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.

Joel Robinson

Time & Place to take on Mosman apartment market

Brunswick’s civic heart continues to consolidate around the Merri-bek Arts and Culture Precinct, where a growing cluster of cultural institutions, recreation facilities, and public infrastructure has created one of the inner north’s most defined community hubs.&nbsp;

Within this evolving precinct, <a href="https://www.apartments.com.au/new-apartments/saxon-street-by-milieu-brunswick-31-saxon-street-brunswick-vic-3056">Saxon Street by Milieu</a> introduces new housing directly alongside the civic anchors that shape daily life in the suburb.

At 31 Saxon Street, the project sits immediately beside Brunswick Baths and within moments of Brunswick Library and Town Hall, longstanding institutions that support both community services and everyday amenity.&nbsp;

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Next door, the newly delivered Balam Balam Place arts precinct has emerged as a central piece of Merri-bek Council’s cultural strategy, bringing together creative studios, exhibition spaces, maternal and child health services, and community programming in a purpose-built civic facility. Together, these destinations have reinforced the surrounding blocks as a focal point for public life in Brunswick.

This part of <a href="https://www.apartments.com.au/developments/brunswick-vic-3056">Brunswick</a> forms a key pocket within the suburb’s designated Major Activity Centre, where long-term planning has prioritised walkability, civic investment, and increased housing supply close to transport and services. The surrounding street network reflects that strategy, with compact blocks, established retail corridors and active transport links supporting a lifestyle that is largely navigable on foot.

Within a few minutes’ walk, Sydney Road delivers one of Melbourne’s most recognisable streets, known for its long-running mix of independent retailers, international dining venues and everyday convenience. Tram routes along Sydney Road provide frequent connections south toward the CBD and north through Brunswick and Coburg, while Jewell Station on the Upfield line sits within roughly a ten-minute walk, offering direct train access into the city.

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Active transport also plays a significant role locally. The nearby Upfield Bike Path forms a key north–south cycling corridor linking Brunswick through Parkville and into the central city, reinforcing the area’s reputation as one of Melbourne’s most accessible inner-urban neighbourhoods for cyclists and pedestrians alike.

The surrounding civic cluster extends beyond cultural infrastructure. Siteworks, a nearby creative hub supporting artists and community organisations, adds to the concentration of cultural activity in the immediate area. Educational institutions such as Brunswick North Primary School, Brunswick Secondary College and RMIT’s Brunswick campus are also within easy reach, contributing to the suburb’s diverse resident base spanning families, students and professionals.&nbsp;

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Designed by <a href="https://www.apartments.com.au/architects/jackson-clements-burrows-architects">Jackson Clements Burrows Architects</a> in collaboration with <a href="https://www.apartments.com.au/interior-designers/designoffice">DesignOffice</a> and landscape architects <a href="https://www.apartments.com.au/landscape-architect/oculus">OCULUS</a>, the nine-level building has been shaped to respond to the surrounding streetscape, with lower levels aligning to the street and upper storeys stepping back to soften its scale and improve solar access.&nbsp;

Curved balcony forms reference nearby heritage architecture, while the development’s public realm improvements include a widened footpath along Saxon Street to strengthen pedestrian connections between the precinct’s civic sites.

Sustainability also underpins the project’s approach. The building is designed to operate entirely on electric infrastructure supported by rooftop solar, with an average 7.5-star NatHERS energy rating and EV-charging readiness across the development. Shared resident amenities will include a landscaped rooftop terrace with barbecue and covered dining areas intended to encourage informal interaction between residents.

Saxon Street marks developer Milieu's fifth project in Brunswick and continues its focus on design-led infill housing across Melbourne’s inner suburbs.&nbsp;

Construction has commenced through reputable builder Manresa, who will complete the project in 2027.

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Saxon Street by Milieu connects residents to Brunswick’s cultural and civic core

Within <a href="https://www.apartments.com.au/new-apartments/candela-ivanhoe-40-upper-heidelberg-road-ivanhoe-vic-3079">Candela Ivanhoe</a>, <a href="https://www.apartments.com.au/developers/salter-brothers">Salter Brothers</a>&nbsp;takes a different approach to larger residences, moving away from the constraints of a single level.

In Grand Residence 3.05, known as the Lustre, plays out across two levels, with a mezzanine configuration that is uncommon in apartment living.

Lustre is a four-bathroom residence where the layout creates a clear distinction between shared and private zones, with uninterrupted views toward the Dandenong Ranges extending the sense of openness from the main living areas.

Entry is to the primary living level, where the kitchen, dining, and living areas are arranged as one continuous space. Timber flooring runs throughout, with a fireplace set within the living zone. Full-height glazing brings in natural light, supported by double glazing that improves thermal performance.

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The kitchen is configured as both a working and social space. A large island bench provides seating, while a walk-in pantry extends storage beyond typical apartment expectations.

Gaggenau appliances, including a 900mm gas cooktop and 600mm oven, are integrated into a layout that connects directly to the adjacent dining and living areas, and outward to the terrace. This balcony includes a built-in BBQ, reinforcing the apartment’s capacity to accommodate larger gatherings without compromising internal space.

A dedicated laundry room, powder room, and a wine cellar area sit discreetly off the main living zone, ensuring that functional requirements are resolved without encroaching on primary living areas. The master suite is also located on this level, designed as a retreat with a walk-through wardrobe and an ensuite that includes double vanities, a bath, and a dedicated dressing table.

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The mezzanine level introduces a second layer of living, rather than simply additional bedrooms. Two large bedrooms with built-in robes are positioned alongside a central bathroom, while a secondary lounge and study area create a self-contained zone suited to children, guests, or extended family. A large storage room further supports long-term usability, addressing a common shortfall in apartment design.

This separation of levels is central to how the residence functions day-to-day. It allows the lower level to operate as the primary entertaining and living space, while the upper level provides privacy and flexibility. The result is closer in feel to a townhouse or standalone home, but with the benefits of apartment living, security, and low maintenance.

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Candela is close to 80 per cent complete, with Ironside delivering construction ahead of its expected October 2026 completion. The development comprises 58 residences, with a strong owner-occupier profile and a mix of one to four-bedroom apartments and loft-style townhouses.

Candela has exclusive access to private amenities, including a residential lounge and rooftop terrace. A charming café and a lifestyle wellness centre are located on the ground level, designed to foster community connection and extend the living experience beyond individual apartments without competing with the scale of homes like Lustre.

Candela, positioned in the heart of Ivanhoe Village, reinforces the practicality of the address. With a Walk Score of 90, residents are within immediate reach of cafés, retail, parklands, and Ivanhoe Station, while also benefiting from proximity to established schools and healthcare services.

[smartcode_project_cta:default project_id=342]

Inside Lustre: Grand Residence 3.05 at Candela Ivanhoe

<a href="https://www.apartments.com.au/developers/milieu-property">Milieu</a>’s <a href="https://www.apartments.com.au/new-apartments/elsternwick-gardens-by-milieu-8-gordon-street-elsternwick-vic-3185">Elsternwick Gardens</a> is being shaped around a simple but increasingly rare premise in apartment development: that the built environment should actively support residents’ wellbeing.&nbsp;

Located on the former ABC Studios site on Gordon Street in Melbourne’s south-east, the new neighbourhood sits on an expansive 11,740 sqm site neighbouring the heritage-listed Rippon Lea Estate, whose gardens date back more than 140 years.

Rather than positioning wellness as an add-on amenity, the development integrates it into the physical planning of the site. Architecture by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> is arranged across six low-rise buildings set within extensive landscaping designed by <a href="https://www.apartments.com.au/landscape-architect/oculus">OCULUS</a>, with more than 40 per cent of the land dedicated to gardens and green space. Walking trails, pocket gardens, and mature trees are threaded between buildings, creating a network of green corridors that encourage residents to move through the precinct on foot and spend more time outdoors.

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Milieu has intentionally framed these gardens as an extension of the neighbouring Rippon Lea Estate. More than 16,000 new plants will be introduced across the site, with species carefully selected to protect and complement the area’s ecological significance. The approach focuses on strengthening existing environmental conditions while establishing new habitats that support native wildlife, reinforcing the role of the landscape as both an active ecosystem and a defining element of daily life.

A private resident gate will provide direct access to the historic grounds during opening hours, allowing residents to move seamlessly between the development’s landscaped gardens and the estate’s expansive lawns, lakes, and mature trees. The project’s gardens will also be maintained by the same gardeners responsible for Rippon Lea, reinforcing the visual and ecological continuity between the two landscapes.

Complementing the landscape is a dedicated wellness hub designed to support everyday health and recovery. Residents will have access to a gym alongside yoga and Pilates studios, while mineral pools and infrared saunas provide spaces for relaxation and restorative wellbeing. Shared lounges, workshop spaces, and pet care facilities expand the concept of wellness beyond fitness, creating opportunities for social connection and community interaction within the precinct.

Environmental performance is another key component of the project’s wellbeing focus. Elsternwick Gardens will be entirely fossil-fuel-free, with homes designed to operate on renewable electricity rather than gas. Passive design strategies, including cross-flow ventilation, high-performance insulation, and thermally broken double glazing, are intended to maintain comfortable indoor temperatures while reducing energy demand. Solar photovoltaic systems will power common building services, while rainwater harvesting will help irrigate the extensive landscaping across the site.

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Milieu Founder and Managing Director Michael McCormack says the scale and setting of the project allowed the team to take a different approach to urban apartment living.

“This site represents a once-in-a-lifetime opportunity to build something truly special,” McCormack says.

“Through that process, we arrived at a design that centres on a fully realised natural landscape – a series of private, interconnected gardens that encircle the homes and extend seamlessly from Rippon Lea Estate.”

Elsternwick Gardens will comprise three residential offerings, Gordon Place, Ripponlea Terrace, and The Garden Pavilion, each designed for owner-occupiers and shaped around high-quality interior design by Woods Bagot, K.P.D.O., and Flack Studio. The first stage, Gordon Place, includes one-, two-, and three-bedroom apartments designed with a strong focus on indoor-outdoor living and sustainability.

[smartcode_project:default project_id=136535 project_image_fid=288412]

Milieu recently appointed <a href="https://www.apartments.com.au/builders/brady-constructions">Brady Constructions</a> to deliver the project, marking a key milestone for the development. The appointment follows the demolition of the former studio buildings on the Gordon Street site, with construction progressing toward the delivery of the nature-led community.

Situated between the established villages of Elsternwick and Ripponlea, the development balances its garden setting with strong urban connectivity. Residents will be within walking distance of cafés, restaurants, and local retail, while nearby train and tram connections provide quick access to Melbourne’s CBD and the beaches of Elwood and St Kilda.

With construction underway and the first residents expected to move in by early 2027, Elsternwick Gardens represents a growing shift in apartment development toward environments that prioritise wellbeing as much as density or location. By placing landscape, sustainability, and shared spaces at the centre of the design, Milieu is positioning the project as a residential neighbourhood where wellness is not just promoted, but built into the structure of everyday life.

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Elsternwick Gardens' wellness-first design strategy

Brisbane-based developer <a href="https://www.apartments.com.au/developers/red-co">Red &amp; Co</a> has made a striking debut on the Gold Coast, officially unveiling its $250 million COMO development in Varsity Lakes, a lifestyle-driven residential project anchored by an extensive rooftop wellness and activity precinct.

Having recently launched to market, construction has already been fast-tracked by <a href="https://www.apartments.com.au/builders/5point-projects">5Point Projects</a>, ensuring momentum continues on what is set to become a landmark residential address for the growing Varsity Lakes community.

Located at 22 Lake Street, Varsity Lakes, <a href="https://www.apartments.com.au/new-apartments/como-varsity-lakes-22-lake-street-varsity-lakes-qld-4227">COMO</a> will comprise 156 apartments across 16 levels, comprising one-, two- and three-bedroom residences designed for modern living. However, it is the project’s rooftop amenity offering that sets COMO apart.

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Designed as a dedicated wellness and recreation hub, the rooftop will feature a 25-metre lap pool, fully equipped gymnasium, and multiple pickleball and paddleball courts - amenities rarely seen in boutique apartment projects.

Residents will also have access to a sauna and plunge baths, while landscaped gardens and relaxation zones will provide tranquil spaces overlooking sweeping panoramic views across the Gold Coast skyline.

The rooftop precinct has been designed to function as the social and wellness heart of the development, encouraging residents to embrace an active, balanced lifestyle within their own building.

&nbsp;

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Red &amp; Co director David Laverty said the amenity offering was central to the project’s design from the outset.

“Amenities were at the forefront of our decisions,” Laverty said.

“Buyers today are looking for more than just an apartment - they want a lifestyle that promotes health, connection and balance.

“The rooftop at COMO has been designed to be the epicentre of that lifestyle, with a suite of wellness and recreation facilities that are quite unique for a boutique development of this scale.”

&nbsp;

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Designed by <a href="https://www.apartments.com.au/architects/bda-architecture">BDA Architecture</a>, the residences prioritise liveability, featuring spacious layouts, 2.7-metre ceilings and high-quality finishes throughout.

The development sits beside Bond University, placing residents within walking distance of education, retail and dining options within the vibrant Varsity Lakes precinct, including Robina Town Centre, Varsity Lakes Train Station and a range of leading schools.

[smartcode_project:default project_id=135546 project_image_fid=363511]

Laverty said the location was a key driver behind Red &amp; Co’s decision to bring the project to the Gold Coast.

“<a href="https://www.apartments.com.au/developments/varsity-lakes-qld-4227">Varsity Lakes</a> was a clear choice for us to invest in as it’s a lifestyle hub that seamlessly blends lakeside living with urbanity,” he said.&nbsp;

“Como will capitalize on this great location, delivering a project that not only creates premium homes, but a lifestyle defined by community, wellbeing, and connectivity.”

Red &amp; Co has delivered more than 500 apartments and townhouses across 26 projects in Brisbane in recent years, with COMO marking the company’s first major Gold Coast development.

[smartcode_project_cta:default project_id=135546]

Red & Co unveils amenity-rich Como development in Varsity Lakes

Economic Development

<h2>What&rsquo;s the outlook for the Australian property markets for 2021 and beyond?</h2>

This is a common question people are asking now that our real estate markets are up and running again after virtual auctions and sight unseen purchases took place in 2020.

News from the biggest banks and Australian economic experts are predicting house price growth across almost every segment of the market.

Those I spoke to, and who have released forecasts of their own, are predicting property price growth of 12 per cent per cent - 20 per cent per cent across Australia this year. They expect the trend will almost certainly continue until the end of 2022.

Historically low-interest rates and FOMO (fear of missing out) have driven dwelling prices to record new highs &ndash; but we&rsquo;ve only recently surpassed previous 2017 peaks, which means double-digit price growth is on the horizon for many areas around Australia in 2021.

AMP Capital&#39;s Shane Oliver in particular said, &quot;the forces that have driven average Australian capital city property prices well above trend and well above price-to-income ratios seen in comparable countries over the last two decades may be at, or close to, having finally run their course.&quot;

We&rsquo;ve taken a look at a handful of the state capital property markets, how they&rsquo;ve performed since COVID hit, and what is being forecast to the end of 2021.

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Melbourne Forecast

While Melbourne property prices suffered because of its extended lockdown which severely impacted market activity in 2020, commencing in late October the Melbourne property market has rebounded strongly and is likely to deliver double digit price growth over the next 12 months.

Apartment prices were up just 0.4 per cent in July, contributing to a growth of 1.9 per cent for the quarter and 6.1 per cent in the year to date. The median apartment price in Melbourne is now $612,711.

Dwelling values overall, have increased 11.1 per cent in the past seven months, carried primarily by house price growth of 13.3 per cent in that period.

Property of every type remains in high demand across regional Victoria, especially those with easy access to the capital city with units seeing price growth of 15.7 per cent since January.

Overall, experts forecast property prices will rise roughly 16 per cent by 2021&#39;s end.

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Sydney Forecast

Extremely strong demand for property in Sydney&rsquo;s inner and middle-ring suburbs has led to Sydney house prices seeing double digit price growth, apartments however have taken longer to bounce back from covid.

Apartment prices are up 5.1 per cent over the quarter to be up 10 per cent in the year to date. Of that growth, 1.6 per cent happened in July with similar showings in February and March. Sydney&rsquo;s median unit value is now just over $810,000.

Interestingly enough it is Regional NSW that is seeing the strongest growth in the apartment sector with values shooting up 7 per cent this quarter to be up 14.5 per cent in the year to date.&nbsp;

It is worth noting that the greatest increase in property prices across NSW are seen in the priciest properties and this holds true in both the house and unit markets.

Overall, experts forecast property prices will rise roughly 19 per cent by 2021&#39;s end.

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Brisbane Forecast

Brisbane&rsquo;s house prices remained resilient over 2020 when other markets were impacted by the economic impact of COVID-19.

Now, moving forward, the Sunshine State will shine with strong demand for homes, particularly in lifestyle areas, likely to deliver double digit capital growth over the next 12 months.

Brisbane apartment values have increased 2.7 per cent over the quarter, in line with 6.2 per cent in the year to date.&nbsp;

Median apartment values have hit a high of $419,143.

Several of the economists I spoke to including Terry Ryder and Westpac&#39;s Bill Evans tipped housing prices to surge 20 per cent between 2022 and 2023.&nbsp;

Hotspotting&#39;s Terry Ryder clarified that 89 per cent of suburbs across Brisbane are seeing price growth and was tipping it to become Australia&#39;s property leader in the coming months and years.

It&rsquo;s also worth keeping in mind the Brisbane 2032 Olympics which will positively impact property values now and in the future.

Overall, experts forecast property prices will rise roughly 16 per cent by 2021&#39;s end.

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Canberra Forecast

Canberra&rsquo;s property market has been described by many as a &ldquo;quiet achiever&rdquo; with dwelling values reaching a new peak after growing 14.2 per cent over the last year.

Considering a large percentage of Canberra&#39;s population is employed by the government or industries supporting the public sector, Canberra&rsquo;s property market has not really felt the effects of the coronavirus recession like other capital cities did.

Due primarily to the ongoing apartment developments popping up across Canberra, like those from Geocon, unit values are up 1.3 per cent this month, making up a large chunk of the 2.8 per cent price growth this quarter. Apartment prices are up 6.5 per cent in the year to date.&nbsp;

Median apartment prices are currently $520,900.

Moving forward, the Canberra property market will continue to enjoy solid but slower property price growth, due primarily to slow population growth.

Overall, experts forecast property prices will rise roughly 17 per cent by 2021&#39;s end.

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Perth Forecast

Perth&rsquo;s long-awaited recovery was interrupted midway by COVID-19 but now Perth&rsquo;s housing market is back on a recovery trajectory, with home values posting a 7.5 per cent increase in the year to date.

Perth continues to be the most affordable capital city for houses in the country and this along with a record-low mortgage rate, improving economic conditions and government incentives has set it up for strong price growth this year.

This has also seen strong benefits for the apartment market which has been neck and neck with houses and even outperformed them this quarter, seeing 2.3 per cent growth compared to 1.5 per cent. Units were up 0.6 per cent for July, while houses saw growth of 0.3 per cent.

Apartment values are up 6.8 per cent since January achieving a median price of $404,257.

Overall, experts forecast property prices will rise roughly 19 per cent by 2021&#39;s end.

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<h2>How does my property impact the economy?</h2>

Real estate affects the economy because it makes up a large portion of individual and business wealth across economic sectors.

When real estate prices rise, wealth increases, so individuals and businesses are more likely to borrow and spend.

This can be seen in recent times with the average Australian savings account decreasing ~$7,000 from May to April as prices start to spike, however this can also be largely attributed to a reducing fear of COVID-19

When your home rises in value it increases the overall value of the economy. When real estate prices rise, wealth increases, so individuals and businesses are more likely to borrow and spend.

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<h2>What&rsquo;s causing the rise in home prices?</h2>

The primary factor causing the current boom in home prices are the continuing low mortgage rates and low interest rates.&nbsp;

Plus with Australia&rsquo;s excellent response to Covid 19 transmission seeing business reopening well and an increasing optimism for the economy there is much less fear around COVID-19.

With fewer homes for sale and first time home buyers and owner occupiers (those buying a property to live in it) dominating the market, they are currently the ones driving up property prices the most.&nbsp;

However as incentives like those from the HomeBuilder Grant and First Home Buyer Grant taper off it is expected that we will see a massive uptick in investor spending on property as they compete with owner occupiers and first home buyers over the super competitive interest rates.

It is predicted that Investors will drive the market well into 2022 and perhaps even 2023 depending on other conditions that influence interest rates like the cash rate.

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<h2>How does the Cash Rate influence the Interest Rates on my loan?</h2>

You often hear about it in the news, the monthly changes in the Cash Rate, but what is the cash rate and how does it affect you?

In essence the Cash Rate which the RBA meets on to decide once a month (currently 0.15 per cent) changes how much money banks can lend to you.

So when the cash rate is extremely low - close to zero - as it is currently, banks can and are encouraged to offer lower interest rates.&nbsp;

That means when the Cash Rate is low, Variable and Lock-In Interest Rates are low so your mortgage is cheaper!&nbsp;

This can save you hundreds to thousands of dollars a year depending on the value of your home.&nbsp;

With all that covered, every expert I talked to predicts that the cash rate will not decrease any time in the next 2 years and most experts expect the cash rate to increase in 2023 or later.

However three of the Big 4 banks have already started hiking interest rates across the range with Westpac the only one yet to start showing upward movement. It&#39;s a sign of the times with a number of other banking and loan institutions also increasing interest rates across a wide range of home loans.

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<h2>How does the government affect property prices?</h2>

Legislation is also a factor that can have a sizable impact on property demand and prices.

Tax credits, deductions, and subsidies are some of the ways the government can boost demand for real estate for as long as they are in place.

Some recent examples of this include the HomeBuilder Grant and the First Home Buyers Grant.

Being aware of current government incentives can help you determine changes in supply and demand and who and what will be affecting property prices.

An example of something to look out for is the percentage of properties purchased by FHB&#39;s (First Home Buyers) soaring to record highs recently. Although this still remains the case, it wont forever and certainly is not predicted to last into 2022.

What’s the outlook for the Australian property markets for 2021 and beyond?

jordan_55689

Economic Guide: Forecasting property prices and what affects property in 2021, 2022 and beyond

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EXPERT OBSERVER
The Reserve Bank has released its November Statement on Monetary Policy and a major interest is always in any revisions to its output, employment and inflation forecasts.
In that regard, we were a little surprised that the forecast for growth in 2019 remained at 3 ¼ per cent. That is because in the Governor’s Decision Statement following the November Board meeting, he noted “the forecast for economic growth in 2018 and 2019 have been revised up a little."
The central scenario is for GDP growth to average around 3 ½ per cent over these two years”. That seemed to point to an upward revision for the 2019 forecast but instead it remains 3 ¼ per cent.
However, there is some recognition of stronger growth in the second half of 2019 since growth through to June 2020 has been revised up from 3 to 3 ¼ per cent.
It is true however, that growth in 2018 has been revised up to 3 ½ per cent from 3 ¼ per cent, although that largely reflects a higher starting point given that the previous estimate of growth to June 2018 was lifted from 3 per cent to 3.4% actual.
The forecast for 2019, nevertheless, is significantly higher than Westpac’s forecast of 2.7%.
This can largely be explained by an assessment by the RBA that there will be no marked reduction in residential construction activity in 2019 and limited reduction in 2020. Secondly, the assumption is that household consumption growth will be sustained at around the current 3 per cent pace over the forecast period.
With regards to the residential construction cycle, the assumption is that the fall in building approvals, which is already apparent and the information the RBA has received from its liaison contacts in the industry that off-the-plan sales have slowed significantly, will not significantly impact activity until beyond 2020.
This seems to overlook evidence of a clear slowdown in non high-rise approvals, the likelihood of an increase in abandonments of approvals which are already in the system, and evidence, which the RBA notes, that “lot sales for new detached housing have also declined sharply in Sydney and Melbourne since late 2017”.
Instead we assess that all of these forces point to a more significant reduction in dwelling construction in 2019 and 2020 than the RBA is expecting.
The view around consumption growth being sustained at 3 per cent looks courageous. It relies on ongoing growth in employment despite a clear slowing through 2018, the elusive pick-up in wages growth, and only a relatively small wealth effect that might be related to the ongoing falls in house prices and associated household wealth. We would expect that with the savings rate down at around 4 per cent, this wealth effect is likely to be more significant.
There has also been an increase in the forecast for underlying inflation for the year to December 2019 from 2 per cent in the August SoMP to 2 ¼ per cent. With the recent September quarter inflation report confirming that underlying inflation is running at 1 ¾ per cent, this forecast lift of ½ per cent in underlying inflation looks to be optimistic.
The justification behind this increase is around expected faster wages growth and a larger reduction in the output gap due to the above trend growth in 2018 and 2019.
The history of underlying inflation indicates that a ½ per cent jump over the course of one year seems optimistic given the correction in housing that is underway.
The RBA’s analysis of the prospects for wages growth is tentative. In fact, it points out that “wage outcomes from enterprise bargaining agreements are likely to remain a drag on overall wages growth” and also points to its liaison work which notes that “there is still spare capacity in the labour market”.
Appropriately, the SoMP spends some time referring to international evidence which indicates that Australia’s unemployment rate could fall well below historical estimates of the NAIRU “before there is a material increase in wages growth”.
This evidence refers to globalisation, technological change, and changes in relative bargaining power. Other major risks to this inflation forecast relate to ongoing competitive forces in the retail sector and “a risk of further declines in administered prices” due to government initiatives to reduce cost of living pressures.
As was indicated in the Governor’s Decision Statement, the forecast for the unemployment rate has been lowered. However, this appears to be a cautious ‘mark-to-market’ exercise.
In August, the forecast was for the unemployment rate to fall from 5 ½ per cent in December 2018 to 5 per cent by December 2020.
The new forecast is for the unemployment rate to fall from 5 per cent in December 2018 (recognising the most recent employment report) to 4 ¾ per cent in December 2020.
The discussion around the risks of a lower NAIRU would suggest only a very limited prospect of resurgent wage pressures should the unemployment rate only fall by a ¼ per cent in two years.
It is difficult for a central bank to acknowledge political risks but with a Federal election certain to be called in 2019, the uncertainty/ confidence factor associated with such an event might also have been incorporated in the forecasts.
But their assumption around employment growth, income growth and business investment seems to indicate no effect taken into account – both construction activity and machinery and equipment investment are expected to be boosted.
Conclusion
On face value, the stronger growth and higher inflation forecasts might imply that the RBA is closer to raising rates than we have expected. That may well be the case from their perspective. But if the economy evolves as we expect with a slowdown in consumer spending, a contraction in residential investment, and softer confidence partly linked to global uncertainty, the RBA’s growth and inflation forecasts are unlikely to be achieved.
Of course, it will take some time for these developments to be apparent and based on the Governor’s comment “the Board does not see a strong case to adjust the cash rate in the near-term”, we have ample time for the outlook to evolve without a surprise policy adjustment based on these forecasts.
Westpac confirms its view that the cash rate will remain on hold through 2018, 2019 and 2020.  
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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RBA wrong to rely on small wealth effect given ongoing falls in house prices: Bill Evans

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<img src="https://counter.theconversation.edu.au/content/63322/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Various cities in Australia have developed creative economy policies with the aim of diversifying their economy.
These policies are about attracting and retaining entrepreneurs and firms from the creative industries sector, such as the music and fashion industries.
Creative economy policies were often based on the cluster concept developed by Michael Porter in the 1990s. This was the case for the creative city strategy in Brisbane and also for the more recent music industry policy in Melbourne.
Brisbane has been very active in this area. The objective was to be less dependent on natural resources in the future.
Planning initiatives such the Kelvin Grove Village are examples of economic development strategies based on the cluster concept that translated into planned projects. But positive steps are being taken to provide affordable spaces for creative workers.
Recent research on the video game industry in Australia has shown that new technologies have greatly influenced the production of games. The industry functions as a “networked community” and not strictly as spatially bounded clusters. The use of new platforms such as the internet enables small companies to produce games from remote areas.
<h2>Industry structures are changing</h2>
The composition of the industry has changed significantly since 2006-07, with the closure of several development studios that focused on console games, such as Krome Studios. A variety of platforms – Unity 3d, mobile phones etc – is now available to game developers.
With the shift from console games to mobile phone games, the industry has changed dramatically. The nature of the demand has changed too: consumers of video games are now looking for a quick and fast experience.
Disparity Games, operating from Noosa on the Sunshine Coast, is an example of these new successful companies located outside the main cluster. The people behind Disparity Games are two video game developers working from home in an idyllic environment. The map below shows the location of video game firms in Queensland, with some of those companies operating from the Gold Coast and the Sunshine Coast.
In an interview with the author, one of the game developers explained why they decided to move their company to Noosa:
"After the collapse of large studios we decided to go indie. With the smaller indie companies, everyone is more supportive. We have meet-ups on marketing, technical issues, game testing. We are exchanging knowledge at those events, [so] we don’t need to be based in the city anymore to be part of the community."
<h2>New technologies enable new ways of working</h2>
These studios have demonstrated that self-publishing is a viable business model in Australia. Independent developers can now bypass traditional international publishers.
New technologies have thus had the effect of reducing the size of video game companies and increasing their number. This is verified in Queensland, which has become specialised in developing mobile phone games.
New technologies such as the National Broadband Network (NBN) have changed the way video game developers produce games and where they produce them. With the NBN, a small video game company can literally produce a game from anywhere.
If they already have the professional connections, developers can work on the same game with different experts located in different cities. Face-to-face interactions are important, but this does not mean anymore that video game developers need to be located in the city at all times.
In that sense, creative economy policies should think about flexible ways to accommodate creative workers in the city. The opening of co-working spaces in South Bank or the River City labs are good examples in Brisbane.
This research shows it is time to go beyond the cluster type of economic development policies to attract and retain creative workers and firms in cities like Brisbane.
Instead of planning creative neighbourhoods or districts, which are often not affordable for start-up companies, policies should aim for flexible solutions such as co-working spaces. Those are more adapted to an era in which new technologies are to a certain extent changing the geography of creative industries based on technological innovation such as the video game industry.
Sebastien Darchen is lecturer in Planning, The University of Queensland and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/sebastien-darchen-6781" target="_blank">here</a>.
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