<p><a href="https://www.apartments.com.au/developments/broadbeach-qld-4218">Broadbeach</a> offers plenty of reasons to live vertically, but moving from a substantial family home into an apartment can expose the compromises of high-density living. Privacy, room for guests and usable living space tend to matter more when an apartment is intended as a permanent home rather than an occasional coastal base.</p>

<p>A typical residential floor at <a href="https://www.apartments.com.au/new-apartments/the-eveleigh-broadbeach-7-9-surf-parade-broadbeach-qld-4218">The Eveleigh</a>, on Surf Parade,&nbsp;contains just four apartments. The 94-residence development by <a href="https://www.apartments.com.au/developers/hirsch-faigen">Hirsch &amp; Faigen</a> is predominantly made up of expansive three-bedroom homes, with a limited collection of half-floor penthouses above.</p>

<p>Across the apartment floors, <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> has used the relatively limited number of residences to give each home greater access to natural light and outlook. Living spaces extend towards full-height glazing, while a series of bay windows frame selected views across the Pacific Ocean, city and hinterland rather than treating the building edge as a continuous wall of glass.</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=149670 project_image_fid=360965]</p>

<p>“The apartment floors deliver a collection of homes that embrace controlled outlook via a series of bay windows deliberately framing moments of view,” Rothelowman Director Kim Lowman said.</p>

<p>From outside, those projecting forms contribute to the tower’s faceted profile. Strong horizontal and vertical elements establish its proportions, while the changing position of the sun alters the light, shadow and reflection across the façade throughout the day.</p>

<p>The same attention moves inside the apartments, where the material palette combines warm timber, natural stone, metallic detailing and softer curved forms. Kitchens sit within the main living zone, with stone island benches, integrated joinery and European appliances, before the living areas extend towards the glazing and the outlook.</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=149670 project_image_fid=360981]</p>

<p>Three genuine bedrooms provide room to accommodate family and guests, while two secure car spaces and storage address some of the practical considerations that can become more noticeable when moving from a larger home. Feedback from the display suite has centred on the warmth and restraint of the interiors, with buyers commenting that the residences feel like homes rather than conventional coastal apartments.</p>

<p>A limited collection of half-floor penthouses occupies the upper levels, increasing the scale of the living spaces and adding private balconies and elevated finishes. From this position, the outlook extends between the ocean and hinterland.</p>

<p>Outside the private residences, The Eveleigh separates its shared spaces between the podium and rooftop. The podium is centred on wellness, with subtropical landscaping surrounding a swimming pool and pool terrace, yoga garden, private gymnasium, sauna and hot and cold plunge facilities. Landscaped retreats and pavilions provide additional places to sit away from the main recreation areas.</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=149670 project_image_fid=360966]</p>

<p>Higher in the building, a rooftop pavilion and private dining suite sit alongside resident lounge, barbecue and outdoor dining areas, opening towards panoramic views across the ocean, city and hinterland.</p>

<p>“Buyers are no longer just looking for an apartment, but a lifestyle where they can relax, reset, and enjoy a balanced way of living,” Hirsch &amp; Faigen Director of Sales Matt George said.</p>

<p>Interest to date has come from established owner-occupiers and interstate lifestyle purchasers, including buyers planning a future move to the Gold Coast. Many are coming from larger homes and want to reduce ongoing maintenance without giving up space for family and guests, privacy, two car spaces or the ability to entertain at home.</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=149670 project_image_fid=360969]</p>

<p>Much of that daily life can also take place beyond the building without requiring a drive. Kurrawa Beach and Pratten Park are an easy walk from Surf Parade, while Pacific Fair, Oracle Boulevard, The Oasis, restaurants, cafés, entertainment and public transport are also within walking distance.</p>

<p data-end="8307" data-start="8063">The Eveleigh is Hirsch &amp; Faigen's fourth Gold Coast development since entering the market in 2021, following The Hemingway at Palm Beach, The Emerson at Kirra and Yves at Mermaid Beach. Each of the preceding projects sold out before completion.</p>

<p data-end="8543" data-start="8312">“Broadbeach had been on our radar throughout our time operating on the Gold Coast,” the developer said. “Following our projects in Palm Beach, Kirra and Mermaid Beach, Broadbeach represented the natural next step for the business.”</p>

<p data-end="8915" data-start="8548">The Surf Parade site brought together proximity to the beach, protected coastal outlooks and walkability to dining, shopping and recreation. Hirsch &amp; Faigen also identified the street as an emerging premium residential address, with enough separation from Broadbeach's busier destinations to retain a quieter environment at home.</p>

<p>The Eveleigh is now under construction by Maxcon, with completion forecast for mid-2028. Three-bedroom residences are currently available from $2.87 million.</p>

<p>[smartcode_project_cta:default project_id=149670]</p>


Joel Robinson

The Eveleigh brings house-like apartments to Broadbeach

<p>A long-stalled Campbelltown development site is back in play, with new plans for 139 apartments set to supersede a mixed-use scheme approved almost a decade ago but never built.</p>

<p>The new proposal for 28 Cordeaux Street would deliver 116 market and 23 affordable apartments in a part 14-storey building, bringing a substantial new project into a Campbelltown market where new apartment supply remains limited.</p>

<p>Plans have been filed over the 3,092 sqm corner site at Moore-Oxley Street, around 600 metres from Campbelltown Railway Station and the city-centre retail core.</p>

<p>The site already carries a mixed-use residential approval dating to 2016. Doroch Architects has now been engaged on a larger replacement scheme, which is progressing as a State Significant Development Application following a Housing Delivery Authority determination in August 2025.</p>

<p>The apartment mix comprises 39 one-bedroom, 72 two-bedroom and 28 three-bedroom residences. Two-bedroom apartments make up just over half of the project, while three-bedroom homes account for 20 per cent.</p>

<p><img alt="First look: New 139-apartment plans revive long-stalled Campbelltown city centre site" data-entity-type="file" data-entity-uuid="136dd5b9-3791-4da6-9e31-76f533f5b4de" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Campbelltown%20da2.png?VersionId=LgOSy9nwf5u.MGswBBwaGGxuX8QpHSl_" /></p>

<p>Of the 139 apartments, 23 will be delivered as affordable housing under the in-fill affordable housing provisions of the Housing SEPP. The affordable component represents 15 per cent of the residential gross floor area and will be managed by a registered Community Housing Provider.</p>

<p>Doroch has sought to break the scale of the building into two distinct elements, with a masonry podium of around four storeys establishing the street edge before the residential tower steps back above.</p>

<p>The corner position has shaped that approach. Cordeaux Street faces toward the commercial and civic centre, while Moore-Oxley Street leads into the lower-scale residential neighbourhood to the south, and the design verification report describes the site as "bridging the commercial core to the north and established residential areas to the south."</p>

<p>The podium will be expressed predominantly in face brick, while the upper levels shift to brushed and grooved concrete cladding with darker metal detailing. Recessed sections, deep balcony edges and landscaping break down the upper form, with an approximately 11.8-metre setback to the northern boundary addressing the adjoining St Peters Anglican School.</p>

<p><img alt="First look: New 139-apartment plans revive long-stalled Campbelltown city centre site" data-entity-type="file" data-entity-uuid="c8b3d2d3-c561-4bfc-a5d9-a68c0c10dac1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Campbelltown%20da1.png?VersionId=AeAEyJU02Gk2k5noUj2StziCvdQ7fW4B" /></p>

<p>Campbelltown has been starved of new residential developments in the last decade.</p>

<p>The only other notable development set to come to market this year is ALAND's Queen Square, a mixed-use precinct on over two hectares that will comprise apartments above a vibrant ground-level retail and hospitality dining precinct.</p>


First look: New 139-apartment plans revive long-stalled Campbelltown city centre site

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<p>A 60-apartment building nine storeys tall would be a rarity almost anywhere along this stretch of Moreton Bay, but that's exactly what's been lodged for a modest Deception Bay street better known for its single-storey weatherboard homes.</p>

<p><a href="https://www.apartments.com.au/developers/sherlock-construction-homes">Sherlock Construction Homes</a> is seeking to push Deception Bay’s emerging medium-density housing profile higher, lodging plans for a nine-storey apartment building near the suburb’s shopping centre and foreshore.</p>

<p>Dubbed Grosvenor Apartments, the proposal at 14-20 Grosvenor Terrace would replace two detached homes with a new building designed by&nbsp;<a href="https://www.apartments.com.au/architects/mode">Mode Design</a>&nbsp;which would&nbsp;reach nearly 30 metres, well above the site’s mapped 21-metre building height.</p>

<p><img alt="First Look: Sherlock Construction pitches 9-storey tower for low-rise Deception Bay" data-entity-type="file" data-entity-uuid="86c21a25-5a97-4ca7-a361-80757137ea5b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Deception%20da%20front.png?VersionId=aXIujfvEhH33sLHOEjHFv9Ii6qxSvAF4" /></p>

<p>The apartment mix is weighted toward larger homes, with 14 three-bedroom apartments, 31 two-bedroom apartments and 15 one-bedroom apartments. Six apartment types are spread across the floors, ranging from 66 sqm one-bedroom units through to three-bedroom apartments of 116 sqm, most with private balconies or terraces.</p>

<p>Levels one through seven follow a consistent layout of six to eight apartments per floor arranged around a central lift and stair core, with the top floor, level eight, trading one apartment for a landscaped community breakout space rather than repeating the standard layout below.</p>

<p>Ground floor is dedicated to arrival and services, with a lobby, mailroom and manager's office, alongside 91 car spaces.</p>

<p><img alt="First Look: Sherlock Construction pitches 9-storey tower for low-rise Deception Bay" data-entity-type="file" data-entity-uuid="b098bde0-5fe1-4e6c-9601-e5446612e5fc" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Deception%20podium.png?VersionId=A0hfENMNxSxkfh9Jl6D4WJ9XIraeOukA" /></p>

<p>Mode Design's brief describes a "serene coastal-inspired design blending soft curves, natural textures and light-filled spaces to reflect the relaxed Deception Bay lifestyle."&nbsp;</p>

<p>The material palette leans on white and grey render, timber-look aluminium screening and stacked-brick-look finishes, with hanging greenery and vine planting proposed across balcony edges and ground-level walls.&nbsp;</p>

<p>Balconies feature asymmetrical geometries intended to vary the building's rhythm rather than repeat a single module up the tower, while lush planting is concentrated over the entry and level one balconies to soften the building's base.</p>

<p><img alt="First Look: Sherlock Construction pitches 9-storey tower for low-rise Deception Bay" data-entity-type="file" data-entity-uuid="c05c5693-3e00-42d0-b075-55c36094f4db" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Deception%20da%201.png?VersionId=cMKJgBsBaaVCd2dA5O22SOT38OT_.BPA" /></p>

<p>The design evolved following an April 2025 prelodgement meeting with council. At that stage, the project was conceived as a seven-storey building containing 45 apartments. The subsequently lodged scheme increases the development to nine storeys and 60 apartments while introducing one-bedroom residences to the mix.</p>

<p>Zone Planning argues the additional scale reflects the site's position within an area earmarked for increased residential intensity. The planning report points to the North Lakes-Redcliffe-Moreton Bay Rail corridor strategy, which identifies Deception Bay as a district-level activity centre and supports greater housing choice within urban neighbourhoods.</p>

<p>Market Square Deception Bay, Deception Bay Sports Centre, Deception Bay State School, public transport, community facilities and the Moreton Bay foreshore are all identified within approximately one kilometre of the site, while the property falls within a 400-metre walking catchment of Market Square.</p>

First Look: Sherlock Construction pitches apartments for low-rise Deception Bay

<p data-end="587" data-start="368">Queensland builder-developer MAYD has revealed the first look at its major North Kirra beachfront development, lodging amended plans that reduce the number of apartments and increase the proportion of larger residences.</p>

<p data-end="778" data-start="589">The project is planned across a substantial 4,742 sqm amalgamated site spanning seven lots at <a href="https://www.apartments.com.au/new-apartments/2-6-pacific-parade-bilinga-qld-4225">2-6 Pacific Parade</a> and 27-33 Golden Four Drive in Bilin​ga, directly opposite Nor​th Kirra Beach.</p>

<p data-end="907" data-start="780"><a href="https://www.apartments.com.au/developers/mayd-group">MAYD</a> secured the site for $32.5 million in 2025, in what was one of the Gold Coast's largest property transactions of the year.</p>

<p data-end="1052" data-start="909">The development will be delivered across two stages, with the first stage carrying an estimated gross realisation value of around $360 million.</p>

<p data-end="1311" data-start="1054">The latest amendments seek to reduce the overall apartment count and shift the project further toward the owner-occupier market, with larger residences designed for buyers wanting considerably more space than traditionally offered in a beachfront apartment.</p>

<p data-end="1451" data-start="1313">The residential mix will include townhomes, oversized two-bedroom apartments, substantial three-bedroom residences and four-bedroom homes.</p>

<p data-end="1676" data-start="1453">MAYD has appointed Cera Stribley to lead the architecture and interiors, with the Melbourne-based design practice drawing on the beachfront setting through a series of ocean-facing terraces and heavily landscaped balconies.</p>

<p data-end="1908" data-start="1678">Strong horizontal forms and curved balconies will define the exterior, with subtropical landscaping integrated throughout the building to soften the built form and increase the connection between the residences and the beachfront.</p>

<p data-end="2142" data-start="1910">The project will also include an extensive collection of resident wellness and lifestyle facilities, continuing the broader shift across the Gold Coast's luxury apartment market toward larger homes supported by resort-style amenity.</p>

<p data-end="2142" data-start="1910"><img alt="MAYD" data-entity-type="file" data-entity-uuid="d1bcbb05-e659-4b47-8bd4-1e595315e2ad" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%202.05.03%E2%80%AFPM.png?VersionId=jj0XEud1X1DuLt7_KyElhjMdZGOXmLHP" /></p>

<p data-end="2308" data-start="2144">MAYD Founder Todd Mould said North Kirra was increasingly appealing to buyers attracted to the more established, lower-density character of the southern Gold Coast.</p>

<p data-end="2648" data-start="2310">"North Kirra presents one of the most compelling luxury residential opportunities currently emerging in Australia, combining absolute beachfront with the character and authenticity that buyers are increasingly seeking, and the same sense of tight-knit community that defined Burleigh and Currumbin perhaps 10 or 15 years ago," Mould said.</p>

<p data-end="2797" data-start="2650">"With Gold Coast Airport on its doorstep, it also offers a level of accessibility that broadens its appeal across almost every market demographic."</p>

<p data-end="2938" data-start="2799">The project comes as the southern Gold Coast continues to attract an increasing share of high-end apartment development and buyer activity.</p>

<p data-end="3216" data-start="2940">Kirra in particular has emerged as one of the region's more tightly held beachfront markets, with its relatively low-density character, established surf and hospitality scene and proximity to Gold Coast Airport differentiating it from the higher-density markets further north.</p>

<p data-end="3325" data-start="3218">Mould said those characteristics had informed the approach MAYD and Cera Stribley had taken to the project.</p>

<p data-end="3442" data-start="3327">"We've worked closely with Cera Stribley to create a vision that is deeply connected to its surroundings," he said.</p>

<p data-end="3662" data-start="3444">"Inspired by the coastline itself, the architecture has been shaped around space, privacy and resort-style living, creating a collection of homes that reflects the next generation of luxury on the southern Gold Coast."</p>

<p data-end="3818" data-start="3664">MOTIV Managing Director Carly Cottam, who has been appointed to market the project, said buyer attention had continued to move south along the Gold Coast.</p>

<p data-end="4076" data-start="3820">"Purchasers who may once have defaulted to Broadbeach, Main Beach or Surfers Paradise are increasingly recognising the value of a genuine beachfront location that offers lower density, strong amenity and a more established sense of community," Cottam said.</p>

<p data-end="4375" data-start="4078">"Kirra has a powerful combination of growing demand and genuine scarcity. Beachfront supply is inherently constrained, the area remains relatively low density, and buyers are increasingly placing a premium on locations that feel established, uncrowded and authentic rather than heavily developed."</p>

<p data-end="4503" data-start="4377">Cottam said the proximity to Gold Coast Airport was also proving increasingly important for interstate and second-home buyers.</p>

<p data-end="4741" data-start="4505">"Being minutes from Gold Coast Airport makes it particularly compelling for interstate buyers, frequent travellers and second-home purchasers who can access an authentic coastal lifestyle almost immediately after stepping off a flight."</p>

<p data-end="4910" data-start="4743">The acquisition takes MAYD's active development portfolio to more than $500 million, with the North Kirra project representing one of its largest undertakings to date.</p>

<p data-end="4951" data-start="4912">MAYD is targeting an early 2027 launch.</p>


First look at MAYD's North Kirra mixed-use precinct

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<p data-end="600" data-start="394">Castle Hill, the longtime hub of the Hills District, has been one of the major beneficiaries of Sydney's Metro expansion, with improved connectivity helping drive continued population growth, development and buyer demand across the Hills District.</p>

<p data-end="733" data-start="602">But despite that growth, the suburb has seen relatively few major new apartment projects brought to market over the past 18 months.</p>

<p data-end="970" data-start="735">Hills District developer Reve Group is looking to fill that gap with <a href="https://www.apartments.com.au/new-apartments/nova-r-ve-castle-hill-2-garthowen-crescent-castle-hill-nsw-2154">Nova Rêve</a>, a major new mixed-use precinct on the corner of Garthowen Crescent and Old Castle Hill Road, a short walk from Castle Hill Metro Station and Castle Towers.</p>

<p data-end="970" data-start="735">[smartcode_project:default project_id=152737 project_image_fid=377679]</p>

<p data-end="1159" data-start="972">The project will comprise three residential towers alongside a hotel, restaurants, cafes and a skybar, more than 1,600 sqm of ground-floor retail and almost an acre of landscaped gardens.</p>

<p data-end="1357" data-start="1161">It represents the largest project undertaken by Reve Group, the development arm of the Kassis family, which has been building across the Hills District for more than 30 years through Kassis Homes.</p>

<p data-end="3400" data-start="3216">[smartcode_project:default project_id=152737 project_image_fid=377675]</p>

<p data-end="3400" data-start="3216">Nova Rêve also represents a significant step up from the family's first apartment development, Grand Rêve, which was delivered nearby on Garthowen Crescent.</p>

<p data-end="1664" data-start="1517">Grand Rêve introduced larger, house-like apartment layouts and premium inclusions including Wolf and Sub-Zero appliances to the Castle Hill market.</p>

<p data-end="1826" data-start="1666">Nova Rêve takes that approach to a precinct scale, combining the residential component with hospitality, retail and substantial public and resident landscaping.</p>

<p data-end="1826" data-start="1666">[smartcode_project:default project_id=152737 project_image_fid=377685]</p>

<p data-end="2045" data-start="1828">Reve Group Managing Director Sam Kassis said the project reflected the family's three decades of building in the Hills, which has evolved from trophy homes on quarter-acre blocks to larger-scale apartment development.</p>

<p data-end="2269" data-start="2047">"Grand Rêve was our first apartment project here and it showed us what this pocket of Castle Hill could be. Nova Rêve is the refinement of that idea: not just apartments, but a place the whole suburb can use," Kassis said.</p>

<p data-end="2430" data-start="2271">A key part of that approach is the hotel, which has been designed to operate as an amenity for the wider Castle Hill community rather than solely hotel guests.</p>

<p data-end="2606" data-start="2432">It will include restaurants, cafes, skybars and all-day dining, alongside conference and event facilities catering to business functions, community groups and private events.</p>

<p data-end="2724" data-start="2608">At ground level, more than 1,600 sqm of shops and cafes will open onto the surrounding streets and landscaped areas.</p>

<p data-end="2892" data-start="2726">Almost an acre of gardens designed by Land and Form Studios will run through the precinct, incorporating pathways, seating, barbecue areas and children's play spaces.</p>

<p data-end="2892" data-start="2726">[smartcode_project:default project_id=152737 project_image_fid=377680]</p>

<p data-end="3004" data-start="2894">Reve Group's Romio Georges said creating an active ground plane had been central to the planning of Nova Rêve.</p>

<p data-end="3214" data-start="3006">"There are gardens with pathways, barbecues, seating and play areas, shops and cafes opening onto the street, and a hotel with restaurants and a skybar that anyone in Castle Hill can walk into," Georges said.</p>

<p data-end="3400" data-start="3216">The project's elevated position on one of Sydney's highest ridgelines will also provide apartments with outlooks toward the Sydney skyline, surrounding parkland and the Blue Mountains.</p>

<p data-end="3400" data-start="3216">More than 80 per cent of the apartments will occupy corner positions, with Turner responsible for both the architecture and interiors.</p>

<p data-end="3670" data-start="3538">&nbsp;</p>

<p data-end="3670" data-start="3538">[smartcode_project_cta:default project_id=152737]</p>

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Nova Rêve arrives as Reve Group bets on Castle Hill's next growth phase

Dwelling Construction

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<div>One of the most notable aspects of this building approvals boom has been that it has been focussed on the building of high density housing to an unprecedented extent.</div>
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<div>If you want capital growth from property then I suggest that you should be wary of high rise stock since proportionately far too much of it is has been approved.</div>
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<div>Approvals in most instances do now seem to be pulling back, but the approvals pipeline has seen 4+ storey dwellings pushed through this cycle to date in unprecedented volumes.</div>
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<div>In August the number of approvals pulled back in Victoria from 1,766 to as the new <a href="https://petewargent.blogspot.co.uk/2015/09/building-approvals-boom-passes-peak" target="_blank">levy</a> takes effect, but the 12mMA trendline tells its own story...</div>
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<div><span>In Queensland the number of 4+ storey dwelling approvals at 895 in August was well below the extraordinarily high volumes approved in 7 of the preceding 9 months, and the trendline peak now seems to be in...</span></div>
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<div><span>Being home to the largest capital city, New South Wales has typically approved the greatest number of high rise apartments, although here too approvals fell from an elevated 3,431 to 1,887 in August...</span></div>
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<div>Overall it seems that the great flood of approvals of high rise apartments is now easing as developers take note of the looming oversupply.</div>
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<div>The problem with the highest density tower blocks for investors is simply that there is no inherent scarcity value. </div>
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<div>Pass.</div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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The high rise apartment glut: Pete Wargent

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<p><span>The Australian Bureau of Statistics (ABS) released building approvals data for July 2015 earlier this week. According to the data there were 19,298 dwelling approvals over the month which represents an increase of 4.2% over the month and a year-on-year rise of 13.4%. Monthly dwelling approvals reached a record high of 20,260 approvals in March 2015 and the July 2015 result represents the fifth largest monthly number of dwelling approvals on record.</span></p>
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<p>Over the month there were more unit approvals than house approvals. In fact it was only the seventh time on record that there were more units approved over the month than houses, five of which have happened in 2015. Although unit approvals outnumbered house approvals over the month it is important to note that they tend to be much more volatile than house approvals and are ultimately less likely to be built than houses (approximately 85% of all unit approvals proceed through to a completion historically). Although this is the case, particularly for larger unit development, the economic benefit is extended over a longer period because they take much longer to complete.</p>
<p>In July 2015 there were 9,479 houses and 9,819 unit approvals over the month. House approvals fell by -2.6% in July and were -2.1% lower year-on-year.  Meanwhile, unit approvals increased by 11.7% in July (following a fall of -13.3% in June) and were 33.8% higher year-on-year.  On an annual basis there has been a record high 224,121 approvals to July 2015. To put the recent ramp-up in approvals into perspective, three years ago there were just 148,449 approvals over the year.</p>
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<p><img src="/images/2015/09/02/Chart-2.jpg" alt=""></p>
<p><span>As the number of approvals has increased, the greatest rise has occurred across the multi-unit segment. Over the past 12 months a record high 48.3% of all approvals were for units. If you look just at the capital city markets 55.7% of all dwelling approvals were for units.  </span></p>
<p><span>The rise in unit approvals is reflective of changing lifestyle patterns with more and more people preferring to live closer to the city centre and along transport spines where most of these units are located. It also shows that developers are enjoying a level of confidence by seeking approvals for a record high number of units.  </span></p>
<p><span>Another factor contributing to the rise in higher density dwelling approvals is changes in town planning policies where governments are aiming to maximise existing transport infrastructure by allowing higher densities along existing and planned transport corridors and mixed use precincts.</span></p>
<p><a href="/images/2015/09/02/Chart-3.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/09/02/Chart-3.jpg" alt=""></span></p>
<p> </p>
<p>If we look at the types of units that are being approved it is interesting to note the sharp rise in high-rise approvals, that is units in a block of four or more storeys.  Over the past 12 months, a record high 63.4% of all unit approvals were within high-rise projects while a record low 26.2% of approvals were terrace and townhouses and a record low 4.9% of approvals were for units in a one or two storey block. Again, these figures just go to show the heightened level of developer confidence particularly when you consider the relative level of risk associated with high rise development.</p>
<p>The number of dwelling approvals remains high albeit it is slightly lower than recent record highs. Strength in the approvals figures are becoming increasingly reliant on the multi-unit sector which tend to be much more volatile than house approvals. With many banks, credit unions and building societies tightening their lending criteria it will be interesting to see over the coming months if this flows into approvals and causes developer confidence to wane.</p>
<p>No matter what happens with approvals over the coming months and years there is a strong pipeline of new construction, much of which is high-rise and will extend out over a number of years.  Furthermore, with population growth slowing we should see a better relationship between housing supply and housing demand.  This is already being seen by the fact that capital city rental rates are increasing at an historic low rate currently.</p>
<p><em>Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.</em></p>
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ckusher-ujnxiKuFQs

Rise in unit approvals drives rebound: Cameron Kusher

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<div>Total construction work done declined by a further 1.9 percent in the June 2016 quarter to $47.8 billion, to be 7.9 percent lower over the year. </div>
<div> </div>
<div>The result was driven by another 5.1 percent decline in engineering construction in the quarter - largely mining related - to leave this component down by 24.9 percent year-on-year.</div>
<div> </div>
<div><a href="/images/2016/08/25/A2.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/08/25/A2.jpg" alt=""></div>
<div> </div>
<div>The building boom, on the other hand, continues apace. </div>
<div> </div>
<div>Although there has been a solid increase in alterations and additions (major renovations) lately, record building activity through this cycle has been overwhelmingly been driven by "other residential" building, specifically units, apartments, and townhouses.  </div>
<div> </div>
<div><a href="/images/2016/08/25/A3.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/08/25/A3.jpg" alt=""></div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Mining cliff now 4 years old</span></strong></div>
<div> </div>
<div>Next month it will be fully four years since the so-termed "mining cliff" began. </div>
<div> </div>
<div>Interestingly engineering construction work done increased in the June 2016 quarter in Queensland, where most of the retracement has already taken place, while activity has actually trended up strongly in New South Wales and Victoria over the past year. </div>
<div> </div>
<div>I've long been warning that Western Australia would have to take its medicine sooner or later, and the reality check kicked in this quarter, with engineering construction crashing down to be some 48 per cent lower than one year ago. </div>
<div> </div>
<div>These figures confirm what has no doubt been obvious on the ground for some time - that the local economy is doing it tough as it passes through this painful slowdown period.</div>
<div> </div>
<div class="separator"><a href="/images/2016/08/25/A1.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/08/25/A1.jpg" alt=""></div>
<div class="separator"> </div>
<div>Engineering construction work done has also fallen substantially in the Northern Territory over the last six quarters, including by a further 28 per cent over the past year, with only the massive Ichthys LNG project is holding this result aloft.</div>
<div> </div>
<div class="separator">The good news is that the decline in engineering construction is now thought to be around 80 percent complete, meaning that sooner or later this will stop being such a drag on the economy. </div>
<div class="separator"> </div>
<div class="separator">In fact, in New South Wales, Victoria, and now Queensland, it already has. </div>
<div class="separator"> </div>
<div class="separator"><strong><span style="text-decoration: underline;">Record building boom continues</span></strong></div>
<div class="separator"> </div>
<div class="separator">The building boom and its associated multiplier effect has largely benefited the largest capital cities.</div>
<p><a href="/images/2016/08/25/A4.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/08/25/A4.jpg" alt=""></p>
<div>New house building, while still increasing steadily in Victoria, Queensland, and South Australia, appears to have peaked for this cycle nationally.</div>
<p><a href="/images/2016/08/25/A5.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="/images/2016/08/25/A5.jpg" alt=""></div>
<div class="separator"> </div>
<div>On the other hand the value of construction work done on attached dwellings was still tracking at record levels in the June quarter. </div>
<div> </div>
<div><a href="/images/2016/08/25/A6.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div class="separator"><img src="/images/2016/08/25/A6.jpg" alt=""></div>
<div class="separator"> </div>
<div>
<strong><span style="text-decoration: underline;">The wrap</span></strong><br><br>Residential building activity was still running at full pelt through the second quarter of the year, pushing up building costs in cities such as Sydney.<br><br>The Housing Industry Association (HIA) announced today that it believes that new home building will now decline for the next three years, with annual commencements falling from a peak of over 232,500 dwellings to 166,500 in 2018/19, with some downside risks to the forecast.</div>
<div> </div>
<div>The good news is that engineering construction will have already stopped falling significantly over the next 18 months.<br><br>Ichthys aside, most of the project-driven declines have now washed through the figures outside Western Australia.<br><br>Analysts expect to see moderate GDP growth in the second quarter of calendar year 2016 with net exports not making much of a contribution this time around.<br><br>On balance, though, the planned hand-off has been pulled off very well, with Australia now getting close to the bottom of its mining cliff.<br><br>Although resources regions have felt the pain, the largest capital cities have by and large pulled through relatively unscathed. </div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Record building boom continues: Pete Wargent

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<h3 class="post-title entry-title"> </h3>
<div id="post-body-2781265956150443664" class="post-body entry-content">
<div>Australia's GDP increased to $1.67 trillion in financial year 2016, measured in seasonally adjusted Chain Volume Measures terms, now tracking at just above $420 billion per quarter.</div>
<div> </div>
<div>Following on from yesterday's post, a quick look here at industry gross value added (GVA).</div>
<div> </div>
<div>Having accounted for just over 5 per cent of industry GVA three decades ago, mining's share has swelled to 8.9 percent as export volumes begin to ramp up.</div>
<div> </div>
<div>Finance and insurance also now accounts for 8.9 per cent of industry GVA, up from just 4.9 per cent in 1986.</div>
<div> </div>
<div>You can click on the chart to expand it (or use the touch screen, if you have one of those, of course).</div>
<div> </div>
<div><a href="/images/2016/09/28/GVA.jpg" target="_blank">Click to enlarge</a></div>
<br><div class="separator"><img src="/images/2016/09/28/GVA.jpg" alt=""></div>
<br><div class="separator"> </div>
<div>On the other hand, manufacturing is shrinking as a share of the pie, declining from a share of 11.1 percent at the beginning of this chart to just 5.8 percent in 2016.</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Construction wind-down</span></strong></div>
<div> </div>
<div>The latest figures show that the contribution of construction to GDP has remained solid at 7.6 per cent, tracking at around $32 billion per quarter.</div>
<div> </div>
<div>A decade ago construction was contributing only $13 to $14 billion per quarter. </div>
<div> </div>
<div>This suggests that the planned 'hand-off' from resources to residential construction was generally a success between 2012 and 2016. </div>
<div> </div>
<div>However, this does also mean that as residential construction eventually winds down there will be quite a hole in domestic demand to be plugged by something other than rising mining export volumes.</div>
<div> </div>
<div>Given the respective skill-sets of all those construction workers, tradies, and project managers, the answer should be: infrastructure and non-residential construction, as I looked at in a bit more detail here. </div>
<div> </div>
<div>Indeed, the unprecedented stamp duty windfall from Sydney's property boom is already funding a range of infrastructure projects in Sydney and New South Wales. </div>
<div> </div>
<div>But what about the gaping gulf left behind in the resources regions? </div>
<div> </div>
<div>Troubling, and this may be leading to an exodus of regional workers. </div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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When construction winds down: Pete Wargent

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<div>EXPERT OBSERVER</div>
<div> </div>
<div>Less than a month ago, one report suggested Australia might have the 'world's worst management' of the virus, and yet now it has transpired that our results are among the very best in the world, alongside New Zealand. </div>
<div>
<br>Whether that's by luck or by judgement - or most likely a bit of both - may only be known in the fullness of time.</div>
<div> </div>
<div>As to how this is impacting real estate searches, there are three main factors to bear in mind.</div>
<div> </div>
<div>Firstly, there are now record low mortgage rates for new borrowers, from just over 2 per cent, and these look set to persist for<em> at least </em>three years. </div>
<div> </div>
<div>Secondly, there's now some potential return for a return of the cobweb effect we saw before the election last year, which may kill new supply, at least in tightly held or blue chip areas. </div>
<div> </div>
<div> </div>
<div>
<div class="separator"><img src="https://1.bp.blogspot.com/-muLpbzV0YMk/XqeSHzYsCkI/AAAAAAAA1bQ/UiIENyW0HFITZfYPgrsz7LRQGKmXAASWgCNcBGAsYHQ/s640/COBWEB.jpg" width="640" height="402" data-original-height="676" data-original-width="1073"></div>
<br>Dwelling starts look set to slump to around a 70-year low, and while plenty of aged listings remain on the market, quality new listings are now rather thin.</div>
<div> </div>
<div>For example, Real Estate reported that there was just one new apartment listing in Coogee over the course of a week, which is exasperating for anyone wanting for take advantage of the slowdown.</div>
<div> </div>
<div>And thirdly - a point I've alluded to previously - while Canada, the US, and many developed European and Asian countries have grappled with the spread of the virus, the two countries which are emerging with enhanced reputations as the most desirable to live appear to be New Zealand and Australia. </div>
<div> </div>
<div class="separator"><img src="https://1.bp.blogspot.com/-FCrTsrhS1A8/XqeB4-FGTkI/AAAAAAAA1a0/FNk2h5mGer4YoMzTOD_POJsFl6E9LiKcgCNcBGAsYHQ/s640/BB.jpg" width="640" height="448" data-original-height="517" data-original-width="738"></div>
<p><br><span>A 'Lucky Country' indeed.</span></p>
<p><span><strong>PETE WARGENT</strong><em> is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em></span></p>
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Dwelling starts look set to slump to new low: Pete Wargent

Significant slowdown in dwelling commencements this quarter: Cameron Kusher

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<div>After years of under-building from about 2005 forth in Sydney, between July 2012 and April 2016 a vastly improved 163,500 dwelling approvals have been recorded for the Greater Sydney region (inclusive of the Central Coast and the Blue Mountains) and the Illawarra.</div>
<div> </div>
<div>As Australia's densest capital city, Sydney approvals today are mostly of the attached or dwelling multi-unit type. </div>
<p><a href="/images/2016/08/16/A1.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/08/16/A1.jpg" alt=""> </p>
<div class="separator"> </div>
<div> </div>
<div>There has been report after report concerned with the record number of units and apartments under construction.</div>
<div> </div>
<div>Yet to date vacancy rates have barely budged at the city level, and apartment rents have kept rising.<br><br><strong><span style="text-decoration: underline;">Bottleneck</span></strong>
</div>
<div> </div>
<div>The reason for this - and indeed the reason that so many dwellings are under construction - as I've looked at previously <a href="https://petewargent.blogspot.co.uk/2016/07/making-sense-of-australias-super-duper" target="_blank">here</a>, is that multi-unit dwellings generally take considerably longer to proceed from approval, to commencement, and then to completion (perhaps up to several years from start to finish) than detached houses on greenfield sites, at typically just a matter of months. </div>
<div>As a result, over the year to April 2016, after accounting for demolitions there were just 11,937 net detached dwelling completions, and 18,370 multi-unit dwellings. </div>
<div> </div>
<div>Not only has this rate of net completions after accounting for demolitions not been making up for the years of under-building, it has barely even been keeping pace with <em><strong>current</strong></em> annual Greater Sydney population growth of an estimated 83,500 per annum.<br><br>This is particularly so given that so many small apartments are being built, typically housing only two persons (not to mention those apartments left vacant by offshore investors), contributing to a mismatch of supply increasingly characterised by a surfeit of high rise apartment stock.<br><br>It's worth noting that this completions data doesn't easily capture the addition of granny flats, but the point still stands - completions in Sydney just haven't been that high...to date.</div>
<div> </div>
<div><a href="/images/2016/08/16/A3.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/08/16/A3.jpg" alt=""></div>
<p> </p>
<div>From July 2012 to April 2016, after accounting for demolitions, there were net dwelling completions of only 101,300, just 62 percent of the number of dwelling approvals over the same time period. </div>
<div> </div>
<div>The population of Greater Sydney increased by somewhere in the region of 307,000 heads over that time, so it's a little wonder that population growth has been absorbing new supply.</div>
<div> </div>
<div>This dynamic is finally about to change, though, as the record pipeline of new apartments under construction begins to come online, although the industry being stretched to full capacity will inevitably see construction costs rising henceforth. </div>
<div><strong><span style="text-decoration: underline;">Local Government Authorities (LGAs)</span></strong></div>
<div> </div>
<div>At the LGA level we can see that up to April 2016 there have been few regions that have really been hammering out unduly high net dwelling completions. </div>
<div>
<br><div class="separator"><a href="/images/2016/08/16/A1-1.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/08/16/A1-1.jpg" alt=""></div>
</div>
<div>However, looking at the LGA dwelling approvals figures split out by financial year helps to identify the areas at risk of emerging oversupply (as well as certain upmarket localities such as Manly, Mosman, and Woollahra, where the total stock of dwellings has remained all but fixed).<br><br>
</div>
<div>The City of Sydney LGA covers a large central area of 25 square kilometres and comprises a great many hugely popular suburbs, and in that context its 13,700 approvals from July 2012 represent relatively slim pickings. </div>
<div> </div>
<div>However, the volume of dwelling approvals - especially for apartments - in certain other areas is abnormally high in historical terms, in turn suggesting an elevated level of risk: Blacktown, Parramatta, the Hills District, Liverpool, and to some extent Camden and Ryde.<br><br>The Canada Bay approvals figures don't really capture the volume of building that has already taken place at Wentworth Point and some surrounding suburbs.</div>
<div> </div>
<div class="separator"><a href="/images/2016/08/16/A3-1.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/08/16/A3-1.jpg" alt=""></div>
<p><br><strong><span style="text-decoration: underline;">Case study: Parra</span></strong></p>
<div class="separator">I don't quite have the space here (read: can't be bothered) to discuss apartment supply in detail across every Sydney LGA, but a quick look at the Parramatta data is instructive. </div>
<div class="separator"> </div>
<div class="separator">Parramatta has seen several years of abnormally high apartment approvals figures, yet until relatively recently net dwelling completions had not lifted too dramatically.</div>
<div class="separator"> </div>
<div class="separator">This rapidly changed in September 2015 as a slew of new projects began to come onstream, and there is plenty more to come in the pipeline, with yet another 3,339 multi-unit dwellings approved over the 12 months to April 2016. Wow-wee!</div>
<div class="separator"> </div>
<div class="separator"><a href="/images/2016/08/16/A2.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/08/16/A2.jpg" alt=""></div>
<div class="separator"> </div>
<div>I took a drive around Parramatta a fortnight or so ago, and the amount of building still underway is really quite eye-popping. </div>
<div> </div>
<div>This may result in valuation challenges at settlement for off-the-plan apartment purchases, rising vacancy rates, declining rents, and widespread instances of weak capital growth over the coming years (by which, of course, I mean negative).</div>
<div>
<br><em>Caveat emptor!</em><br><br>Regular readers may recall I spent a joy-filled afternoon driving around looking at a number of apartment construction hotspots recently, and I wrote a bit about it.<br><br>
</div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Sydney's construction pipeline: Pete Wargent

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<div id="post-body-3241568079110976919" class="post-body entry-content">
<div>Australia's construction boom hit "peak apartments" in the March 2016 quarter the latest Building Activity data from the ABS showed, with developers now beginning to crunch their way through the record number of dwellings approved but not yet commenced. </div>
<br><div class="separator"><a href="/images/2016/07/18/A1.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/07/18/A1.jpg" alt=""></div>
<div> </div>
<div>Total quarterly commencements accordingly rose to a record high of 59,684.<br><br>Attached dwelling commencements - townhouses, units, and apartments - were up by 21 per cent from the first quarter of calendar year 2015, leading to just shy of 230,000 dwellings commenced in the year to March 2016, also a record.<br><br><div class="separator"><a href="/images/2016/07/18/A1-1.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/07/18/A1-1.jpg" alt=""></div>
<br>As you can see in the chart above, annual house commencements have already passed their peak for this cycle, with Sydney in particular constructing fewer detached dwellings through the cycle as the harbour city becomes more dense - building up, not out - while on the other hand Melbourne continues its heroic sprawl.  </div>
<div> </div>
<a href="/images/2016/07/18/A6.jpg" target="_blank">Click to enlarge</a>
</div>
<div class="post-body entry-content">
<img src="/images/2016/07/18/A6.jpg" alt=""><br><br><div>Annual attached dwelling commencements are now at their highest ever level.</div>
<br><a href="/images/2016/07/18/A5.jpg" target="_blank">Click to enlarge</a>
</div>
<div class="post-body entry-content">
<img src="/images/2016/07/18/A5.jpg" alt=""><br><br><div><strong><span style="text-decoration: underline;">Completions slower to come online</span></strong></div>
<div> </div>
<div>The curious aspect of this cycle is that with so many of the commencements being multi-unit developments, the supply has been considerably slower to come online.<br><br>Why? Because on average it's much faster to build a house on a shovel-ready block of greenfield land (perhaps only a few months) than it is to deliver a block of apartments on a brownfield site, which could chew up a period of several years from approval to completion. <br><br>The outcome of this is an epic supply bottleneck.<br><br><strong><span style="text-decoration: underline;">Bottleneck!</span></strong><br><br>There are now more dwellings stuck in the "under construction" phase than we have ever witnessed before: a thunderous total of 218,262 dwellings, more than 150,000 of which are attached dwellings.<br><br>If you can see a lot of cranes on the city horizon, this is why!<br><br>
</div>
<div>A record 74,530 of the dwelling units under construction are located in New South Wales (including more than 56,000 attached dwellings), 67,748 are in Victoria (nearly 48,000 of which are attached dwellings), and 39,816 are in Queensland (more than 31,000 of which are attached dwellings, an eye-popping ratio).<br><br>In other words, lots and lots of apartment projects are underway but not yet finished.</div>
<div> </div>
<div>Indeed, completions have been so slow to come online that actual dwelling completions have declined for the past four quarters on the bounce, from 49,733 in the first quarter of last calendar year to just 45,619 in the first quarter of this year.</div>
<br><div class="separator"><a href="/images/2016/07/18/A2.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/07/18/A2.jpg" alt=""></div>
<br><div>This huge lag between record approvals and completion helps to explain why super-strong population growth in the two most populous capital cities has to date continued to outpace and absorb dwelling supply. </div>
<div> </div>
<div>Annual attached dwelling completions in NSW (22,400) and VIC (23,000) not only remain below previous peaks, but are also tracking way behind the romping pace of state population growth of 106,000 and 109,000 per annum respectively.</div>
<div> </div>
<div class="separator"><a href="/images/2016/07/18/A3.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/07/18/A3.jpg" alt=""></div>
<br><div>
<em>The Australian</em> recently reported an estimated year's oversupply of dwelling based upon an assumption of 47,000 net additions to the dwelling stock per quarter. </div>
<div> </div>
<div>Yet reported vacancy rates in Sydney and Melbourne - even if the figures are arguably incomplete - have actually declined, the slowdown in rental price growth as much reflective of the number of <em>investors</em> in the market through this cycle as the number of physical dwellings.<br><br>Because the record high volume of units and apartments under construction are slower to come online than houses, the assumptions reported by <em>The Australian</em> have been over-egged when compared to the number of actual completions by some 85,000 dwellings. </div>
<br><div class="separator"><a href="/images/2016/07/18/A4.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/07/18/A4.jpg" alt=""></div>
<div> </div>
<div class="separator"> </div>
<div class="separator">Moreover these assumptions overlook that up to 25,000 commencements per annum simply replace existing stock, as pointed out by the good Prof. Philips of the ANU.</div>
<div class="separator"> </div>
<div class="separator"><a href="/images/2016/07/18/PHILLIPS.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/07/18/PHILLIPS.jpg" alt=""></div>
<div class="separator"> </div>
<div class="separator">The picture is complicated somewhat further by the addition of granny flats which are not well captured by the data, but after accounting for demolitions the new supply has so far had a relatively muted impact in Sydney and Melbourne.</div>
<div class="separator"> </div>
<div>What has transpired to date is localised bursts of oversupply, not nothing too dramatic at the macro level.</div>
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<div class="separator"><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
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<div class="separator">There are more than 150,000 units, townhouses, and apartments now under construction in Australia, easily the highest figure on record, so construction activity will remain at or close to full capacity for some time yet. </div>
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<div class="separator">Attached dwellings can take a long period of time to complete, so to date at least the impact of new supply hasn't been all that great. </div>
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<div class="separator">But what is Australia going to do with all these new high-rise dwellings during a period when its post mining-boom economy isn't supporting such high levels of immigration? </div>
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<div class="separator">Mr. Turnbull does have a plan. And like most of Australia's cunning plans these days, it involves tapping demand from China. </div>
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<div class="separator">It's only been a fortnight since the new "streamlined" student visa rules kicked in, but early anecdotal indications suggest that the plan might just be working. </div>
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<div class="separator"><a href="/images/2016/07/18/VISAS.jpg" target="_blank">Click to enlarge</a></div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Making sense of Australia's super-duper construction boom: Pete Wargent

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<p>EXPERT OBSERVER</p>
<p>An extraordinary amount of construction work has occurred in Australia over the past five years. In fact work done in both NSW and Victoria soared by over 40 per cent from 2014 to 2019. But now work flows are adjusting to more balanced supply-demand metrics.</p>
<p>Residential work peaked around 18 months ago and is now down 15 per cent from the highs.</p>
<p>Commercial work hit record highs in the September quarter but eased in the December quarter. Still, on the work yet to be done, commercial work will test record highs in the next year while residential work softens – at least for the next six months. Bushfire reconstruction work will slowly pick up over 2020.</p>
<p>Construction-dependent firms won’t be short of work in 2020, but businesses may have to travel a bit further to tap into the opportunities. The good news is that price pressures are well contained. In fact building costs (residential and commercial) are rising at the slowest annual pace in around seven years.</p>
<p>The data hasn’t been updated since mid-January, but the latest reading showed $144 billion of construction work still to be completed. Engineering work totals $74 billion with around $38 billion of residential work and a record $32 billion of commercial work.</p>
<p><strong>What do the figures show?</strong><br><em>Construction work done – December quarter</em></p>
<p>Construction work done fell by 3.0 per cent in the December quarter – the fifth fall in six quarters. The value of construction work done is down by 7.4 per cent on a year ago.</p>
<p>Public sector construction work rose by 0.7 per cent in the quarter after a 3.6 per cent lift in the September quarter.</p>
<p>Private sector activity fell by 4.2 per cent in the December quarter – the fourth successive quarterly fall.</p>
<p>Construction work fell across six states and territories in the December quarter: NSW (down 4.6 per cent); Victoria (down 2.8 per cent); Queensland (down 3.4 per cent); South Australia (down 5.4 per cent); Western Australia (down 2.9 per cent); Tasmania (down 6.6 per cent); Northern Territory (up 0.6 per cent); ACT (up 1.5 per cent).</p>
<p>Engineering work fell by 1.5 per cent in the December quarter – the sixth straight decline. Work done is down by 8.0 per cent over the year.</p>
<p>Commercial (non-residential) building fell by 3.4 per cent in the December quarter after rising 7.5 per cent in the September quarter. Work done is up 3.3 per cent on the year.</p>
<p>Residential building fell by 4.6 per cent in the December quarter – the sixth straight decline. Work done is down 12.8 per cent over the year – the biggest annual fall in 18 years.</p>
<p>Alterations &amp; additions fell by 1.3 per cent in the quarter to be down by 5.8 per cent over the year. And new residential work fell by 5.1 per cent over the quarter and by 13.7 per cent over the year to December</p>
<p>Construction costs rose by 0.2 per cent in the December quarter, with building costs up 0.1 per cent and engineering costs up by 0.3 per cent.</p>
<p>Over the year, construction costs rose by 1.2 per cent (slowest pace in three years) with building costs up 0.7 per cent (slowest pace in seven years) and engineering costs up by 1.9 per cent (slowest in 2½ years).</p>
<p><strong>Bushfires</strong></p>
<p>The ABS noted: “Bushfires resulted in minor disruption to data collection activities during the December 2019 quarter in New South Wales, Victoria and the Australian Capital Territory. Quality assurance undertaken by the ABS confirmed that these disruptions did not result in any impacts to Construction activity statistics. Whilst it is expected that bushfire rebuilding and recovery activity will have some impact on future Construction activity estimates this activity is not yet present in the December estimates.”</p>
<p><strong>What are the implications for interest rates and investors?</strong></p>
<p>There is still plenty of construction work to go around. In fact some firms like Monadelphous continue to highlight the difficulty in attracting and retaining good skilled workers for engineering projects.</p>
<p>In terms of the outlook for home building, the Housing Industry Association said “We estimate the industry commenced construction on 174,770 homes in 2019, and we are forecasting for activity to rise only marginally (by 0.6 per cent) in 2020.”</p>
<p>The fall in residential work in the December quarter means that dwelling investment will be drag on economic growth in the December quarter. We will get another piece of the ‘GDP puzzle’ tomorrow with business investment data. The data will likely show an easing of building/construction investment by Aussie businesses.</p>
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