fc94" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Ascot%20entry.png?VersionId=JIoUOLMgQ5xWpEF0etEI3ffIoIVjD7gO" />

The proposal sits within the Racecourse Road precinct, a key mixed-use spine in Ascot that continues to attract renewed development interest.

Later this year national developer Fortis will launch its own boutique development, which, pending council approvals, will be 16 apartments designed by Koichi Takada Architects, just down the street.

“Racecourse Road is going through a massive revitalisation and we’re proud to be a part of that transformation,” said Fortis's QLD General Manager, Dan Boman.

Nearby, GRAYA is advancing its larger-scale The Gallery, a mixed-use shop-top housing project designed to act as a “catalytic project for Racecourse Road.”

First Look: Racecourse Road, Hamilton revitalization to continue as Skyhold joins the party

Twenty-five years after launching one of Australia’s most visionary and successful masterplanned beach communities - Casuarina on the Northern NSW Tweed Coast - developer Consolidated Properties Group has unveiled plans for an $800 million sister project located 10 kilometres south, at Cudgera Creek near the coastal town of Pottsville.

CPG has taken the wraps off Caldera, a 78-hectare masterplanned village that builds on the legacy of Casuarina and aims to help address Northern NSW’s coastal housing shortage via the delivery of 550 homes built in a sustainable manner and addressing affordability and housing diversity, while also focusing on architectural and ecological merit.

Caldera is being brought to life by the same creative team that delivered Casuarina, led by Consolidated Properties CEO and chairman Don O’Rorke, Hutchinson Builders chairman Scott Hutchinson and renowned urban designer Brian Toyota, of architectural practice Bureau Proberts.

CPG has lodged a rezoning application with Tweed Shire Council for the Caldera site, which has been designated since 1991 as the Dunloe Park Urban Release Area, the final land release area within the Pottsville locality and one of only four remaining growth areas along the entire Tweed coastal strip. Preliminary plans for Caldera feature a 13-hectare retail and commercial precinct at the core of the village, surrounded by meticulously planned residential areas comprising around 550 homesites.

The retail hub will be anchored by a Coles Supermarket and will offer 7000 sqm of retail and 23 commercial lots designed to serve the local community and bring together curated shopping, dining, gym, wellness, childcare, medical and other essential services.

<img alt="Cons prop" data-entity-type="file" data-entity-uuid="fca7dc71-4b71-45b1-bb04-5a60bd7158d0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-20%20at%208.34.04%E2%80%AFAM.png?VersionId=vAKwIvLuwmTKj6blHJRYIEeXS_8lCgUx" />

The project will create more than 1500 jobs over its development cycle, according to its economic modelling, and significantly address the shortage of employment land in the Tweed.

The residential areas will encourage a sense of community via a cohesive urban design that encourages walking, cycling, enhanced resident connectivity and reduced reliance on cars via bike paths and pedestrian-friendly streets.

Homesites will include a range of options from premium ridge-top homes to affordable housing options, ensuring a community that is inclusive of different income levels and designed to appeal to a wide demographic from baby boomers to families, singles and professionals. Architectural and planting covenants on home building will support the village’s built form and protect its character.

O’Rorke says CPG intends Caldera to be a model project delivered efficiently in a dedicated urban release area and ‘very much for this region and for this time’.

“Our vision for Caldera is to create a modern coastal village with its own unique northern NSW identity,” he said.

“Building on our legacy of Casuarina, 25 years on, this new village is designed to stand apart, offering the future of modern living, balancing the natural beauty of the region with contemporary amenities and convenience.

“Caldera will be more than just a place to live - it will be a welcoming, inclusive coastal village neighbouring Pottsville that invites visitors and embraces new residents. With its strong ties to the land, vibrant lifestyle and sense of place, Caldera will set a new standard for village living in Northern NSW.”

<img alt="CPG" data-entity-type="file" data-entity-uuid="9a5a7cf4-5f76-4ddf-bd05-c8fb77d0a787" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-20%20at%208.33.59%E2%80%AFAM.png?VersionId=J1CzCGD7kE7fcAMd41V4pKAf_sI4L5Jv" />

The project’s centrepiece is environmental sustainability, with comprehensive wetlands protection measures and planting of native trees, parklands, village greens and communal grounds to enhance the natural beauty of the area.

CPG will also deliver a developer-funded wastewater treatment plant to ensure zero ocean outflows and provide high quality long-term infrastructure for Tweed Shire.

A key focus is wildlife management planning, including extensive conservation controls for the West Pottsville koala population, aligned with Tweed Shire Council’s Koala Plan of Management and designed to enhance koala habitat connectivity and future population growth.

Caldera will extend the existing koala corridor by connecting koala precincts west of the Pacific Highway with populations in the north and east precincts. A koala underpass will be created under Pottsville Road to complete the connection of this important corridor. Native tree plantings will expand essential koala food sources, while approximately eight kilometres of exclusion fencing will be constructed to safeguard the koalas from urban threats.

The Caldera site is nestled in the hills of Cudgera Creek and benefits from its rich natural surroundings including the Pottsville Wetland, Cudgera Creek Nature Reserve and nearby Pottsville Beach.

It takes its name from the surrounding Tweed Shield Volcano and Caldera, the vast bowl-shaped depression stretching from Byron Bay to the Queensland border that 20 million years ago was the world’s largest shield volcano and which has shaped the region’s striking landscape, with Mount Warning standing as one of its most iconic features.

The development is a joint venture between CPG and Pottsville Development Corporation, which made its first investment in Pottsville more than 45 years ago and is the developer of Black Rocks By the Sea, a masterplanned community now part of the fabric of Pottsville and which was the catalyst for the construction of a bridge across the Pottsville Estuary, providing direct access to the beach.

CPG’s $1.5 billion Casuarina Beach township, 10 kilometres to the north of Caldera, commenced construction in 2000 and has become the model for modern Australian, eco-sensitive beachside development.

Consolidated Properties unveils $800m coastal village Caldera in Casuarina

Growing national developer Time &amp; Place has announced its fifth new apartment development.

With two projects in Manly and two upcoming in Surry Hills and Potts Point, the developer, which expanded beyond Melbourne just a few years ago, is now heading to Mosman. It is planning 53 new apartments on Redan Street.

The 3,233 sqm site, spanning <a href="https://www.apartments.com.au/new-apartments/40-48-redan-street-mosman-nsw-2088">40–48 Redan Street</a> with frontage to Redan Lane, is located just under 400 metres from Spit Junction Town Centre. It is reported the developer paid around $100 million for the five-site amalgamation.

Time &amp; Place, founded by Tim Price and backed by James Packer’s private investment firm NPACT, has submitted the project as a State Significant Development through the NSW Government’s Housing Delivery Authority pathway.

Of the 53 apartments, 42 will be released to the market, with the remaining 11 allocated as affordable housing in line with NSW Government requirements.

fjc Studio has designed the building. In its Design Report, the architect said the diverse mix of dwelling types and sizes, including 11 two-bedroom affordable housing units, 40 three-bedroom apartments, and two four-bedroom residences, will support a broad demographic, including families, downsizers, and key workers.

The development will rise to nine levels, a height encouraged by the NSW Government due to the site’s proximity to Spit Junction, which has been identified as a low- to mid-rise centre. Developments within a certain proximity to these centres are permitted increased height.

fjc said the project “achieves an appropriate density outcome for its setting by balancing increased housing supply with strong amenity performance,” adding that it “makes a measurable contribution to NSW housing supply targets through the delivery of additional dwellings and dedicated affordable housing.”

The new development will replace five existing two-storey homes.

“By aligning with the objectives of the Housing SEPP and applying careful architectural and urban design principles, the development provides high-quality residential accommodation that integrates sensitively within its established Mosman context and delivers enduring benefits to residents and the wider community.”

Mosman has become increasingly popular with developers in recent years.

Developer Abadeen has been particularly active, with Mosman Residences currently on the market and under construction on Clifford Street. It also has an upcoming Burran Avenue project, comprising just three apartments on the Balmoral Slopes, and recently secured the Midas and Honeysuckle nursery site on Military Road.

Prosker Property has a project on Redan Lane, just a few doors down from Time &amp; Place’s proposed development.

Developers including Toohey Miller, DARE Property Group, and WINIM also have projects underway in the area. In 2024, a five-year target was set for the Mosman LGA to increase housing supply by 500 dwellings by 2029.

Time &amp; Place entered the Sydney market with Two Tides, its under construction Manly development. Given its sales success, it has secured another development in the area, more boutique, facing the beach on North Steyne.

They are hoping to launch their redevelopment of The Chimes in Potts Point this year, and next year will look to take to market Marlborough House, an adaptive re-use of the landmark David Jones warehouse in Surry Hills.

Time & Place to take on Mosman apartment market

Budget

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When the Budget was released this week I kept reading with great interest that the government had failed to address ‘housing affordability’. Truth be known the only thing that the Abbott government actually controls is foreign buyers and taxation such as negative gearing and capital gains tax. With regard to foreign buyers it has been well documented that with regard to this portfolio they have Failed it with a capital ‘F’.
In fairness the Federal government would respond by saying that to the contrary they have already unleashed the Australian Taxation Office (ATO) to forensically investigate all property transactions that they believe have contravened the laws. Well if it wasn’t for some bloggers and journalists who pointed this out to the Abbott government foreign buyers would be still running amok. I believe the findings will leave most property observers gobsmacked because I believe we are talking about thousands and thousands of sales.
It’s interesting to note that last week a Senate committee made 40 something recommendations pertaining to housing affordability which included calls to review negative gearing and the appointment of a federal minister for housing, to name just two. Well I have been vocal on not having a housing minister since the Abbott government came to office. More interesting was that Coalition senators immediately rejected the findings – well no surprises there.
If you look closely at the housing affordability debate it can be quickly summed up that data shows we are not building enough high density developments. I wrote about this recently – Lots of positives from discussing negative policies where the NSW government has recognised the problem stemming from municipal councils who are rejecting developments despite the Sydney population expanding at unprecedented levels. The NSW government wants to merge councils to free up more development to meet Sydney’s population explosion.
Should the NSW government be successful with its charter then the price of apartments will obviously come down as too rents. So I’m somewhat mystified why property investors are driving up apartment prices when such a major announcement is pending.
The Abbott government needs to take a very serious look at the legislation that allows foreign buyers to purchase off the plan. I believe that it would be sage for the Abbott government to place foreign buyers on – hold until the ATO has released its preliminary findings. What we are seeing today is Chinese developers out bidding the local developers simply because the off – the – plan legislation allows them to sell directly overseas to foreign buyers so these properties never even hit the Australian market. A vast number of these properties are land banked so they remain vacant which again is self-defeating and ludicrous that this can happen in this day and age.
This week we also read that there are foreign criminals trying to buy Australian real estate to wash their money by investing in real estate. Well this is nothing new as I have heard a few examples of agents who questioned some foreign buyers who expressed interest in landmark Sydney residences.
Thailand has had serious problems with the Russian mafia who have bought up significant parts of that country where the government announced a few years ago that it was cracking down hard on these transactions. This is a global problem where Australia immediately needs to take decisive action which also means tightening the many legal loopholes.
Take the recent divestment order on Villa del Mare where it was found that the Chinese purchaser did not have Australian residence. When I wrote about this <a href="/expert-insights/treasurer-joe-s-villa-del-nightmare-robert-simeon">Treasurer Joe’s Villa del Nightmare</a> on March 5 I said that the purchaser would find an Australian resident to buy the property. Well <a href="/news/australian-buyer-lola-wang-li-emerges-with-villa-del-mare-the-39-million-point-piper-firb-home">Australian buyer Lola Li emerges with Villa del Mare, the $39 million Point Piper FIRB home.</a>
The good news to come from this debate is that for the first time “the dogs are barking” and the Abbott government has to act – and act fast. Finding a viable solution to foreign buyers will prove a much harder assignment than towing back boats.
With regard to new developments, for starters there should be a selling ratio of foreign buyers to Australian residents established.
The Australian property industry has never before encountered such a debate and much of this stems from record low global cash rates. Investors are chasing returns and Sydney is one of the hottest property markets on the globe.
The Abbott government needs to send a very clear message to foreign buyers which is either buy or bye?
Mosman Market
When you look closely at the actual numbers of properties on the market you will struggle to say that the market is booming or bubbling as some prefer to say. Historically when markets are booming this coincides with record volumes being on the market which is otherwise known as a feeding frenzy. The confusing parts about our local markets are that stock levels are down 50 per cent on this time last year or thereabouts.
MOSMAN – 2088
• Number of houses on the market this time last year – 102
• Number of houses on the market last week – 57
• Number of houses on the market this week – 57
• Number of apartments on the market this time last year – 72
• Number of apartments on the market last week – 50
• Number of apartments on the market this week – 49
CREMORNE – 2090
• Number of houses on the market this time last year – 7
• Number of houses on the market last week – 3
• Number of houses on the market this week – 4
• Number of apartments on the market this time last year – 27
• Number of apartments on the market last week – 13
• Number of apartments on the market this week – 10
NEUTRAL BAY – 2089
• Number of houses on the market this time last year – 7
• Number of houses on the market last week – 3
•Number of houses on the market this week – 3
• Number of apartments on the market this time last year– 48
• Number of apartments on the market last week – 31
• Number of apartments on the market this week – 27
 Source: APM Price Finder
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robertsimeon-hRNTwJyXkQ

Do we tell foreign buyers to buy or bye? Robert Simeon

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Speculation that the federal government might lift the age at which people can access their superannuation savings to 70 years should not concern people who have invested in property through a self-managed superannuation fund, a technical expert has said.
Federal Treasurer Joe Hockey last week gave strong indications that the age of eligibility for the government pension is likely to be lifted to 70 years over time while access to other government benefits for older people will also be restricted.
The statements have fuelled fears that the so-called preservation age at which people can access superannuation savings will also be raised.
But SMSF Professionals Association of Australia director technical and professional standards Graeme Colley told Property Observer that an increase to the preservation age for superannuation might advantage people who hold property in their fund.
“It might be an advantage because the longer they hold a property, the greater the likelihood of capital gains,” Colley said.
Many people who own investment property through an SMSF are forced to sell when one of the members retires if the property does not generate sufficient cash flow to pay a pension from the fund.
Colley said an increase to the preservation age for superannuation would probably be accompanied by an increase to the age at which people can make personal and voluntary contributions to their funds.
As the rules stand now, all working people can receive superannuation guarantee payments from employers into their funds, regardless of age. However, while people aged under 65 can also make voluntary or personal contributions to their funds, those aged between 65 and 75 years must meet a work test to be able to do so.
People aged over 75 are unable to make any personal or voluntary payments into their funds.
SMSFs that have borrowed to invest, particularly those that have negatively geared property, often need to sell if members can no longer contribute to the fund to make up the shortfall in cash flow.
Giving older people who were no longer working the ability to make personal contributions to superannuation would allow them to hold their property in the fund for longer, providing the advantage of holding the asset in the low-tax superannuation environment.
“The longer it is, the better it is,” Colley said.
He added there was a risk for government that lifting the superannuation preservation age beyond the planned graduated increase to age 60 by 2024 and aligning it with the age pension age could backfire and put unintended pressure on other parts of the social security system. 
Amounts accumulating in superannuation are excluded from the assets tests that determine whether people qualify for social security payments.
Older people currently moving from the workforce to the age pension, topped up with superannuation benefits, could be forced to rely on other social security payments such as the Newstart Allowance if they were unable to find work but were too young to access their superannuation or the age pension, Colley said. 
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Rise in pension age should not worry SMSF investors

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The First Home Saver Account scheme was one of the Rudd government initiatives axed in the Abbott government’s first federal budget.
Under the scheme, First Home Saver Accounts were given concessional tax rates and government co-contributions. Despite offering a concessional tax rate of 15% on interest earned in the accounts and awarding 17% co-contributions on the first $6,000 deposited by savers each year, the scheme failed to attract many savers preparing to purchase their first home.
The scheme’s low take up has been attributed to poor marketing and the regulations attached to the accounts. In order to qualify for the benefits, savers needed to deposit a minimum of $1,000 a year over four years before they could withdraw any money in the account. If the money was not used for a payment on a saver’s first home, it was added to their superannuation account.
Any new accounts created after 13 May will be ineligible for tax concessions or co-contributions. Existing accounts will not receive any co-contributions after 1 July 2014. National tax director of professional services firm BDO Lance Cunningham says that the government has begun winding down the scheme.
“It’s basically been abolished but with a phase out, so that from budget night you won’t be able to open any more new accounts. But for existing accounts, the co-contribution will cease from 1 July 2014.”
Savers who hold existing accounts will be able to receive co-contributions for deposits made in the 2013-14 financial year up until July.
“Be careful, it’s only a budget announcement,” says Cunningham. “But it seems to be fairly clear that if you make contributions before July this year, the co-contributions will be honoured.
“If you haven’t reached the co-contribution cap, which I think is about $6000, you might consider depositing more money in the next month to receive your co-contribution.”
Although co-contributions will end on July 1 this year, tax concessions will continue for another year.
“The tax concessions will still be available up until July 2015,” says Cunningham. “They will still be treated as First Home Saver Accounts, but the concession ceases after that date. After July 2015, they will be treated as any other account.”
Savers who have held their existing accounts for less than the four year period will have to wait until 1 July 2015 to withdraw their savings.
Steven Gunzburg is a 26 year old account manager who holds a First Home Saver Account. He says that though he understands why the scheme is being scrapped, it provided good incentives to save.
"I was contributing the maximum amount, which increased over the past 3 or 4 years, every year." 
"Mainly it was a fantastic way to incentivise people to think about saving from a much earlier age. There’s no way in the world that it’s going to make the vast majority of my deposit, but it helps you get into the right mindset."
Gunzburg opened his account when he was 18 or 19, after his mother explained the benefits of the scheme.
"My mum actually found out about it, explained it to us and I begrudgingly put quite a reasonable amount of my money into the account," he says. But Gunzburg says that the scheme had its downsides.
"Part of the problem with the scheme was that it was so complex and convoluted, it was incredibly hard to understand when and how you could access your money."
When the scheme was announced in 2008, the Rudd government predicted that 750,000 First Home Saver Accounts would be opened over the next four years. However, as of December last year, only 46,000 accounts had opened.
Late last year, <a href="/expert-insights/calls-for-urgent-revision-of-first-home-saver-account-scheme">comparison website RateCity called for changes to the scheme</a>. Chief executive Alex Parsons said that at the time, none of the “big four” banks offered the accounts.
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First Home Saver Accounts scrapped: What now?

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Whilst there has been so much commentary this week on the Federal Budget, I thought we could talk about a different type of Budget - one that’s just as important to property developers as the Budget is to the politicians.
Budgeting well for your building or construction works is crucial to the success (or not) of your development. 
Property developing can throw many different challenges at you but one thing I have learnt in this industry is there is always a solution to a problem. The trick is to understand what possible problems may arise and preparing yourself for them. This comes with experience but sometimes things don’t always go to plan and as a project manager it’s our responsibility to make sure a development is completed as efficiently as possible.
When pricing a development and running feasibilities, it is important to understand that your building estimate is an organic creature. By this I mean the building estimate you start with will nearly always be different to the one you end with.  It will evolve throughout the process as you obtain more and more details.  Once you have all the fine details, the building estimate can be finalised and a fixed price builder’s contract issued. 
When architecturally designing our villas, we follow this process:
<ol>
<li>Once the site has been secured, a Concept and Yield Plan is designed – this shows the number of units we can get onto a site and the size of each, but not much more detail.</li>
<li>After we are happy with the Concept Plan and we’ve received a Detailed Contour Survey and Geotech Report, then we progress to the more detailed Development Application (DA) plans. These include enough information to satisfy council requirements.</li>
<li>When the DA Consent is received, we finalise Construction Certificate (CC) plans – these include more detail, including engineering detail for the stormwater drainage and slab design.</li>
</ol>
Before a Concept Plan is available, the starting point in assessing the development potential is our construction estimate.  This is based on similar projects that we have recently completed and includes any allowances for differences in the sites.
The builder is asked to run their first quote based on the Concept Plan.  This is still a ‘loose’ estimate as there is not enough detail on the Concept Plan for the builder to give a finite cost.  The build estimate we have at this stage will tell us whether we are tracking within budget.  If not, we can make the necessary changes required, perhaps reducing the size of the units working with both our builder and architect to design the right dwellings for our project to be successful.
Once the Concept Plan is approved, the architect will proceed to full DA plans.  Using the information received on the Contour Survey and soil test results, there is much more detail added to the plans.  Our builder will then price the DA plans and we will review the costs against our initial estimates and make sure they are within our range for the project to be successful. At this stage we still do not have the final build cost but we will be getting closer to the expected outcome.  Once approved by our client, the DA plans are finalised and the DA is lodged with council.
During the DA process, council may request some changes to the plans, so it is important to understand we are still ‘evolving’ at this stage. Then once approved, we need to review the Conditions of the DA Consent before we have more detail to finalise the build costs.
Next we move to preparation of the CC plans.  Engineers will be briefed and a stormwater drainage and engineered slab design or footings for the foundations will be produced. More detail is added to the CC plans, finalising levels and double checking schedules. 
Before we lodge the CC plans with our private certifier we will have our builder issue a third costing. It is this costing that will give us the final build costs...well almost.  We still need to have the CC approved and ensure there are no further revisions to the plans required.  
After we have the CC stamped plans, our builder will issue their final tender and the building contract. This will be a fixed price contract; however, there may still be a few items that will be ‘provisional’. They are usually some site works, removal of fill and retaining walls.  The builder may mark these items as provisional as they won’t know until works proceed exactly what the cost is. For instance, if rock is hit during the site cut, this will increase the site costs. If the site cut differs slightly to the plans, this may impact on the height of retaining walls.  So these ‘provisional’ items will be charged at actual cost whether it is lower or higher.
So you can see how the build budget must evolve through the development process and until your development is completed, you really won’t know the exact cost.  It’s important you allow a contingency amount for any variations that may arise along the way. 
As a developer, you will embark on a challenging journey from start to finish and the development budget is a very important part of your work. If you don’t have experience, then consider using the help of an experienced project manager to guide you along the way.
And always take the time to have builder’s estimates updated at each stage of your development planning process to avoid any nasty surprises. 
Jo Chivers is chief executive officer of property development project managers <a href="https://www.propertybloom.com.au/about" target="_blank">Property Bloom</a>.
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jochivers-wq5Bp59R5a

Building a better Budget: Jo Chivers

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GUEST OBSERVER
As expected, a range of housing policy measures were introduced in the Budget, including but not limited to:
-National Affordable Housing Agreement providing $1.3 billion of funding per annum to the States to help meet supply targets;
-A $1 billion National Housing Infrastructure Facility;
-A new suburb for Melbourne, with 6,000 homes to be unlocked 10km from the CBD at Maribyrnong (which is not an easy thing to say late at night);
-Managed Investment Trusts to invest in affordable housing, with a 60 per cent capital gains tax discount to invest in this sector;
-Extension of homelessness funding to the States;
-Encouraging downsizing by allowing a non-concessional contribution to made into superannuation for the over 65s up to $300,000;
-First home buyers will be allowed to save for a deposit by salary sacrificing into their superannuation account, though contributions will be capped at just $30,000 per person, and $15,000 per year;
-A Foreign Investment Levy of at least $5,000 on all future foreign investors who fail to either occupy or lease their property for at least six months each year; and
-A reinstated requirement that prevents developers from selling more than 50 per cent of new developments to foreign investors.
There were other measures too, including increasing APRA's powers to control the non-ADI sector, zoning reform, and land release.
Each of these points deserves detailed market analysis in its own right, but today I'll just take a look at the least well understood new policy, which I believe will be significant. 
Negative gearing sideswiped
Instead of quarantining negative gearing deductions to new dwellings as proposed by the Australian Labor Party (ALP), the Treasurer has targeted the following areas of deductions prospectively:
Travel expenses will now be disallowed for investment properties, which is mildly annoying for landlords with plans for investment properties at Port Douglas - there is no longer an incentive for politicians to buy an investment home in their favourite holiday destinations! - but broadly a sensible move which improves the integrity of negative gearing legislation. 
More pertinently, for investment properties bought after 7.30pm yesterday, the Government will also limit previously generous plant and equipment depreciation deductions to only those expenses directly incurred by investors.
<a href="https://www.propertyobserver.com.au/images/2017/05/14/NG.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/14/NG.jpg" alt="">
What this means
Firstly this is a cruel impact for the Quantity Surveyor industry, hundreds or perhaps thousands of whom will wake up today only to discover they have very little to do. These businesses will need to pivot immediately towards new and commercial properties, though competition here will be fierce.
As for investors, going forward landlords purchasing established property will only be able to claim plant and equipment depreciation deductions on assets they have purchased themselves, while buyers of newly constructed dwellings will still be able to make a depreciation claim on plant and equipment. 
Landlords will still be able to claim deductions on the construction component (Division 43, for the building's structure) of the dwelling over 40 years for properties built after September 1987.
The ruling is evidently designed to restrict 'double-dipping' whereby multiple claimants received deductions on the residual value of the existing assets, such as air conditioning, heaters, carpets, televisions, dishwashers, alarm systems, hot water systems, and so on. 
In practical terms, about half of deductions would typically have been claimed for plant and equipment items on established property in the first year of claim, though this really depends upon the age and type of dwelling in question.  
Copied below are just a few examples of Sydney properties bought about a decade ago. As you can see with plant depreciation disallowed on established properties the difference to deductions in the early years of ownership would have been quite substantial, though there is no impact of landlords already in the market.
<a href="https://www.propertyobserver.com.au/images/2017/05/14/DEDUCT2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/14/DEDUCT2.jpg" alt="">
Data compiled by MCG Quantity Surveyors showed that their average claim for depreciation deductions was $9,138, up to half of which was typically for plant and equipment deductions. 
For new individual Mum-and Dad investors - which is most of the landlord market - this is a fairly significant change to tax legislation. 
Market impacts
As always investors will try to find a way around the rules, such as by purchasing chattels off-contract, though presumably the tax office would scope out such a move through an ATO Interpretative Decision (ID) if the practice became widespread.
Overall, it may become more tax-efficient to purchase older style properties in order to renovate them, though for properties built before 1987 the building works component would already be fully depreciated over 40 years. 
Somewhat ironically these changes will may create a divide between the perceived value of new and established properties in the eyes of investors, effectively creating a 'second-hand market' (which is what the Treasurer previously accused the ALP of doing with its own negative gearing proposals). 
Some domestic investors may be inclined to steer clear of new properties for this reason, in turn hurting building approvals and dwelling starts, at least while the dust settles.  
Ultimately what these changes will mean is that rental returns on established property in the lowest-yielding cities of Sydney and Melbourne will have to increase in aggregate, either through higher rents or through lower prices (or, most likely, a combination of the two).
I'll take a look at the wider impact of the Budget next up. 
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/">blogger</a>.
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx">Four Green Houses and a Red Hotel</a>.
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pwargent-M4siyDbqQY

Budget takes sideswipe at negative gearing: Pete Wargent

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GUEST OBSERVATION
In public, the government is crab-walking away from its commitment to a budget surplus, saying since the bushfires that other things have become more important.
Asked directly on Tuesday whether he was prepared to sacrifice this year’s projected surplus to help the bushfire recovery effort, Treasurer Josh Frydenberg said:
Our focus is on delivering the services and support to people in need. That’s what we’ve been doing.
But less-publicly, and little noticed in the pre-Christmas release of the mid-year economic and fiscal outlook, the government has quietly buried long-standing targets for restraining spending.
Jettisoning these targets provides it with more wriggle room to increase spending to respond to things such as the bushfires and to boost the economy should it need to in 2020 and beyond.
Under the Charter of Budget Honesty Act 1998 every government must release a fiscal strategy statement alongside the Budget.
The statement is a list of the government’s budget targets. One long-standing target is “to achieve surpluses on average over the economic cycle”. Others relate to spending, tax collections, and public debt.
They are not binding but they provide a useful guide to the government’s thinking.
A looser straitjacket
Revisions to these targets can signal changes to the government’s approach.
In the pre-Christmas Mid-Year Economic and Fiscal Outlook (MYEFO), the government significantly scaled back its targets – both in number and ambition.
For example, the budget repair strategy it adopted in 2014 committed it to “deliver budget surpluses building to at least 1% of GDP by 2023-24”.
The strategy has been reproduced in every budget since then, although in 2017 the 2023-24 deadline was extended to “as soon as possible”.
In December’s MYEFO more wriggle room was added, with the surpluses of at least 1% of GDP to be reached only “when economic circumstances permit”.
<hr>
Spot the difference
<a href="https://images.theconversation.com/files/311051/original/file-20200121-187130-1h42ojy.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/311051/original/file-20200121-187130-1h42ojy.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> <a href="https://budget.gov.au/2019-20/content/bp1/download/bp1_bs3.pdf">2019 Budget</a> <a href="https://images.theconversation.com/files/311072/original/file-20200121-117917-jev67o.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/311072/original/file-20200121-117917-jev67o.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> <a href="https://budget.gov.au/2019-20/content/myefo/download/MYEFO_2019-20.pdf">2019 MYEFO</a>
<hr>
Another component of the original repair strategy was that “new spending initiatives will be more than offset by reductions in spending elsewhere in the budget”.
In other words: if the government wanted to announce a new spending policy, it had to find savings elsewhere to cover the cost.
Targets missing
This target does not appear in MYEFO. A softer replacement says the government intends to “pursue budget savings to make room for spending priorities”.
This relaxing of the purse strings is already evident: the new spending measures in MYEFO on aged-care home packages, bringing forward infrastructure spending, and drought assistance are significant costs that were not paid for by spending reductions elsewhere.
Nor has the government provided any indication that its bushfire relief measures will be funded through savings.
<hr>
Gone: the commitment to cut the government’s share of the economy over time
<a href="https://images.theconversation.com/files/311074/original/file-20200121-117962-1swvsvs.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/311074/original/file-20200121-117962-1swvsvs.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> <a href="https://budget.gov.au/2019-20/content/bp1/download/bp1_bs3.pdf">2019 Budget</a>
<hr>
The budget repair strategy also required improvements in the budget position due to favourable economic circumstances to be “banked to the bottom line”. That target has now been removed all together.
The medium-term (10-year) fiscal strategy has also been amended to remove some of the more ambitious spending-control targets.
One was to reduce the government’s share of the economy over time.
That target has now gone, even though shrinking government spending as a share of the economy is crucial to the budget projections of growing surpluses and declining net debt over the decade.
The obvious question is – why?
The government is making big spending easier
The government might argue that it no longer needs a budget repair strategy because it expects to a deliver a surplus this year.
But its strategy was always more ambitious than a single surplus.
It wanted to reach continuing surpluses of 1% of GDP. Surplus forecasts of between 0.2% and 0.4% of GDP over the next four years indicate it is still well short of achieving them.
More likely is that it recognises that some of its targets were going to be difficult to meet.
It has already failed on <a href="https://theconversation.com/more-mirage-than-good-management-myefo-fails-to-hit-its-own-targets-108830" target="_blank">a number of occasions</a> to offset new spending with savings. Around <a href="https://theconversation.com/5-things-myefo-tells-us-about-the-economy-and-the-nations-finances-128843" target="_blank">half</a> of this year’s upside from stronger-than-expected commodity prices and employment growth was used to fund tax cuts and extra spending rather than banked to the budget bottom line.
As the <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Budget_Office/Publications/Research_reports/Medium-term_budget_projections" target="_blank">Parliamentary Budget Office</a> has pointed out, it becomes even harder to hold down spending as the budget improves.
This is all the truer amid the need for bushfire reconstruction.
It’s better to shift goal posts than repeatedly fail to score
Another possible explanation is that the government is clearing the way for fiscal stimulus. To date it has relied on the efforts of the Reserve Bank and state governments to boost lacklustre economic growth.
Reserve Bank governor Phil Lowe, <a href="https://theconversation.com/we-asked-13-economists-how-to-fix-things-all-back-the-rba-governor-over-the-treasurer-126283" target="_blank">along with many economists</a>, has argued that it should do more.
In taking off its self-imposed spending straitjacket, it is giving itself room to heed the governor’s call.
<a href="https://theconversation.com/profiles/danielle-wood-147710" target="_blank">Danielle Wood</a>, Program Director, Budget Policy and Institutional Reform, <a href="http://theconversation.com/institutions/grattan-institute-1168" target="_blank">Grattan Institute</a>; <a href="https://theconversation.com/profiles/nathan-blane-934089" target="_blank">Nathan Blane</a>, Analyst, <a href="http://theconversation.com/institutions/grattan-institute-1168" target="_blank">Grattan Institute</a>, and <a href="https://theconversation.com/profiles/shelby-so-934091" target="_blank">Shelby So</a>, Researcher, <a href="http://theconversation.com/institutions/grattan-institute-1168" target="_blank">Grattan Institute</a>
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/new-year-new-strategy-unheralded-change-to-budget-targets-creates-space-for-stimulus-129690" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

New year, new strategy? Change to budget targets creates space for stimulus

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The NSW Government have shortlisted Multiplex and John Holland for the construction of the new Sydney Football Stadium following a blowout with Lendlease last month.
Lendlease was axed for the reconstruction of the stadium shortly after The Australian revealed that Lendlease was chasing tens of millions of dollars more to finish the project when it told the government it was unable to lower the cost.
However Lendlease will continue to oversee stage one demolition work at Allianz Stadium, which is on track for completion by the end of the year.
Minister for Sport John Sidoti said that the delivery of the new Sydney Football Stadium remains on time and on budget.
Both organisations have been invited to participate in a competitive tender process to deliver stage two of the project.
John Sidoti said, “The winning bidder will be announced later this year, following the receipt of stage two planning approval and completion of the tender evaluation.”
“We know that if we want to continue attracting global events we need our stadiums to be the best in the world but the NSW public expects us to negotiate the best price." 
“The NSW Government’s plan delivers the experience fans deserve. The refurbished Stadium Australia will move 46,000 seats up to 25 metres closer to the action to create more atmosphere,” Mr Sidoti said.
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NSW Government shortlist Mutiplex and John Holland after Lendlease stadium construction reversal

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EXPERT OBSERVER
The Australian economy grew by just 0.4% in the March quarter. It was a pick up from 0.2% in the December quarter, but over the year the four quarters taken together amounted to only 1.8%.
It’s the first time Australia’s annual economic growth rate has had a “1” in front of it since 2013, and the lowest annual growth rate since the global financial crisis.
<h2>Economic growth begins with ‘1’</h2>
1.8% is a big step down from the decade average of 2.6% displayed by Treasurer Josh Frydenberg on a chart prepared by his office, and below most estimates of the potential growth rate of the economy.
<hr>
Real GDP growth
<a href="https://images.theconversation.com/files/278058/original/file-20190605-40731-1tfy7tz.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/278058/original/file-20190605-40731-1tfy7tz.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> Commonwealth Treasury
<hr>
And most of the 1.8% was the result of population growth.
GDP per capita fell marginally in the March quarter after slipping by 0.1% and 0.2% in the previous two quarters.
<h2>Growth per person is weak</h2>
It means GDP per capita has fallen for three consecutive quarters – the first time that has happened in almost four decades, since the early 1980s recession.
Over the year to March, GDP per person grew just 0.1%, a result that suggests living standards barely grew.
But actual living standards grew by more. The Bureau of Statistics says the best guide is “real net national disposable income per capita,” a measure that takes better account of prices paid and income received.
It grew by a more impressive 1% and 0.5% in the December and March quarters on the back of sharply higher commodity prices, suggesting that, for the moment at least, living standards are not going backwards.
<h2>Household spending growth is weak</h2>
Household spending climbed only 1.7% over the year, barely more than population growth. The treasurer’s graph shows it was and well below recent average growth of 2.7%.
Household consumption growth accounted for just 0.1 points of the 0.4 points of economic growth over the quarter, which is well down on its usual substantial contribution as it is the largest component of output - around 60%.
<hr>
Growth in household consumption
<a href="https://images.theconversation.com/files/278059/original/file-20190605-40731-1txzoz5.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/278059/original/file-20190605-40731-1txzoz5.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> Commonwealth Treasury
<hr>
Consumption of discretionary items such as restaurant meals and entertainment, fell while consumption of essentials such as electricity, health services and rent, continued to climb.
The treasurer’s chart showed that most of the items on which we cut spending were discretionary.
<hr>
Growth in consumption by category
<a href="https://images.theconversation.com/files/278102/original/file-20190605-40723-1gbqj8d.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/278102/original/file-20190605-40723-1gbqj8d.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> March quarter. Commonwealth Treasury
<hr>
<h2>Home building is falling</h2>
Low wages growth and falling housing prices are factors dampening consumption growth. The downturn in the housing market is also weighing on output growth through falling construction. In the March quarter it declined 2.5%, and was 3.1% lower over the year, a far cry from 10% plus annual growth rates achieved as recently as three years ago.
<hr>
Growth in dwelling investment
<a href="https://images.theconversation.com/files/278081/original/file-20190605-40731-jaxr75.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/278081/original/file-20190605-40731-jaxr75.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> Commonwealth Treasury
<hr>
<h2>Government spending has surged</h2>
By itself the government sector was responsible for half of the economic growth in the quarter, contributing 0.2 of the 0.4 percentage points.
Government spending surged more than 5% over year reflecting growth in spending on the National Disability Insurance Scheme and infrastructure.
<hr>
Growth in new public final demand
<a href="https://images.theconversation.com/files/278083/original/file-20190605-40758-y551n1.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/278083/original/file-20190605-40758-y551n1.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> Commonwealth Treasury
<hr>
<h2>Exports supported growth</h2>
Net exports contributed another 0.2 points to the 0.4 points of economic growth, with exports of rural goods, ores and minerals and services increasing.
Imports fell slightly, reflecting a weak economy.
Australia’s terms of trade – the ratio of export to import prices – jumped 3.1% as supply disruptions – including a dam burst in Brazil – boosted the spot price of iron ore.
<h2>Investment has flatlined</h2>
Although business investment was 1.3% lower over the year, it climbed 0.3% and 0.6% in the December and March quarters, suggesting that the worst of the slide might be over.
Treasurer Frydenberg said it was a tale of two sectors - investment in mining fell 1.8% over the quarter and was down 10.6% over the year as part of the transition from the investment in new facilities to production.
More encouragingly, non-mining investment grew by 2% in the quarter, reflecting commercial construction.
<hr>
Growth in new business investment
<a href="https://images.theconversation.com/files/278100/original/file-20190605-40715-dnkuex.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/278100/original/file-20190605-40715-dnkuex.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> Commonwealth Treasury
<hr>
<h2>Inflation is weak</h2>
Inflation is determined by productivity-adjusted wages (unit labour costs) and import prices.
Unit labour cost growth moderated to be up just 0.3% in the quarter. Labour productivity (GDP per hour) declined 0.5% in the quarter to be down 1% over the year.
Import prices fell slightly, although given the recent depreciation in the Australian dollar means they are likely to increase in the near term. For the moment it adds up to little inflationary pressure.
<h2>Households are less optimistic</h2>
Consumers’ expectations, as measured by the Westpac-Melbourne Institute Consumer Sentiment Expectations Index, have softened slightly this year, but remain well above the lows reached during the global financial crisis and early 1990s recession.
The index is made up of answers to questions about expectations for family finances over the next 12 months, economic conditions over the next 12 months, and economic conditions over the next five years.
They are presented on a scale where 100 means expectations of improving conditions balance those of worsening conditions and greater than 100 means optimistic responses outweigh the pessimistic.
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Westpac Melbourne Institute Consumer Sentiment Expectations Index
<a href="https://images.theconversation.com/files/278616/original/file-20190610-52753-1jdb9gq.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/278616/original/file-20190610-52753-1jdb9gq.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> Trend, 100 means positive expectations balance negative expectations. Melbourne Institute
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<h2>Further ahead, the signs aren’t good</h2>
Subdued economic growth may well continue for some time. This is suggested by the Westpac Melbourne Institute Leading Index for April which points to below-trend growth for the next 3 to 9 months.
The index combines a selection of economic variables whose movements typically point to movements in gross domestic product, including the S&amp;P/ASX 200 stock index, dwelling approvals, US industrial production, the Reserve Bank Commodity Prices Index, aggregate monthly hours worked, the consumer sentiment expectations index the Westpac-Melbourne Institute Unemployment Expectations Index, and a financial market yield spread.
<hr>
Westpac Melbourne Institute Leading Index
<a href="https://images.theconversation.com/files/278098/original/file-20190605-40731-1r4yvtt.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/278098/original/file-20190605-40731-1r4yvtt.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> Percentage deviation from trend growth, smoothed. Melbourne Institute
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This week’s Reserve Bank rate cut and those that follow will provide some support. The important question is how much will be needed.
More sluggish world growth due to increased trade tensions is likely to weigh on export growth in the near term. The depreciation in the Australian dollar, however, will provide a buffer.
A positive aspect for the consumption outlook is that there are tentative signs that the pace in decline in house prices is moderating, although what will happen is highly uncertain.
Overall, consumption growth is likely to continue to be soft, with at best only modest improvements in the near term. The downturn in residential construction clearly has further to run, with dwelling approvals in April down 24% on a year ago.
The government sector will have to continue to be an important source of growth in the near term. Whether non-mining investment growth will maintain its recent momentum is uncertain, as subdued consumption growth and the downturn in residential construction might dampen firms’ demand.
A problem faced by the Reserve Bank is that inflation has now undershot its target for so long that may be feeding into inflation expectations, making achieving the target more difficult.
Given the relative health of its budget, and Australia’s infrastructure needs, the government itself is in a position to step up and do more to boost the economy.
Look further ahead, the national accounts make clear that the government will have address Australia’s lacklustre productivity growth. It has been given a lot to work through.<img src="https://counter.theconversation.com/content/118273/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/tim-robinson-138270" target="_blank">Tim Robinson</a>, Senior Research Fellow (Macroeconomics), Melbourne Institute, <a href="http://theconversation.com/institutions/university-of-melbourne-722" target="_blank">University of Melbourne</a>
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/expect-weak-economic-growth-for-quite-some-time-what-wednesdays-national-accounts-tell-us-118273" target="_blank">original article</a>.
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Expect weak economic growth for quite some time. What the national accounts tell us

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EXPERT OBSERVATION
While the budget speech referenced housing a few times, in the sense that falling housing prices represent a downside risk to budget forecasts, there was in fact very little in the budget directly focussed on the housing sector. With the performance of the housing and household sector so critical to the Government achieving their forecasts and planned surplus, there is certainly an argument that more could have been provided in the budget to support these sectors.
<ul>
<li>The Government expects wages to rise only modestly, with growth forecast to rise from 2.1% to 2.5% in 2018/19 before ticking higher to 2.75% in 2019/20, supported by lower unemployment and jobs growth of around 2% per annum. Based on these forecasts, and their potential to undershoot as they have over previous years, we can’t rely on a material improvement in household incomes to boost spending and stave off a higher rate of saving.</li>
<li>On the positive side, household income and consumption should find some support from personal income tax cuts for low to middle income workers (those earning $126,000 or less) and cost of living relief to pensioners. With income growth slow additional cash in people’s pockets each week is positive and could be moderately stimulatory from a consumer expenditure perspective. For example, those that earn between $48,001 and $90,000 will gain an additional $1,080 over a year.</li>
<li>The Treasurer reiterated that housing affordability was a key priority for the Government, but it looks like the Government is content to see housing affordability improve ‘organically’ via lower housing prices that could act as a contagion to weaker household consumption and a sharper than expected fall in residential construction. While this may seems a bit passive, it’s clear that housing affordability has improved substantially since the last budget due to lower housing values in the most expensive cities as well as the lowest mortgage rates since the 1960s and a subtle rise in incomes. </li>
</ul>
Arguably, the state and local governments have more ability to tackle housing affordability than the federal government, with factors such as stamp duty payments, allocation of the first home buyers grant, land release, development charges and town planning all falling outside of the federal government arena. 
Perhaps the most substantial area of the budget related to housing is a reiteration of the strong infrastructure spend and the City Deals, which will provide stimulus for specific regions of the country and help to cushion the downturn in residential construction. 
Infrastructure spending is up 25% on last year, with a record level $100 billion spend over the next ten years. While the allocation of this spend is short on detail (likely to be trickle fed to the market via election announcements), it seems much will be dedicated to improving transport infrastructure in an effort to ease congestion and better manage population growth. Major projects included funding of $2 billion for the fast rail between Melbourne and Geelong, a quadrupling of the urban congestion fund to $4 billion and detailed assessments for additional fast rail corridors. These additional fast rail corridors are: Sydney to Wollongong, Sydney to Parkes, Melbourne to Albury/Wodonga, Melbourne to Traralgon and Brisbane to the Gold Coast. Sticking with a public transport theme, the Budget committed $500 million from the Urban Congestion Fund to provide better park and ride facilities.
The City Deals are nothing new, however the budget reaffirms commitment of $5.7 billion of funding delivered in Townsville, Launceston, Western Sydney, Darwin, Hobart, Geelong and Adelaide, as well as the announcement of a recent deal for South East Queensland. The Government has also announced a roll out of regional deals for Barkley NT, Hinkler Qld and Albury Wodonga NSW/Vic.
No doubt the strong infrastructure spend and investment in improving the key areas of Australia’s cities will be stimulatory for housing markets that benefit from the improvements. Tackling congestion and improving access to essential amenities should indirectly support housing affordability by making the most affordable regions of the cities more accessible and liveable. Questions remain as to whether $100 billion is actually enough to tackle the infrastructure deficit however, expenditure up materially which is encouraging.
Overall, the Budget didn’t really focus on housing however, some of the associated issues such as household incomes and infrastructure investment are being addressed which is positive to see.
TIM LAWLESS heads up the CoreLogic RP Data research and analytics team and can be contacted<a href="https://blog.corelogic.com.au/author/timlawless/" target="_blank"> here.</a>
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tlawless-5VLUrbAk9s

What does the budget mean for Australia’s housing sector? CoreLogic's Tim Lawless

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GUEST OBSERVATION
The budget just before an election seems to have a special quality: the transport infrastructure will surely be more plentiful than usual, and carefully chosen to shore up the electoral bulwarks. But don’t get too excited: this year the rhetoric may be big, but the scale of the numbers is nothing unusual. What is different is the pattern of spending over the budget’s four-year forward estimates.
The budget estimates a transport spend of A$7.4 billion for the coming year, 2019-20, and $33 billion over the forward estimates period. The 2019-20 expenditure estimate amounts to 0.37% of GDP – comparable to what we’ve seen in recent years. In fact, governments have spent between 0.26% and 0.53% of GDP under Treasurers Morrison, Hockey and Swan, and Treasurer Frydenberg is no different.
What’s particularly interesting about this budget, though, is that the treasurer is chancing his arm on the medium term.
<a href="https://images.theconversation.com/files/267093/original/file-20190402-177175-1h08ig9.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/267093/original/file-20190402-177175-1h08ig9.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
Usually treasurers leave themselves some wriggle room in the outyears. They can always spend more if the cash is available, and invariably they do. Plus, it gets easier to estimate what will be spent as the time of spending draws closer.
Of course, these days much of the promised spending is further into the future than the forward estimates. The government is touting a $100 billion, ten-year <a href="https://buildingourfuture.gov.au/assets/documents/10_Year_Infrastructure_Pipeline.pdf" target="_blank">Infrastructure Investment Pipeline</a>. There’s money all over the country.
Where does the money go?
Victoria gets particularly big-ticket items in this budget, totalling $6.2 billion, and somewhat more of it within the next four years than other states. In New South Wales, the longer-term package totals $7.3 billion, including $3.5 billion for the Western Sydney north-south rail link as well as a $1.6 billion upgrade to the M1 Pacific Motorway extension to Raymond Terrace.
But if you look at what’s happening within the next four years, a notable larger item is a road safety package, totalling $400 million over four years. The longer-term goal is for this package to cost $2.2 billion.
Some of the other longer-term spending is squarely focused on rural and regional areas. This includes a billion to improve the Princes Highway in NSW, Victoria and SA.
If it all comes to pass, there’s something here for everyone.<img src="https://counter.theconversation.com/content/114597/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;">
Marion Terrill, Transport and Cities Program Director, Grattan Institute
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/total-transport-spending-is-about-par-for-the-course-but-the-pattern-is-unusual-114597" target="_blank">original article</a>.
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