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.

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.

<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.

The development will be delivered across two stages, with the first stage carrying an estimated gross realisation value of around $360 million.

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.

The residential mix will include townhomes, oversized two-bedroom apartments, substantial three-bedroom residences and four-bedroom homes.

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.

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.

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.

<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" />

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.

"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.

"With Gold Coast Airport on its doorstep, it also offers a level of accessibility that broadens its appeal across almost every market demographic."

The project comes as the southern Gold Coast continues to attract an increasing share of high-end apartment development and buyer activity.

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.

Mould said those characteristics had informed the approach MAYD and Cera Stribley had taken to the project.

"We've worked closely with Cera Stribley to create a vision that is deeply connected to its surroundings," he said.

"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."

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.

"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.

"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."

Cottam said the proximity to Gold Coast Airport was also proving increasingly important for interstate and second-home buyers.

"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."

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.

MAYD is targeting an early 2027 launch.

Joel Robinson

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

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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.

But despite that growth, the suburb has seen relatively few major new apartment projects brought to market over the past 18 months.

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.

[smartcode_project:default project_id=152737 project_image_fid=377679]

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.

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.

[smartcode_project:default project_id=152737 project_image_fid=377675]

Nova Rêve also represents a significant step up from the family's first apartment development, Grand Rêve, which was delivered nearby on Garthowen Crescent.

Grand Rêve introduced larger, house-like apartment layouts and premium inclusions including Wolf and Sub-Zero appliances to the Castle Hill market.

Nova Rêve takes that approach to a precinct scale, combining the residential component with hospitality, retail and substantial public and resident landscaping.

[smartcode_project:default project_id=152737 project_image_fid=377685]

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.

"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.

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.

It will include restaurants, cafes, skybars and all-day dining, alongside conference and event facilities catering to business functions, community groups and private events.

At ground level, more than 1,600 sqm of shops and cafes will open onto the surrounding streets and landscaped areas.

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.

[smartcode_project:default project_id=152737 project_image_fid=377680]

Reve Group's Romio Georges said creating an active ground plane had been central to the planning of Nova Rêve.

"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.

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.

More than 80 per cent of the apartments will occupy corner positions, with Turner responsible for both the architecture and interiors.

&nbsp;

[smartcode_project_cta:default project_id=152737]

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Nova Rêve arrives as Reve Group bets on Castle Hill's next growth phase

A collection of just 25 large-format apartments and penthouses overlooking Goodwin Park is entering the Coolangatta market, with <a href="https://www.apartments.com.au/new-apartments/marea-residences-coolangatta-27-27a-dixon-street-coolangatta-qld-4225">Maréa Residences</a> combining a low-density, residential-only approach with uninterrupted park and Pacific Ocean outlooks.

Located at 27 Dixon Street, Maréa comprises three and four-bedroom residences alongside a limited number of dual-level penthouses, with the project positioned between Goodwin Park and <a href="https://www.apartments.com.au/developments/coolangatta-qld-4225">Coolangatta</a>’s coastal precinct.

Construction has commenced, with completion currently estimated for late 2027. Three-bedroom residences are priced from $1.8 million.

[smartcode_project:default project_id=150999 project_image_fid=374005]

The project has been designed around its northern outlook across the park, with the building’s architecture, landscaping and material palette intended to establish a connection with the neighbouring green space. The residences have been configured to maximise natural light and views across Goodwin Park towards the ocean.

Inside, the material palette incorporates timber, stone and brushed brass, complemented by curved detailing and ambient lighting. Kitchens and bathrooms carry the same natural material approach, while residences also include basement parking, storage and lift access.

Maréa’s penthouses are arranged over two levels and include private pools, adding another layer to the project’s focus on larger-format apartment living. Across the development, residences are configured with three or four bedrooms rather than the broader mix of smaller apartment types commonly found in larger projects.

[smartcode_project:default project_id=150999 project_image_fid=374010]

Resident amenity is concentrated at rooftop level, where landscaped entertaining terraces and pools take advantage of elevated views across Coolangatta and the Pacific Ocean.

The project has so far been particularly well received by local owner-occupiers and downsizers, according to Urban Activation Property Sales and Marketing Director Matt George, with the residential-only format, construction quality and northern park outlook among the features resonating with purchasers.

“The uninterrupted northern aspect overlooking Goodwin Park has been a key point of difference, with buyers attracted to the sense of serenity and open space the park provides, while still enjoying easy access to the ocean and being within walking distance of the lifestyle and amenities Coolangatta has to offer,” George said.

[smartcode_project:default project_id=150999 project_image_fid=374002]

“The combination of high-quality construction, a residential-only building, park outlook and proximity to the beach has resonated strongly with the local downsizer market.”

The Dixon Street address is within walking distance of Coolangatta Beach and the broader southern Gold Coast coastline, including the surf breaks at Snapper Rocks and Kirra. Coolangatta’s cafés, restaurants and retail are nearby, while Gold Coast Airport is also within close proximity.

[smartcode_project_cta:default project_id=150999]

Maréa Residences brings parkside apartments to Coolangatta

Melbourne developer PDG has secured Victorian Government approval for its $1.5 billion Southbank development <a href="https://www.apartments.com.au/new-apartments/the-one-1-queens-bridge-street-southbank-vic-3006">The One</a>, clearing the way for the long-dormant riverfront site opposite Crown to finally be developed.

The Minister for Planning has approved the project at 1-29 Queens Bridge Street, with the Department of Transport and Planning issuing the planning permit following its assessment.

The approval will allow PDG to develop the prominent 5,059 sqm site with a major mixed-use tower comprising premium apartments, including branded residences, a luxury hotel and boutique office space.

PDG acquired the site in late 2024, with its position directly opposite Crown's main entrance and near Melbourne's Arts Precinct making it one of Southbank's most significant remaining development opportunities.

<img alt="PDG" data-entity-type="file" data-entity-uuid="3933013e-6332-4386-b9be-089df05caf17" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.22%E2%80%AFAM.png?VersionId=sITIgBqDL0N3VNSMwWEmF5UA.uvcsRyu" />

Designed by COX in collaboration with ODO and PDG, the tower's architecture draws on the movement of the Yarra River, with six vertical pleats running the height of the sculpted facade.

The project will also see the heritage-listed Queens Bridge Hotel restored and incorporated into the development&nbsp;with new hospitality and public uses, including a rooftop venue.

A significant component of The One will be its residential amenity.

More than 5,000 sqm of resident facilities will be delivered across a single level, making it one of the largest consolidated residential amenity offerings proposed in an Australian apartment development.

The planning approval also incorporates a major upgrade of Queensbridge Square, which PDG will deliver in partnership with the City of Melbourne.

<img alt="PDG" data-entity-type="file" data-entity-uuid="73167fcd-1031-4b6f-a408-a064cfe45ed1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.17%E2%80%AFAM.png?VersionId=Pf1AEWxw6SNmBqR0zQW5lyEze.MtxgFp" />

The existing square will be revitalised as a new civic and pedestrian space along the Yarra River, strengthening the connection between the project, Southbank and the riverfront.

PDG Founder and Managing Director Vince Giuliano said the approval represented a major milestone for a site which has remained largely underutilised for more than 15 years.

“This is the most significant Planning Permit approval Melbourne has seen in recent years,” Giuliano said.

“For more than 15 years, this site has remained underutilised. This approval enables us to deliver a project that will contribute meaningfully to the revitalisation of Southbank, restore and reactivate an important heritage building, and create a new civic and hospitality destination for Melbourne.”

The latest approval follows an earlier planning permit issued by the City of Melbourne covering demolition works across part of the site at 9-29 Queens Bridge Street. Those demolition and early works are already underway.

PDG has also started generating early interest in the residential component from owner-occupiers ahead of a planned public launch in early 2027.

PDG secures approval for $1.5bn Southbank apartment development, The One

Local developer Harridan is seeking to turn its Woolloongabba apartment project into the first stage of a broader transformation of Burke Street, using a new 16-storey mixed-use building to establish a greener pedestrian connection toward the rapidly evolving Boggo Road transport and knowledge precinct.

The South East Queensland developer has filed plans for 154 apartments on the <a href="https://www.apartments.com.au/new-apartments/4-burke-street-woolloongabba-qld-4102">southern side of Burke Street</a>, where its proposal has been designed alongside a wider vision by LatStudios for the street.

That vision positions the southern side of Burke Street for buildings of 15 storeys and above, while envisaging lower-rise development of up to five storeys on the northern side to transition into Woolloongabba's existing character housing. It also proposes wider pedestrian verges, deep planting, new street trees and upgrades to the pedestrian approach to Boggo Road Station.

The Harridan development itself has been designed by Brisbane-based Arqus Design and will comprise 154 apartments across 16 storeys. The mix is weighted heavily toward two-bedroom apartments, with 121 proposed alongside 10 one-bedroom and 23 three-bedroom residences. There will typically be around 14 units per floor.

A lower-ground car park and three podium levels will accommodate 156 resident parking spaces, along with visitor and commercial parking. There will also be 154 resident bicycle spaces and 40 visitor bicycle parks.

&nbsp;

Harridan is a family-owned developer and part of the Holmwood Highgate Group, with more than three decades of development activity across South East Queensland. Its portfolio spans residential, commercial and industrial property, with current residential projects including Riverbank on Byron in Bulimba, Esperance Residences in Carina and The Precinct at Kinross Road in Thornlands.

Wooloongabba has been popular for apartment developers, particularly since the announcement of the 2032 Summer Olympics games in Brisbane.

While there have been a lot of development applications, it has failed to materialize into real supply.&nbsp;

Sarazin has been the major player in the area. They are under construction at Murcia Residences, on the fringe of East Brisbane and Woolloongabba. They have just launched <a href="https://www.apartments.com.au/new-apartments/the-stanley-residences-woolloongabba-8-trafalgar-street-woolloongabba-qld-4102">The Stanley Residences</a>, in Woolloongabba on Trafalagar Street. They also have Nuage coming soon on the nearby <a href="https://www.apartments.com.au/new-apartments/nuage-woolloongabba-14-wellington-road-woolloongabba-qld-4102">Wellington Road</a>.

First look: Harridan plans Burke Street transformation beside Boggo Road transport hub

Economy

jchancellor-FAypfDUnLy

Fixed income markets and the economy: RBA's Christopher Kent

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GUEST OBSERVER
The labour market has comprehensively strengthened over the past four months.
Trends in employment (including the composition of jobs growth), the unemployment rate, participation and hours worked suggest that output growth will accelerate over H2 2017.
Sustained strength in the labour market is a necessary condition for wage inflation to lift. 
Overview
After a soft 2016 the Australian labour market is on an encouraging trend. The latest ABS employment report was the fourth robust set of monthly jobs numbers in a row. The improvement is evident in a range of labour market indicators. And it suggests that GDP growth will lift over H2 2017. As a result, market pricing for another rate cut has faded to zero and a 65% chance of a hike within the next twelve months is now priced.
In this note we analyse the latest trends in the key metrics that relate to the labour market. We also take a brief look at outcomes by state. We conclude by presenting our views on what we think is in store for the labour market over the second half of 2017 and what it means for policy. 
Employment
We kick off with employment growth because job creation goes hand in hand with output growth (chart 1).
Click to enlarge
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.48.21%20AM.png" alt="">
Over the past four months there’s been a marked improvement in jobs growth. The ABS reports that employment has lifted by 154k over the four months to June and the average monthly gain has been 38.5k (chart 2). These results are strong. As a result, annual employment growth in the year to June 2017 accelerated to 2.0% - quite a bit higher than population growth (1.5%pa).
As we flagged a few weeks ago, Australia’s population growth has boosted headline growth rates and masked some per capita weakness in the economy. But if employment growth can continue to outpace population growth some of the per capita metrics related to the labour market and output will improve. From GDP perspective, the recent trend in jobs growth means we should see a lift in growth over H2 2017 after a soft 2016/17. 
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.49.33%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.49.33%20AM.png" alt="">
In addition to strong employment growth, the composition of jobs growth has been impressive. Taken at face value, full-time jobs have lifted by 179k over the past four months while part-time employment has fallen by 25k. As a result, the annual growth rates have converged (chart 3).
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.50.22%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.50.22%20AM.png" alt="">
There can be a fair bit of noise in the PT/FT split each month. But looking at the trend series indicates there has 4.0 recently been a solid lift in full-time jobs growth.
This is a welcome development and is reflective of some genuine strength in job creation. In addition, the pace of full-time job losses from the fall in mining-related employment has eased which means that the headwind on net full-time jobs growth has lessened. 
2. Unemployment  
There has been a modest improvement in the unemployment rate in recent month which reflects the combination of solid jobs growth dampened a little by a lift in participation. The trend unemployment rate, our preferred measure of the jobless rate, has come down by 0.2ppts over the past four months to be 5.6% in June (chart 4). The current level of the unemployment rate is not at a historically high 
one. But despite the fall it is above the non-accelerating inflation rate of unemployment (NAIRU) which the RBA recently estimated to be 5%. It suggests that there is still a fair way to go to take the economy back to the level we associate with full employment. But it’s moving in the right direction, albeit that it’s a slow grind.
Job security fears have remained stubbornly high despite the recent improvement in the labour market. It looks to us like the latest strength will need to be maintained if job security fears are to lessen. In fact, in may be the case that a lift in wages growth is also required for job security fears to recede. 
3. Underemployment and underutilisation 
Underemployment remains a problem in Australia. In May, the underemployment rate was 8.8% - just 0.1ppt off its record high (chart 5). To recap, people who are underemployed have a job but want to work more and can’t find the work.
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.51.26%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.51.26%20AM.png" alt="">
The number of additional hours of work wanted by underemployed workers has been stable at around two days (or 14hrs) per week since the mid-2000s. This compares with unemployed people who are on average looking for 33 hours of work per week. 
On Wednesday, when this note was in train, RBA Governor Philip Lowe gave a speech on The Labour Market and Monetary Policy which covered a lot of the themes here. One chart in the Governor’s speech depicted proportionately the reasons why people work part-time. The data came from the HILDA release and indicated that the bulk of people in part-time work have chosen to be there. Nothing surprising there. Interestingly, however, the proportion of people who are working part-time because they could not find full-time work was put at around 9% which marries up almost perfectly with the underemployment rate.
Data on underemployment is published by the ABS on a quarterly basis so we will need to wait until August for the next update. But the trend lift in full-time employment suggests that it’s more likely than not that the underemployment rate inches a little lower when the new data prints.
The sum of the unemployment rate and the underemployment rate produces the underutilisation rate which is the broadest measure of spare capacity in the labour market – using the latest unemployment and underemployment rates puts it at 14.4% in June. This is quite high and means that the economy is operating below its capacity and there is a negative output gap. We have known this for some time. What we are interested in from here is the direction in the underutilisation rate and there are tentative signs that it’s starting to decline. In our view, it’s going to need to come down materially to generate wages inflation. 
4. Employment to population and participation
The share of the Australian workforce in a job has recently lifted. The employment to population ratio has ticked up by 0.46ppts to 61.3% (chart 6). This shift upwards basically reflects employment growth running above population growth. Given the very solid jobs growth over the past few months we would have expected the unemployment rate to fall by more than 0.2ppts. But its decline was capped due to a lift in participation.
Labour force participation has picked since late 2016. There are structural and cyclical forces that drive participation and it looks like some of the cyclical headwinds have receded. At the end of 2016 the part. rates of WA and Qld had fallen quite a bit through the year as the big downturn in mining-related investment reduced job prospects for workers in these states. As a result, some local workers had given up looking for work which reflects the discouraged worker syndrome. But the recent lift in jobs in WA and Qld has been coupled with an increase in participation which suggests a touch more optimism for workers in these states. 
5. Hours worked
Hours worked, as you would expect, is strongly correlated with output, consumption and employment growth. It is also a key input into examining productivity growth because we can measure output per hour (or unit of labour).
Monthly aggregate hours worked is quiet volatile so we look to the annual change in trend terms to best gauge what’s been happening in that space (chart 7). The news is pretty decent. The data indicates that growth in total hours worked has accelerated to be 2.3% higher in the year to June 2017. For most of the last five years annual employment growth has been stronger than growth in hours worked because of the strong growth in part-time relative to full-time employment. But the recent strong lift in full-time employment has seen growth in hours worked pick up to be running ahead of employment growth. It’s still early days and we aren’t getting too carried away. But these type of developments are generally commensurate with an authentic lift in the demand for labour.
The increase in aggregate hours worked has been sufficient to see per capita hours worked lift from a multi-decade low (chart 8).
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.52.39%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.52.39%20AM.png" alt="">
 
Again, we are coming off a low base and there will need to be a sustained upward trend in per capita hours worked if Australia’s labour market is going to genuinely tighten. 
6. Labour market by state
In our view, one of the striking things about the latest jobs growth is that it’s been relatively broad-based (charts 9 and 10). For most of the past few years there has been a “two-speed” economy that comprises i) NSW and Victoria (driven largely by Sydney and Melbourne); and (ii) the rest of Australia. We wrote about this in late 2016.
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.53.59%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.53.59%20AM.png" alt="">
But the labour force data suggests that we may be seeing some convergence in outcomes. This is a particularly welcome development.
Jobs growth has been spectacularly strong in Victoria, driven by population growth. But there has also been solid growth in employment over the past few months in Qld, WA and SA, which had previously all looked soft. Employment growth in NSW has slowed, but that’s to be expected given Australia’s biggest state is close to full employment.
There is a little more divergence in terms of trends in the unemployment rate (chart 11). The trend jobless rate in NSW sits at a healthy 4.8%. In Victoria, despite strong employment growth, the unemployment rate has remained stuck above the national rate at around 6.0%. The jobless rate has also trended sideways in Qld while it’s unexpectedly fallen in WA. 
What does it mean for policy?
There are two key questions that need to be answered to determine what the recent labour market trends mean for monetary policy: (i) can they be maintained; and (ii) will they generate wages inflation.
On the former, the leading indicators suggests that the pace of job creation will ease from its current red-hot pace. But it should still be sufficient to match and slightly better the monthly increase in labour market supply (charts 12, 13 and 12. 14). The CBA PMIs, along with the NAB Business Survey and the vacancies  data, suggest that employment growth should average around 20k a month in the near term. That would be enough to exert some further mild downward pressure on the unemployment rate.
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.54.58%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.54.58%20AM.png" alt="">
There are still plenty of headwinds for the labour market to contend with over 2017. Namely, a gradual decline in dwelling construction, closure of the car industry and the completion of the final big resources projects. But there are also a few tailwinds at work like the continual ramp up in public investment, particularly in NSW, and the improvement in the global economy which is providing a boost to Australia’s tradables sector. 
On that basis, the first condition about ongoing labour market improvement is satisfied in our view and that takes another rate cut off the table. The focus therefore shifts to what the improvement in the labour market means for wages growth given a lift will be required to propel core inflation back to target. Here, we think that we are still some way from labour market slack being eroded sufficiently to put genuine upward pressure on wages.
<a href="https://www.propertyobserver.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.55.49%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/08/01/Screen%20Shot%202017-08-01%20at%2010.55.49%20AM.png" alt="">
Our modified Philips curve, which puts underutilisation against wages growth, suggests that we probably need to see underutilisation fall comfortably below 14% for wages growth to lift (chart 15). In our view, that is unlikely to happen until early next year which would all but rule out a rate increase in 2017. In addition, because any improvement in wages growth is coming off a very low rate, we suspect that the RBA will not act to tighten until a solid uptrend is firmly in place. As a result, we don’t see the RBA raising rates until late 2018. 
Gareth Aird is economist at Commonwealth Bank and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/gareth-aird/14/790/905">here</a>.
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Has the Australian labour market turned a corner? Gareth Aird

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<div class="column">GUEST OBSERVER</div>
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<div class="column">Reserve Bank Board minutes: The minutes from the July 4 Board meeting shows the Reserve Bank weighing up a raft of factors including the strength in the labour market, likelihood of higher wages, the level of household debt, and even the estimate of neutral interest rates for the economy.</div>
<div class="column"> </div>
<div class="column">Consumer confidence eases: The weekly ANZ/Roy Morgan consumer confidence rating eased from 113 to 112.5 in the week to July 16. Confidence is down 2.1 per cent over the year.</div>
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New vehicle sales: The Bureau of Statistics (ABS) reported that new vehicle sales rose by 1.2 per cent in June – the fourth consecutive gain. Annual sales of SUVs and “other vehicles”, like utes, are at record highs.
The Reserve Bank Board minutes provides guidance on interest rate settings. Consumer confidence data is important for retailers. The residential property price data is important for housing-dependent businesses. The car sales data provide perspectives on consumer spending as well as the auto sector of the sharemarket.
What does it all mean?
The Reserve Bank Board remains cautiously optimistic. In fact it could be argued that the latest minutes were certainly more optimistic than in prior months. Although it is unlikely to result in any change to interest rate setting any time soon. Board members considered all manner of factors at the July meeting with particular focus on the housing and job markets. </div>
<div class="column">Interestingly policymakers judged that the “that the strength of recent labour market data had removed some of the downside risk” to wage growth forecasts. While Reserve Bank liaisons “suggested conditions in the retail sector had improved”. And when it came to the APRA enforced prudential supervision measures it was too early to see the full impact.  </div>
<div class="column">The commentary on the Australian dollar was rather bland but since the meeting, the Australian dollar has lifted by almost 5 per cent and is now holding closer to US79 cents. It is more likely that policymakers will discuss concerns about the currency in coming months. The Reserve Bank has provided a bit more colour on the neutral cash rate for the economy – estimating it to be around 3.5 per cent. And if this is the case clearly monetary policy remains very expansionary.
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<img src="https://www.urban.com.au/images/2017/07/19/Screen%20Shot%202017-07-19%20at%208.12.48%20AM.png" alt="">
What do the figures show?
Reserve Bank Board minutes:
Last paragraph: “Members regarded the improvement in the world economy over the preceding months as a welcome development. Nevertheless, they assessed that current economic conditions in Australia, and the outlook for growth and inflation, meant that developments in the labour and housing markets continued to warrant careful monitoring. Taking into account all the available information, the Board judged that holding the accommodative stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.” 
“Members discussed the Bank’s work estimating the neutral real interest rate for Australia. The various estimates suggested that the rate had been broadly stable until around 2007, but had since fallen by around 150 basis points to around 1 per cent. This equated to a neutral nominal cash rate of around 31⁄2 per cent, given that medium-term inflation expectations were well anchored around 21⁄2 per cent, although there is significant uncertainty around this estimate.” </div>
<div class="column">“There had been further signs that investment was increasing and labour markets had tightened further in many advanced economies. This was expected to lead to a pick-up in growth in wages and prices over time.”</div>
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 “The recent improvement in labour market data had been a positive development. Members noted that the strength of recent labour market data had removed some of the downside risk in the Bank’s forecast of wage growth.”</div>
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 “Members recognised that it was too early for the prudential supervision measures announced by the Australian Prudential Regulation Authority, which were designed to help address the risks associated with high and rising levels of indebtedness, to have had their full effect.” “Members noted that the recent pick-up in growth in employment should also support a pick-up in household income growth, and therefore consumption growth, in the period ahead.”
Consumer sentiment
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The weekly ANZ/Roy Morgan consumer confidence rating eased from 113 to 112.5 in the week to July 16.
Confidence is down 2.1 per cent over the year and below the average of 113.2 since 2014.
Three of the five components of the index fell in the latest week:
<ul>
<li> The estimate of family finances compared with a year ago was down from +5 to +3;  The estimate of family finances over the next year was up from +21 to +26;</li>
<li> Economic conditions over the next 12 months was unchanged at -6;</li>
<li> Economic conditions over the next 5 years was down from +4 to +2;</li>
<li> The measure of whether it was a good time to buy a major household item was down from +41 to +38.</li>
</ul>
New vehicle sales
According to the Australian Bureau of Statistics (ABS), new vehicle sales rose by 1.2 per cent in June – the fourth consecutive gain. Passenger car sales fell by 1.4 per cent but sales of sports utility vehicles rose by 4.4 per cent. And sales of “other” vehicles (includes utilities, panel vans, cab chassis, goods carrying vans, rigid trucks, prime movers, non-freight carrying trucks, and buses) rose by 0.3 per cent.</div>
<div class="column">
 New vehicle sales are up by 3.6 per cent over the year. Passenger car sales are down by 7.4 per cent, while SUVs sales are up 12.3 per cent and “other vehicles” are up by 10.7 per cent.</div>
<div class="column"> </div>
<div class="column">In rolling annual terms, 1,179,545 new vehicles were sold over the year to June. Sales of SUVs (452,122) hit fresh record highs in annual terms, while annual sales of “other” vehicles also stood at record highs of 258,048. Sales of passenger vehicles fell to a 22-year low to 469,375 in the year to June. Across states and territories in June: NSW (down 0.1 per cent); Victoria (up 2.6 per cent); Queensland (up 3.1 per cent); South Australia (down 1 per cent); Western Australia (down 0.4 per cent); Tasmania (down 0.4 per cent); Northern Territory (up 7 per cent); ACT (up 6 per cent).
What is the importance of the economic data?
The Reserve Bank releases minutes of its monthly Board meeting a fortnight after the event. The minutes give a guide to Reserve Bank thinking on interest rate settings.
The Australian Bureau of Statistics (ABS) provides quarterly data on residential prices. The figures provide further perspectives on the state of the housing purchase sector.
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
What are the implications for interest rates and investors?
CommSec expects the Reserve Bank to remain on the interest rate sidelines for an extended period. </div>
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Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>
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Reserve Bank Board remains cautiously optimistic: Savanth Sebastian

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GUEST OBSERVER
The 2016/17 financial year is now complete and it is an opportune time to see how investments, financial markets and economies have performed over the past year.
Overall, the year was remarkable for being unremarkable. At least as far as the economy and financial markets performed. The year started with the fall-out from Brexit.
There was a domestic election and the US Presidential election. In 2017 there has been a raft of elections in Europe. And there was the OPEC production agreement.
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But despite the challenges, returns on shares and residential property lifted over the past year while interest rates are lower and the Aussie dollar is little changed from a year ago. In fact the Aussie dollar has tracked a range of US6.25 cents – the least volatile year in 27 years. The sharemarket has had the least volatile year in 16 years. And the record (and world-leading) Australian economic expansion continues.
The economy has grown by around 1.75-2.00 per cent in 2016/17 and we expect growth of around 3.0 per cent in 2017/18. Infrastructure will be a key driver of growth in 2017/18 alongside exports, while home building continues, especially in Sydney, Melbourne &amp; Brisbane. Underlying inflation may lift from 1.7 per cent to 2.0 per cent over the coming financial year while unemployment may ease modestly from 4-year lows of 5.5 per cent currently to the 5.0-5.5 per cent range. Official interest rates may remain on hold for another year.
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It is clear that Australia is well placed. Inflation is under control; interest rates are at record lows, the Aussie dollar is supportive and the record expansion continues 
What does the data show?
Interest rates
The cash rate stands at a record low of 1.50 per cent, down from 1.75 per cent in June 2016, and courtesy of a quarter per cent rate cut in August 2016.
The market-determined 90-day bank bill rate has fallen from 1.97 per cent to 1.72 per cent over 2016/17. Yields on the long bond – 10-year government bonds – have held between 1.85 per cent and 2.99 per cent. Long-bond yields hit record lows on August 11 2016 and now stand at 2.39 per cent.
Currencies
The Aussie dollar has risen around 3.6 per cent over 2016/17. The Aussie started the year around US74.26 cents and ended the year at US76.92 cents. We have calculated that the Aussie is 22nd strongest against the US dollar of 117 currencies tracked. The strongest currencies have been the Icelandic króna (up 17 per cent), Swazilabnd lilangeni (up 11.3 per cent), South African rand (up 11.1 per cent), and Israeli shekel (up almost 10 per cent). Weakest currencies have been Syrian pound (down 138 per cent), Egyptian pound (down 104 per cent) and Turkish lira (down 22 per cent).
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In the six months of 2017, the Aussie dollar is rose just over 6 per cent against the US dollar, making it the 25th strongest of 117 currencies tracked. The strongest currencies have been the Mozambique metical (up 16 per cent), Mexican peso (up 13 per cent), and Poland zloty (up 11 per cent). Weakest currencies have been the Tunisian dinar (down 5 per cent), Ethiopian birr (down 4 percent) and Agentinian lec (down 3.9 per cent).
The high for the Aussie dollar in 2016/17 was US77.77 cents in November 2016 and the low was US71.52 cents in December 2016. The US6.25 cent range for the Aussie dollar is the smallest in 27 years.
Commodities
Commodity prices have been decidedly mixed over 2016/17. The Commodity Research Bureau futures index has fallen 9 per cent over the year, under-performing the Aussie dollar (up 3.6 per cent)
The price of oil is down almost 5 per cent, gold is down 6 per cent and sugar is lower by 32 per cent. But iron ore prices have lifted 15 per cent, thermal coal has risen by 36 per cent, beef is up 10 per cent and base metal prices have generally firmed over the period with lead, zinc and copper up between 22-31 per cent.
Sharemarket
The Australian sharemarket started 2016/17 with the All Ordinaries at 5,327.0 and the ASX200 at 5,246.6. The All Ords ended the financial year at 5,764.0 points (up 8.5 per cent) with the ASX200 at 5,721.5 (up 9.3 per cent). We estimate that Australia is 55th of 73 global bourses and only five bourses recorded declines in 2016/17. The best performer has been hyperinflation-affected Venezuela (up 860 per cent) but notably Greece is up 52 per cent and Austria is up 48 per cent. The worst performers have been West Africa, Oman, Qatar and South Africa. 
In the six months of 2017, the All Ordinaries has risen by 0.8 per cent, ranking Australia 61st of 73 nations. Commodity producers have recorded the weakest performances such as Qatar, Canada, South Africa, Saudi Arabia and Brazil. Best performers include Greece, Austria, Argentina, Nigeria and Turkey.
Investment returns
Total returns on Australian shares (All Ordinaries Accumulation index) rose 13.1 per cent over 2016/17. Returns on dwellings are up 13.2 per cent while returns on government bonds have fallen by 0.8 per cent. The returns on bonds, was the weakest result in 23 years.
Sectors &amp; size groupings
 Of the 21 identified industry sub-sectors, only five recorded declines in 2016/17.
Leading the gains has been Consumer Durables &amp; Apparel (up by over 40 per cent) followed by Food, Beverages &amp; Tobacco (up 29.1 per cent) and Capital Goods (up 26.3 per cent)
At the other end of the scale, Telecom has fallen by over 26 per cent, followed by the Real estate sector (down almost 9 per cent) and Autos &amp; Components (down 6 per cent).
Of the size categories, the MidCap 50 index has again out- performed, (up 14.2 per cent), from the ASX100 (up 9.7 per cent), ASX 50 (up 9.1 per cent) and Small Ordinaries (up 3.7 per cent).
What are the implications for investors?
Returns on shares are set to record the best gain in three years. And that means that sharemarket returns have only fallen once in the past seven years. So an investor that has employed a diversified strategy across asset classes would be well pleased with the performance over the past year.
The economic and financial metrics remain encouraging. Australia has underlying inflation below the Reserve Bank’s 2- 3 per cent target band at 1.7 per cent. Economic growth is low at 1.7 per cent but that reflects a raft of elections in 2016/17 as well as bad weather. Business conditions are near 9-year highs. The cash rate is at record lows. And unemployment is at a 4-year low of 5.5 per cent,
Housing is providing the momentum for the economy with home building and purchase especially driving the NSW, Victorian and ACT economies. Over the coming year, infrastructure will be a key driver of economic activity. 
Over the coming year more and more apartments will be completed with more stock hitting the market. It has taken a little longer than expected, but supply and demand for homes are likely to prove more balanced in 2017/18, restraining growth in home prices.
Last year we noted: “CommSec expects the All Ordinaries index to be near 5,500-5,700 points at end-December 2016 and 5,700- 5,900 points in June 2017.” The December forecasts was realised and similarly the June forecast should has been realised.
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<img src="https://www.urban.com.au/images/2017/07/03/Screen%20Shot%202017-07-04%20at%208.19.50%20AM.png" alt="">
Over the coming year CommSec expects the All Ordinaries index to be near 5,900-6,100 points at end-December 2017 and 6,000-6,200 points in June 2018.
Home prices nationally are likely to grow by 5-7 per cent in 2017/18 with inflation around 2.0 per cent. The Aussie dollar is expected to remain in the mid 70s against the US dollar over most of the coming year.
The low inflation/low interest rate environment is entrenched, meaning that lower nominal investment returns are also here to stay. So investors will need to remain flexible and alert to the returns achieved across sharemarket sectors and across asset classes to ensure that their savings are keeping pace with the cost of living.
The issues to watch over the coming year include Donald Trump; Oil prices; Australian home prices; Wages &amp; Jobs; and Geopolitics.
US President Trump was elected vowing to cut taxes, repeal the Obamacare health reforms and spend more on infrastructure. Global sharemarkets have rallied on the expectation that extra stimulus in the US will boost revenues and profits.
 But we are still waiting for the tax cuts. Infrastructure spending has been announced – now it is a case of gauging the impact on the economy. The Federal Reserve will take its time lifting interest rates back to more “normal” levels for the simple fact that inflation is well contained.
A soft landing for Australian housing is possible. But there is also the risk of indigestion if too much supply comes onto the market at one time. Overall, regulators and banks have done well in restraining buyer effervescence.
We assume that Aussie households will gradually get used to the new reality of 2 per cent wage growth, especially as wages are still out-pacing prices and the job market is lifting in line with strong business conditions.
There are all manner of geopolitical risks. But these can never be adequately factored into forecasts. As always investors need to be alert, not alarmed.
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>. 
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Remarkable for being unremarkable: CommSec

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<h3 class="post-title entry-title"> </h3>
It's sometimes under-appreciated how Australia's free floating dollar, monetary policy autonomy, flexible labour force, and comparatively low government debt have allowed the economy to adjust through a seriously tumultuous period.
At the peak of the resources construction boom in the third quarter of calendar year 2012 engineering construction activity peaked at $34.8 billion, yet by the end of 2016 had dropped by some 43.3 per cent to under $20 billion. 
This is what some people termed the "mining cliff", essentially the period through which resources projects transitioned from the construction phase through to production. 
And through all of that we never really did get all that close to a recession, though admittedly rising private debt levels did help to grease the wheels a bit.
Rebound
More than four years on, and engineering construction actually began to rise again in early 2017.
Some of this was to do with infrastructure projects - rail, road, and highways - and some was related to ongoing resources investment in existing projects. 
Activity rose quite strongly by +2.8 per cent to $20.3 billion in the first quarter.
Engineering work in the public sector was +10.2 per cent higher over the year, while the quarterly rebound was also helped by a +3 per cent rise in private sector activity in Q1. 
<a href="https://www.propertyobserver.com.au/images/2017/07/03/B2.jpg" target="_blank">Click to enlarge</a>
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 <div>State versus state</div>
<div> </div>
<div>Queensland took most of its medicine back in 2014 as a number of major LNG projects approached the production phase, but the worst has now passed and annual construction activity levels in the Sunshine State have now been rising for four quarters consecutively.</div>
<div> </div>
<div>Annual construction activity has also been rising steadily in New South Wales and Victoria since 2015. </div>
<div> </div>
<div>At least as importantly, Western Australia is now at last getting pretty close to the nadir, meaning that WA is no longer suffering the chronic declines that have characterised that past three years. </div>
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 <div>No boom on the horizon, then, but arithmetically speaking this is positive news for the economy, simply because engineering construction is no longer acting as a drag.</div>
<div> </div>
<div>The next pressing challenge will be whether construction employment can remain at today's elevated levels through a combination of residential building and infrastructure projects. </div>
 
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank">Four Green Houses and a Red Hotel</a>.
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Engineering construction no longer an economic drag

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GUEST OBSERVER
The economy grew by 0.3 percent in the March quarter after rising 1.1 percent in the December quarter.
Annual economic growth eased from 2.4 percent to 1.7 percent. The economy has not experienced a recession for more than 25 years. Four years ago Australia passed the Netherlands to secure the title of longest economic expansion by an advanced nation in the modern era. 
Contribution to growth: The biggest contribution to growth came from inventories (+0.4 percentage points) from household consumption (+0.3pp), government consumption and non-residential building (+0.2pp). The biggest drag on growth was from net exports (down 0.7pp), dwelling construction (down 0.3pp) and equipment investment (down 0.1pp).
Income: Real gross national income rose by 1.1 percent in the March quarter to be up 5.2 percent on the year. In nominal terms GDP lifted 2.3 percent in the quarter and rose by 7.7 percent over the year.
Productivity: Gross value added per hours worked in the market sector grew by 0.2 percent in the March quarter after rising 0.9 percent in the December quarter. Annual growth was 2.1 percent.
Industry sectors: Fifteen of the 19 industry sectors expanded in the March quarter. Seven sectors added 0.1 percentage points to growth. Three sectors each reduced growth by 0.1pp. Agriculture, forestry and fishing production fell 5.6 percent in the quarter.
What does it all mean?
The Australian economy has had to contend with a lot of factors in the past year – geopolitics, weather events, the on-going unwinding of the mining construction boom and variable housing markets. So economic growth has trekked a zig-zag path. But importantly the record expansion remains on track. Especially positive is the health of the business sector with business conditions the best in nine years. The hope is that employment and investment will continue to lift, maintaining economic momentum. 
The March quarter growth rate may seem modest at 0.3 percent but this followed the strongest growth in five years. The bottom-line is that the doomsayers will need to find another target. The record expansion continues and the outlook remains positive. Particularly encouraging is the fact that annual income growth is the fastest in six years and productivity growth is still above 2 percent. 
Ahead of today’s data there was much focus on Australia possessing the longest economic expansion of any major economy in the modern era. OECD data shows we actually passed the Netherlands to secure this record four years ago. But the positive focus on the achievement is well deserved. 
The outlook for the economy is encouraging. Strong spending on infrastructure as well as keen demand for our exports will support economic growth. And add into the mix the on-going lift in home building – especially on the east coast. Consumers are drawing down saving to spend but in part this reflects an adjustment to the new ‘normal’ wage growth of 2 percent, rather than 3-4 percent. 
The Reserve Bank is always looking ahead and so must we. The outlook for the economy remains bright.
The Reserve Bank expects the economy to grow near its ‘potential’ rate of 3 percent by the end of 2017. That is our expectation also. We continue to believe that interest rates will remain on hold over the rest of 2017.
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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Record economic expansion continues: Craig James

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GUEST OBSERVER
With the release of the March quarter national accounts, there have been reports the Australian economy could break the Netherlands’ “world record” for continuous growth. But there are three problems with this assertion.
It’s now been 103 quarters (25 years and 9 months) since Australia last had consecutive quarters of negative growth in real gross domestic product (GDP), in the March and June quarters of 1991. 
Contrary to much-repeated claims, the Netherlands didn’t experience more than a quarter-century of economic growth without consecutive quarters of negative real GDP growth between the early 1980s and the global financial crisis.
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The Netherlands’ real GDP declined by 0.3 percent in the June quarter of 2003, and by 0.01 percent in the September quarter of that year, according to data published by Statistics Netherlands and, separately, by the OECD. So, at best, the Netherlands went for only 22 years without experiencing a recession. Australia surpassed that benchmark in 2013.
Yes, that second quarterly decline in 2003 was almost imperceptible. But sporting records are delineated by margins as small as one one-hundredth of a second, so we can’t blithely discount a -0.01 percent fall in real GDP as “not relevant”.
Even if you blinked and missed that tiny second successive decline in real GDP in the September quarter of 2003, the Netherlands still wouldn’t hold the record for the longest run of continuous economic growth. That belongs to Japan – which, according to OECD data, went from the March quarter of 1960 to the March quarter of 1993 without ever registering two or more consecutive quarters of negative growth in real GDP. That’s 133 quarters, or more than 33 years. 
Indeed, if Japanese GDP data were available on a quarterly basis earlier than 1960 it’s likely that this run of continuous economic growth would have been even longer, perhaps as long as 38 years, inferring from annual data available back to 1955. So Australia would need to avoid consecutive quarters of negative real GDP growth until at least 2024 if it is truly to be able to claim this “world record” as its own.
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Even more importantly, the definition of a technical recession as (two or more consecutive quarters of negative growth in real GDP) is, as former RBA Governor Glenn Stevens said, “not very useful”. It was originally proposed in December 1974 by Julius Shishkin, who at that time was the head of the Economic Research and Analysis Division of the US Census Bureau (now the Bureau of Economic Analysis, which publishes the US national accounts). 
It’s not used to identify recessions in the US. It takes no account of differences over time, or as between countries, in the rates of growth of either population or productivity – which are the key determinants of whether a given rate of economic growth is sufficient to prevent a sharp rise in unemployment. This is something which most people (other than economists) would use to delineate a recession.
While Australia has avoided consecutive quarterly contractions in real GDP since the first half of 1991, we’ve had two periods of consecutive quarterly declines in real per capita GDP (in 2000 and 2006). We’ve also had two periods of consecutive quarterly declines in real gross domestic income or GDI, which takes account of income gains or losses accruing from movements in Australia’s terms of trade (in 2008-09, and in 2014). Perhaps most meaningfully of all, Australia has had two episodes where the unemployment rate has risen by one percentage point or more in 12 months or less (in 2001 and 2009).
That’s still a better track record than almost any other advanced economy during the past quarter-century or so – and it reflects well on the quality of economic management (and the nature of our luck) over this period. Nonetheless, we shouldn’t be in the business of awarding ourselves prizes to which we’re not entitled.
Saul Eslake is vice-chancellor’s Fellow, University of Tasmania and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/saul-eslake-665" target="_blank">here</a>.
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There’ll be no records set this week by Australian economic growth figures: Saul Eslake

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Retail investment for Q1 2017 totalled $1.1bn, up 23 percent on the same period last year according to Cushman &amp; Wakefiled's Retail Investment Snapshot for the quarter.
According to the report Queensland accounted for 43 percent ($457m) of the national investment volume. 
"In contrast, New South Wales and Victoria recorded $262m and $221m, both below respective longer- run averages, as limited available stock was on the market," the report said.
"Foreign investment rebounded strongly in Q1 2017 to $533m, up from $297m in Q4 2016.
"Foreign investors were active across different centre types and sizes. This was highlighted by German- based Deka Immobilien’s purchase of the Canberra Outlet Centre for $135.5m, with a further $160m committed to a Redbank Plains sub regional centre by Rockworth Capital Partners, and $87m into two neighbourhood centres.
"With a lack of activity in larger core retail assets, where yields are tighter, average transaction yields remained stable for the quarter at 6.3 percent.
"Many of the trends evident in 2016, such as retail property’s relative value proposition and competition to secure assets, remain in place into 2017.
"However, we expect more stock to come to market as established owners sell non-core assets to recycle capital into existing assets. Equally, active traders are likely to dispose of assets to seek new opportunities.
"Not only will this bring increased liquidity, and support overall transaction volumes, but also provide opportunities for new market entrants all along the risk curve. 
"In December 2016, Moving Annual Turnover (MAT) grew 3.4 percent, though continued the downward trend from a peak of 5.7 percent in late 2014.
"Retail turnover growth has been limited by weak employment and income growth though consumer sentiment has bounced back to 99.6 reflecting a more positive attitude towards national economic growth."
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Retail investment for Q1 2017 totals $1.1b: Cushman & Wakefield

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GUEST OBSERVER
The Fair Work Commission is considering whether to increase Australia’s minimum wage.
The Australian Council of Trade Unions is arguing for a A$45-a-week rise. Industry, arguing that currently business has limited ability to afford wages increases, wants the increase capped at 1.5 percent (closer to $10 a week).
While I suspect most people immediately focus on wages as a cost of production for business, it’s worth clarifying precisely what economic roles wages play. There is more than one.
Indeed, wages are certainly a cost. More precisely, their significance for business as a cost is as one component of something economists call “real unit labour cost”.
This is the cost of employing a person in terms of the value of the goods and services a business would produce. Crudely put, this means the proportion of the value of a day’s production that would be needed to pay for a day’s labour. This depends on two things.
Two key influences: productivity and real wages
The first is the real wage – the purchasing power of the worker’s pay packet, which brings into play prices of goods and services. The second is the productivity of the worker – how much the worker produces over a given time.
The real cost of employing a person over time depends on how these two things change. If productivity is growing, then the real wage can grow without an increase in the real cost of labour for business.
But a couple of other economic considerations are relevant when assessing the economic impact of changes in the worker’s wage. The first is that productivity also depends on investment. Changes in technology that allow for greater productivity are often embodied in the new plant and equipment that firms invest in.
Yet what governs investment? This is an age-old question in economics, and perhaps one of the least agreed areas within the profession. But any stab at this question would conceivably point to the expected rate of return on the investment relative to the so-called cost of capital. An economist would typically measure the cost of capital by reference to interest rates, among other things.
However, the rate of return is critically dependent on how much demand there is for the goods and services produced by the new plant and equipment the business invests in.
There is also a competitive imperative which links demand growth and investment. Maintaining market share requires a business to be able to respond to growing demand. Optimally, this requires increasing capacity and thus undertaking investment.
Wages growth and investment
But demand growth varies with spending power and the income that flows to the population, a significant portion of which comes from wages. In other words, wages have a flipside. They’re not just a cost of production; they’re also a source of spending and thus of revenue and profit for business.
This is an important point in economics, specifically about how what we see at the micro level does not automatically replicate itself for the economy as a whole. Looked at from the perspective of a single business, wages appear as a cost. But to only look at things this way is inadequate if you are interested in the impact of changes in wages on the overall economy. For that you also have to consider wages as income and a source of demand.
Expectations about future demand growth are presumably as critical to the investment decision for firms as are expectations about factors such as taxes on business income.
A reduction in business taxation may well increase prospective after-tax rates of return on investment. But, as already mentioned, this assumes people with income to spend are ready to buy the output produced with newly installed plant and equipment.
Looked at from this angle, one could argue that growth in demand and in turn wages growth will be required to warrant producers undertaking investment and in turn the kind of changes to production that underpin productivity growth.
One can go a little further. Assuming a government’s intention is to wind back its contribution to demand in the economy (via government spending) through what is euphemistically termed “fiscal consolidation”, and assuming our trade is not significantly changing, a certain real wage growth is required to generate sufficient growth in demand to warrant sustained investment and productivity growth.
It’s the flipside to this scenario that is worrying. To the extent that increasing profitability through increased productivity is not shared in the form of increased real wages, the economy faces the danger of its productive capacity growing faster than demand. This kind of danger was highlighted long ago by the noted Italian economist Luigi Pasinetti.
In this scenario the profit of each unit of output may increase initially as productivity grows, but demand does not keep pace, in which case the increase in profitability is likely to be short-lived. More worrying in this case is that employment growth suffers and consequently the unemployment rate is likely to rise.
Some economists would counter that real wages would fall in order to absorb any increased unemployment, though this claim has always been contentious.
It supposes that unfettered markets will always provide demand for whatever amounts of goods and services are produced – in itself a controversial position in economics.
Of course, none of this deals with the moral or ethical imperative of a minimum wage which ensures a liveable real wage. Rather, the point here is that, quite aside from the moral or ethical case, there are economic arguments to be had for ensuring an appropriate rate of growth of real wages.
Graham White, associate professor, School of Economics, University of Sydney and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/graham-white-8139" target="_blank">here</a>.
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How wage growth contributes to the economy

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The latest state economic handbook by National Australia Bank predicts the end of the mining investment downswing may be nearing in mining states Western Australia and Queensland.
Riki Polygenis, NAB Head of Australian economics said the report said some indicators are stabilising.
“What we can see in today’s update is that Victoria and NSW will continue to benefit from buoyant population growth, strong services activity and infrastructure expenditure," she said.
"Non-mining business investment in these states has also started to strengthen and will gradually pick up speed. 
“Mining states like Western Australia and Queensland are currently receiving an income boost from higher bulk commodity prices, which are flowing through to corporate profits and state government revenue, although the flow on effects to investment and employment are expected to be limited given the temporary nature of the commodity price surge.
"Looking forward, Victoria and New South Wales will remain ahead of other states, while Queensland will experience the strongest growth overall thanks to resource exports. 
State breakout
NSW
Solid consumption growth, combined with private and public investment has helped NSW retain its mantle as the fastest growing state in the country. Final demand growth rose 4.1 percent in the last quarter of 2016, well above the national aggregate.
“While some of the timely economic partials are now painting a mixed picture, we remain generally optimistic about NSW’s prospects,’’ said Ms Polygenis.
“Overall, Gross State Product (GSP) growth is expected to moderate to around 23⁄4 percent in 2016-17 and then pick up slightly to 2.9 percent in 2017-18 (from 31⁄2 percent in 2015-16), but remain a standout (together with Victoria) in terms of state final demand.”
“We expect the all-important housing market to shift down a gear going forward, as the residential construction boom approaches its peak and price gains slow – reflecting greater supply, credit constraints and affordability constraints,’’ said Ms Polygenis.
“While a severe property price correction is not expected, growth in Sydney housing prices is expected to slow after four consecutive years of double digit growth.’’
VIC
Victoria will also remain a standout across the states despite some moderation expected, with growth neck and neck with NSW. Employment and population growth (particularly from overseas and interstate migration) is expected to continue, while infrastructure spending, services activity and exports and a gradually recovery in non-mining investment will be key pillars of growth. Residential building approvals have peaked, and dwelling construction is not expected to add as significantly to growth going forward.
“House price growth in Victoria is also forecast to ease through 2017, while apartment prices are expected to decline modestly as extra supply comes on line. However current strong momentum in the housing market, and measures to reduce stamp-duty for some first home buyers do suggest some upside risk,” said Ms Polygenis.
TAS
The Tasmanian economy has slowed into 2016-17 despite strength in tourism, agricultural and fisheries industries, although should improve moderately into 2017-18.
“A depreciating AUD would also be supportive of export-oriented industries in Tasmania. However an ageing population, low levels of educational attainment and a concentrated industry structure remain headwinds,” said Ms Polygenis
ACT
The ACT economy continues to improve post the earlier Federal public sector job cuts and has recorded stronger state final demand growth over the past two years.
“We expect the ACT economy to continue to recover, with higher population growth, stronger household consumption and increased dwelling investment underpinning its GSP growth. However with Federal Budget repair still very much on the radar, downside risks remain,’’ said Ms Polygenis.
We expect GSP (Gross State Product) growth to pick up modestly to 21⁄4 percent and 21⁄2 per cent in 2016-17 and 2017-18. The ACT unemployment rate is expected to remain below the national average at 4.3 percent in 2016-17 and 2017-18.
NT
Since construction on the Ichthys LNG terminal peaked last year, project employment has begun to slide, with significant knock-on effects for the NT economy.
Business investment is currently strong, but will slow down sharply once the Icthys LNG project is complete, while volatility in the housing market makes 2017 tricky to predict.
“Tourism statistics for the NT continue to present mixed picture, although we note that domestic tourism is booming with interstate visitors up 22 percent to 361,000 in the year ended September 2016,” said Ms Polygenis.
SA
In 2015-16, SA net exports (in real terms) grew significantly on the back of a depreciated AUD, with services exports rising by a record rate of 12 eprcent in the year, while merchandise exports expanded by the fastest rate since 2010-11 at 11 percent.
“South Australia will experience moderate growth, with infrastructure spending and shipbuilding to provide some offset to the impact of auto manufacturing closures this year. The state has some long-term challenges, including an ageing population and negative interstate migration, but employment and consumer spending are holding up for now,” said Ms Polygenis.
QLD
“The Queensland economy’s transition post the mining boom continues to gain traction and the state will experience the strongest rate of economic growth in 2016-17 owing to a surge in LNG exports and strength in tourism and education,” said Ms Polygenis.
However, business and labour market conditions remain subdued as the state economy continues to transition post the mining investment boom.
Regional Queensland (especially north Queensland), faced with variable commodity prices and drought conditions, is still struggling with depressed business activity, subdued house price growth and elevated unemployment.
WA
“Economic indicators are still extremely weak in WA, with the weakness relatively broad-based across the economy as the mining cycle continues to dominate economic trends. However there is some sign of stabilisation in business conditions, indicating a reduced pace of decline. The current surge in iron ore prices is unlikely to spur additional investment or employment, but is having a positive impact on government finances,” said Ms Polygenis.
Overall, we expect very weak real GSP growth in 2016-17 and a moderate rebound in 2017-18 as LNG exports add to growth.
Despite signs that the property market may soon stabilise, property prices are expected to underperform again in 2017, while the unemployment rate expected to stay around current levels before seeing only a gradual improvement. 
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