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

Joel Robinson

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

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

WM Residences fills gap in Mordialloc townhouse market

&nbsp;

Developer GURNER™ Group has revealed $1.65 billion in residential sales nationally across the 12 months to December 2025, driven largely by the continued momentum of its Docklands wellness-focused precinct, Elysium Fields.

The sales result was generated across seven projects in Victoria and New South Wales, headlined by Elysium Fields, GURNER™’s $2.75 billion mixed-use precinct planned for Harbour Esplanade in Docklands.

The project has recorded more than $500 million in sales across the first three towers, equating to around 580 apartments sold.

The first tower, Helios, has now sold out of its 240 private residences, with GURNER™ preparing to release a premium penthouse collection comprising 15 three-bedroom penthouses in coming weeks.

[smartcode_project:default project_id=144441 project_image_fid=370975]

Elysium Fields is being developed on the long-held 20,000 sqm Docklands site at 208-226 Harbour Esplanade, which had remained undeveloped for more than two decades prior to GURNER™ taking over the project around four years ago.

Construction has now commenced across four towers ranging between 18 and 30 storeys, with Hamilton Marino and Maxcon appointed as builders.

Once complete, the precinct is expected to comprise around 1,100 residences, alongside retail, hospitality and public realm uses integrated throughout the site.

[smartcode_project:default project_id=144441 project_image_fid=370981]

Designed by Fraser &amp; Partners in collaboration with GURNER™ Design House, the project has been positioned around the developer’s broader focus on wellness-led residential living.

“We don’t sell apartments. We create a true luxury lifestyle that simply doesn’t exist elsewhere in the market today,” Founder and Executive Chairman Tim Gurner said.

“To deliver that requires an extraordinary level of detail, coordination and discipline across multiple verticals, from design and hospitality through to wellness and service.”

“We’ve always believed that living extends far beyond the physical residence. It’s about how you feel the moment you arrive, how you live day-to-day, and the ecosystem that supports that.” 
[smartcode_project:default project_id=144441 project_image_fid=370977]

The project’s design places a heavy focus on landscaping, wellness amenities and biophilic design principles.

Plans include around 3,700 sqm of landscaped gardens and open space throughout the precinct, alongside a retail and dining offering spanning approximately 5,000 sqm.

The broader public realm strategy centres around what GURNER™ describes as the “Path of Life”, an urban forest and landscaped pedestrian environment intended to connect the various buildings and wellness spaces across the precinct.

The apartments themselves will incorporate a range of wellness-focused inclusions, including purified air and water systems, circadian lighting, antimicrobial surfaces, and optional in-home wellness upgrades.

[smartcode_project:default project_id=144441 project_image_fid=370980]

Gurner said the company’s experience through its Saint Haven wellness clubs had directly informed the residential offering now being incorporated into Elysium Fields.

“We’re seeing a clear global shift toward longevity, performance and proactive health,” Gurner said.

“Our role is to deliver that in a way that feels seamless, highly private and beautifully resolved within the environments we create.”

A large component of the wellness offering is planned through the resident amenity and health facilities proposed within the precinct.

That includes plans for bathing and recovery facilities spread throughout the towers, incorporating mineral pools, saunas, steam rooms, flotation therapy, red light therapy and wellness lounges.

The developer is also seeking approvals for what it describes as a “reverse ageing medical clinic” within the precinct.

[smartcode_project:default project_id=144441 project_image_fid=370978]

According to project information released by the group, the proposed facility would include cryotherapy, IV infusion therapy, infrared and dry saunas, PEMF beds, MRIs, DEXA scans, brain scans and blood analysis services.

Within the first tower, Helios, residents will also have access to a dedicated amenity offering known as the Sky Private Club.

The upper 15 levels of the building will include private lounges, dining spaces, rooftop amenities and optional private wellness studios integrated within residences.

The Helios tower itself comprises 260 apartments ranging between 60 sqm and 300 sqm, including a collection of penthouses.

That includes a planned two-storey penthouse spanning around 600 sqm with uninterrupted bay views.

The Elysium Fields precinct is being delivered in partnership with Digital Harbour Holdings, a consortium that includes the Liberman family, which controls the development rights across the Docklands site.

[smartcode_project:default project_id=144441 project_image_fid=370979]

The sales result comes as GURNER™ continues expanding its national development pipeline beyond Victoria.

“We have a strong pipeline across Australia and are now focused on scaling into key markets including New South Wales and Queensland, while continuing to build on our Melbourne base,” Gurner said.

“We currently have more than $3 billion in the market, growing to over $5 billion by October, and expect to materially outperform last year in the 2026 calendar year.”

The result also reflects the continued strength of the upper-end apartment market in Melbourne, particularly for owner-occupier-focused product with large-scale amenity and lifestyle offerings.

[smartcode_project_cta:default project_id=144441]

Record result anchored by the Group’s “utopian” Elysium Fields precinct – defying market headwinds in Docklands.

Elysium Fields drive Gurner to $1.65 billion in apartment sales over 2025

National Australia Bank (NAB) will fund <a href="https://www.apartments.com.au/new-apartments/palmera-residences-gold-coast-18-garfield-terrace-surfers-paradise-qld-4217">Palmera</a>, a $1 billion, 52-level luxury residential tower being developed by Central Equity in one of the Gold Coast’s most tightly held coastal locations at Northcliffe.

The project, launched recently by <a href="https://www.apartments.com.au/developers/central-equity">Central Equity</a>, one of Victoria’s largest private residential developers, comes at a time when construction funding for large residential developments has become increasingly competitive as lenders tighten exposure to the sector.

Multiplex has been appointed the builder, and construction is now underway.

[smartcode_project:default project_id=108274 project_image_fid=365784]

Since its first project, Central Equity has delivered more than 85 residential developments with a combined end value exceeding $8 billion.

Palmera reflects Central Equity’s growing focus on the Gold Coast luxury apartment market and continues a relationship between Central Equity and NAB that dates back to the late 1980s, when the bank funded one of Melbourne’s earliest inner-city residential towers at a time when high-rise apartment living in the CBD was largely unproven.

“NAB’s funding of Central Equity’s $36 million CBD development in the late 1980’s to the financing of the billion-dollar tower today highlights the long-term relationship between the two organisations in delivering major residential projects” said Central Equity Founder and Chairman Eddie Kutner.

He said NAB’s early support was instrumental in helping establish the company’s development model.

“When we commenced our first residential tower in the late 1980s the concept of funding off-the-plan apartments was still largely untested in Australia,” Kutner said.

“NAB recognised the opportunity early and supported the project when others were uncertain. That relationship has now continued for more than 37 years across many developments.”

[smartcode_project:default project_id=108274 project_image_fid=365771]

Central Equity was established in 1987 when Melbourne’s CBD and Southbank precinct were still dominated by warehouses and commercial buildings. Fewer than 100 residents lived in Southbank at the time, and large-scale residential development in the inner city was not widely considered.

Recognising changing demographics and lifestyle preferences, the company began developing high-rise residential projects designed to bring permanent residents into the city centre.

Central Equity has provided accommodation for approximately 40,000 residents across Melbourne’s CBD and Southbank, while also incorporating supporting infrastructure including essential lifestyle facilities like retail spaces, childcare facilities and neighbourhood activity centres.

Central Equity has spent many years assembling the Palmera development site on the corner of Garfield Terrace and Frederick Street in Northcliffe, creating a supersite of around 3,300 sqm.

The developer said the Palmera apartment tower reflects its long-term view of the Gold Coast as a growing and increasingly diversified economy.

[smartcode_project:default project_id=108274 project_image_fid=365768]

Supported by infrastructure including the light rail network, major road upgrades expanded education, hospital and medical facilities and continued expansion at the Gold Coast Airport with more international and domestic flights.

Positioned in the tightly held Northcliffe precinct, the 52-level tower will deliver 347 apartments, targeting buyers seeking a high-end coastal lifestyle, from downsizers to interstate investors.

Designed by Marchese Partners with interiors by DBI, Palmera has been conceived as a next-generation residential offering, featuring a collection of oversized apartments, with premium three-bedroom residences offering sweeping northern views stretching from Surfers Paradise through to Burleigh Heads.

[smartcode_project_cta:default project_id=108274]

NAB funds $1 billion Surfers Paradise apartment development, Palmera

Two years after completing one of the newest developments in North Sydney, developer <a href="https://www.apartments.com.au/developers/aqualand-australia">Aqualand</a> is turning its attention to the rapidly evolving St Leonards apartment market.

The developer, which completed AURA by Aqualand on North Sydney's Walker Street, has lodged plans for a 5,918 sqm site at <a href="https://www.apartments.com.au/new-apartments/33-37-herbert-street-st-leonards-nsw-2065">33-37 Herbert Street, St Leonards,</a> seeking approval for a pair of residential towers rising above a shared podium opposite Royal North Shore Hospital.

The proposal forms part of the broader transformation underway across the St Leonards-Crows Nest precinct, where former industrial and commercial sites are increasingly being redeveloped into high-density mixed-use projects tied to major transport infrastructure.

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="2cc428cf-fe70-4cac-9cd5-264ad53af62c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.56%E2%80%AFAM.png?VersionId=otKSnHtbjAvAddOnovyXQMgcAwE6DMe1" />

According to the planning documents, the site sits “within the St Leonards–Crows Nest Strategic Centre, identified by the NSW Government as a key area for accommodating future jobs and housing across Sydney.”

The proposal has been designed by fjcstudio, formerly FJMT Studio, and is being progressed through the State Significant Development pathway due to its scale and affordable housing provision.

The scheme would comprise 413 apartments, including 46 affordable housing units, alongside retail and commercial uses fronting Herbert Street. The project would also include communal open space, landscaping, a swimming pool, gymnasium, children’s play areas and podium-level resident amenities.

Planning documents show the development would consist of a part-13, part-39 storey tower form positioned above a four-storey podium.

“The development comprises a unified podium that activates the street interface, and two setback towers to accommodate new housing supply while maintaining an appropriate human scale at ground level,” fjcstudio noted in its Design Report.

The northern and southern towers have been shaped to respond to the surrounding skyline while also limiting overshadowing impacts to nearby public open space, particularly Talus Reserve.

The design report said the differing tower heights were intended to “contribute to a varied skyline while responding to the surrounding built form context and solar access considerations.”

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="36da62dc-ff9e-41f2-a7e3-7be38373751c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.45%E2%80%AFAM_0.png?VersionId=Mo6Rp2r.XRLTzIfg_PEEpw8NepDH8UBs" />

The site sits directly opposite Royal North Shore Hospital and within walking distance of both St Leonards Station and the new Crows Nest Metro station.

While the site itself sits just outside the formal Crows Nest Transport Oriented Development boundary, the planning documents repeatedly reference its alignment with the broader TOD objectives reshaping the Lower North Shore.

“The site is located adjacent to St Leonards Station and in close proximity to Crows Nest Metro which is within the Crows Nest Transit Orientated Development Accelerated Precinct which has been identified by the NSW Government to support housing delivery,” the Design Verification Statement noted.

According to fjcstudio, the project has been designed to respond to the broader transition occurring across St Leonards, where increasing residential density is being concentrated around transport infrastructure and employment hubs.

“The broader precinct is undergoing significant change, with a mix of existing mid-rise buildings and newer high-density developments,” the report stated.

“Recent and approved projects indicate a consistent shift toward taller built form, typically organised as tower-and-podium typologies with more active ground levels.”

The proposal includes close to 6,000 sqm of retail and commercial space across the ground floor and podium levels, designed to create a more activated street edge along Herbert Street.

Aqualand’s plans would also introduce a landscaped podium shared between the two towers, with communal open space in the form of a podium rooftop designed to support resident interaction and improve urban greening outcomes. The scheme would also introduce pocket parks at the northern and southern ends of the site, including a landscaped area at the corner of Herbert and Ella streets designed to improve pedestrian amenity and soften the streetscape.

&nbsp;

The proposal is being progressed through the NSW Government’s Housing Delivery Authority pathway, which was introduced to accelerate housing supply across the state. The application was declared State Significant Development in April 2025 following an expression of interest process.

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="faf6d97d-2671-454f-b85a-fe1c6a7be608" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.49%E2%80%AFAM.png?VersionId=diVd28OBVr5.YV.7prrOz.uAanwwwm7a" />

St Leonards has been particularly active with new developments in recent weeks. Developer SP Setia’s <a href="https://www.apartments.com.au/news/nsw/first-look-sp-setia-targets-st-leonards-skyline-with-40-storey-tod-tower">plans for a new 42-storey tower</a> recently went on exhibition through the same pathway, while <a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">Stockland’s 52-storey tower proposal</a> was also recently unveiled.

Aside from the St Leonards project, which is expected to take around nine months to move through the approvals process ahead of a potential 2027 launch, Aqualand is also preparing to launch Boronia, a new apartment project in Roseville comprising around 111 apartments on Larkin Street.

The developer also has approvals in place for the next stage of the Barangaroo precinct, which will feature new residential, retail, hospitality and community uses, alongside a new metro entry across the five-hectare site.

More than 50 new retail destinations are planned for Central Barangaroo, alongside a 270-metre-long boulevard connecting Hickson Park to Nawi Cove. Together with Harbour Park, more than 50 per cent of the precinct will comprise public open space and parkland.

First look: Aqualand joins St Leonards apartment party

Economy

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GUEST OBSERVER
It is surely time for governments around the world, including Australia’s, to remember the first law of holes: if you’re in one, stop digging.
Governments have been digging madly since the global financial crisis, injecting massive amounts of monetary and fiscal stimulus. It hasn’t worked. 
We don’t have much to show for it in Australia - an interest bill of $16 billion on government debt compared with zero before the crisis, and a growth rate and unemployment rate that are struggling to meet long term averages. 
The International Monetary Fund (IMF) has repeatedly downgraded its global growth forecasts over the past decade and is about to releaseanother downbeat global growth forecast.
The world economy is in its 6th year of below average growth since 1990. Japan has not grown at all - its GDP in 2016 is exactly at the level it was in 2008 – despite massive amounts of monetary and fiscal stimulus over a decade. 
Growth in Europe has remained below 1% every year since 2008, well below its pre-crisis levels, despite the United States Federal Reserve relentlessly pumping new money into the banking system with interest rates already zero. And the US also remains in a funk with growth at 1.5%, less than the 2.5% long run average, having also pumped new money into its banking system and running budget deficits every year that have seen government debt steadily grow as a share of the economy.
Incredibly, the IMF and some governments have not given up. They now accept that perhaps cheap money and plenty of it hasn’t worked, but they still cling to fiscal stimulus as the last great hope as long as it’s the right kind. 
According to the IMF, debt-financed government infrastructure spending is the answer – think roads, ports, power and communication networks. They have constructed a mathematical model showing that such infrastructure spending, funded by borrowing, actually reduces the government debt to GDP ratio in a world of low interest rates. This is because it boosts GDP by more than it raises debt, and boosts overall economic wellbeing.
This will be music to the ears of those politicians who want to spend big on infrastructure. It is however a pipedream. 
The problem is not so much what the debt is used for, although that does matter, it is more the size of debt itself. Since 2008, government debt has increased in almost all advanced countries as a ratio to GDP. 
In the US total government debt has increased from 92 to 125%, in the UK from 63 to 114%, in Japan from 184 to 246%, in Australia from 34 to 65%, and even in relatively austere Germany from 68 to 82%. The combination of rising government debt and booming asset prices (stocks and housing) financed by monetary stimulus is dangerous. 
We have seen through the global financial crisis the devastating effects of a collapse in asset prices on the economy, especially on economies with debts whether held by the private or public sector. Indeed it’s this memory that is surely one of the factors currently holding back spending by households and firms.
In this environment, it would be reckless of governments to embark on major fiscal stimulus that raises their debt levels further. The IMF’s model does not take account of the risk of an asset price collapse in a world of high debt and the effect this has on private sector spending. 
It needs to be said that the IMF’s model is essentially the same type of model that it uses to forecast GDP growth of countries and which The Economist found had an appalling record of inaccuracy. The Economist team took a sample of 220 instances from 1999 to 2014 where a country went from growth in one year to recession in the next, and found that the IMF had never once predicted the looming recession in its April forecasts of the previous year.
There is at least one prescription to the world’s low growth problem that governments have not yet tried. That is to do precisely nothing – stop digging. We may even discover things about the economy’s restorative powers that we didn’t know, or had forgotten.
A related idea is to actively unwind government intervention where evidence suggests it is not working. It is easy to dismiss such prescriptions as the old-hat 1990s deregulation agenda. 
But that was a period of great prosperity in Australia and elsewhere. In any case it’s not about deregulation, but more like what David Cameron in the UK called “better regulation” which was enabled through the Deregulation Act 2015. It is worth noting that growth in the UK has been the strongest in Europe in recent years.
Back to home, the Reserve Bank of Australia should keep its power dry when it meets today and hold its official interest rate steady at 1.5 percent. And so it should for some time to come. 
The Australian government should do the same and not be seduced by the siren call from the IMF and others to spend up big on infrastructure.
Ross Guest is professor of economics and National Senior Teaching Fellow, Griffith University and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/ross-guest-13155" target="_blank">here</a>.
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jchancellor-FAypfDUnLy

Governments and central banks should stop trying to stimulate the economy

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A quick overview of the latest trends in key Australian economic data.
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<img src="/images/2016/09/26/Screen%20Shot%202016-09-26%20at%202.26.47%20PM.png" alt="" width="680" height="297">
Andrew Hanlan is senior economist for Westpac and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/andrew-hanlan/3/222/430" target="_blank">here</a>. 
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Australian data summary table 26 September: Westpac's Andrew Hanlan

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GUEST OBSERVER
I have written extensively about the need for the new Governor of the Reserve Bank to adjust his inflation target from 2–3 percent to 1–3 percent to reflect the reality of lower global inflation relative to the mid 1990’s, when the target was originally successfully adopted. 
However, as noted at the time, I held out little hope that the new Governor would take my advice. 
Accordingly, I was not surprised to see this week’s announcement that the target had been “confirmed” as 2–3 percent. However, there has been a subtle change from “on average over the cycle “ to “over time”. The Governor also emphasised in his Statement to the House of Representatives on Thursday that “the main drafting change is to make the link between monetary policy and financial stability a little more direct”. 
If we weigh those two changes together, they go some way to achieving the objective that I was most concerned about. My concern was that the new Governor might, when confronted with an impossible task of lifting inflation to above 2.5 percent to “average” 2.5 percent over the cycle, might unnecessarily impact asset markets. By using the vague term “over time” and linking policy directly to financial stability (read asset markets), he has allayed much of my concern on that issue. Markets are likely to eventually scale back prospects for further rate cuts given these developments. 
With that policy issue now resolved, I am allocating the rest of this note to some of the opportunities and risks now facing the evolving Australian economy. 
While overall growth in the Australian economy has been remarkably stable since the Global Financial Crisis – holding in the 2.5 percent – 3.0 percent range – the source of this growth has changed markedly. We have seen the huge terms of trade and mining investment cycles almost run their course. The early stages of these cycles were marked by strong income boosts, particularly in the mining states of Western Australia and Queensland, due to surging commodity prices and a spectacular mining investment cycle. Of course, these two cycles were linked, with the surge in commodity prices signalling a commercial opportunity to raise capacity, particularly in the LNG and coal seam gas sectors.
A necessary adjunct to these cycles was a strong AUD and elevated interest rates. The impact on the mining states of these uncompetitive market settings was minimal, with the strong volume and price boosts underpinning their prosperity. On the other hand, the south eastern states – New South Wales and Victoria – struggled under the weight of the high currency and rising interest rates. 
With the mining investment boom now unravelling; Australia’s terms of trade having peaked in September 2011 and both the Australian dollar and interest rates down substantially, Australia is now looking to other sources of demand to sustain its admirable growth record. Those sources are services exports; residential construction; public transport infrastructure and population growth. 
These growth sources are dominated by the south eastern states. New South Wales and Victoria have been the major beneficiaries of the services boom. Education exports; business services and tourism are the key drivers of this success. Between 2007 and 2013, net services exports subtracted around 0.3 – 0.8ppts from GDP growth on average over most years. Since 2013, these sectors are responsible for adding 0.3 – 0.7ppts to growth.
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Residential construction, particularly driven by the boom in high rise apartments, has shown a considerable lift in its contribution to growth. The construction “boom” has equally been centred around the south eastern states. 
Partly funded by the revenue windfalls from housing activity in their states, New South Wales and Victoria are also experiencing a welcome boost to public sector infrastructure investment. In the last six months, “projects committed or under construction” have lifted from $32bn at the beginning of this year to $51bn in New South Wales, and from $7bn to $21bn in Victoria. That compares with a net lift of only $7bn in all the other states combined. 
Finally we are now seeing population growth in both New South Wales and Victoria exceed the national pace for the first time in 20 years. 
But, just as the mining and commodity cycles were heavily dependent on China, so are these latest sources of growth. Growth in tourism and education is dominated by China. This partly reflects the sharp increase in China’s overall services trade deficit. This deficit has more than doubled as a proportion of GDP over the last five years, and in the first half of 2016 was more than 50 percent of the goods trade surplus. 
At some point, the Chinese authorities, who appear to have stabilised last year’s spectacular near USD 1 trillion loss in foreign reserves, may decide to slow this leakage. Certainly we have seen marked evidence of a tightening of capital controls, particularly for the non-corporate sector.
That tightening of capital controls might also impact the construction boom. The number of high rise apartments currently under construction in March this year (ABS latest) has surged to 110,000 – including 44,000 in New South Wales; 34,000 in Victoria; and 23,000 in Queensland. 
As discussed, the south east is dominating the high rise boom. However, a significant proportion of the buyers are offshore based (so called FIRB buyers). Local banks have stopped funding FIRB buyers, presenting risks to local developers who may have sold more than 50% of their stock to these buyers. 
It is generally accepted that apartment buyers in the Melbourne CBD have incurred some capital losses, while Sydney purchasers are seeing their profits squeezed. These liquidity and capital loss prospects may discourage foreign buyers, with the result of sharply slowing the apartment construction cycle. 
On the other hand, foreign banks are seeking to partly fill the funding gap, while large foreign developers may also be able to relieve liquidity stresses for these buyers. 
Overall, huge uncertainty prevails in this market, with possible outcomes ranging from ongoing spectacular momentum to a sudden liquidity driven slowdown. In those circumstances, one part of the recent boost to Australia’s growth story might fade quickly. 
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>. Justin Smirk is ‎senior economist, Westpac Group and can be contacted <a href="https://www.westpac.com.au/about-westpac/westpac-group/" target="_blank">here</a>.
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Future challenges for the Australian economy: Westpac's Bill Evans

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Perth is not known as a model for suburbia and its suburban condition is similar to that of developed cities the world over.
However, it does stand out in one respect: it sits in an exceptionally biodiverse natural setting. A strong, informed vision for this setting’s relationship with the city could help Perth become an exemplar for similarly positioned metropolises everywhere.
The greater Perth region has been designated the Southwest Australia Ecoregion (SWAE). This is one of only 35 “biodiversity hotspots” in the world.
Reconciling future growth with biodiversity is a key issue for urban design and planning this century. Indeed, if current trends continue, global urban land cover will increase by 1.2 million square kilometres(equivalent to half the area of Western Australia) by 2030. Much of this will happen in biodiversity hotspots.
This is important because it is estimated we will lose nearly half of all terrestrial species if we fail to protect the hotspots. We will also lose the ecosystem services upon which human populations ultimately depend.
“Ecosystem services” may sound like abstract jargon, but it’s actually a term used to describe the services nature provides – such as clean air, water and food, and heatwave and flood mitigation. Without these, human life would be extremely unpleasant, if not unviable.
Perth has a reputedly strong planning system and is comparatively wealthy. If it can’t control its city form to protect biodiversity – compact cities generally being recognised as the best model for protecting land for conservation – then city administrators elsewhere, particularly in the developing world, are likely to struggle.
Misreading the land
The current treatment of the Australian environment has its roots in the European annexation of Australia, which has been characterised by catastrophic misreadings of the land. Governor James Stirling, who was singularly responsible for the European annexation of Perth, was the kind of man who saw what he wanted to see rather than what was there. In The Origins of Australia’s Capital Cities, Geoffrey Bolton writes:
"…arriving at the end of … an uncommonly cool, moist summer, [Stirling was] misled by the tallness of the northern jarrah forest and the quality of the alluvial soils close to the river into believing that the coastal plain would offer fertile farming and grazing. It was, Stirling wrote, equal to the plains of Lombardy; and he persuaded himself that the cool easterly land breeze of these early autumn nights must originate from a range of snowy mountains."
The results of such misinterpretations of the land were generally less poetic. Stirling sited the settlement of Perth on a narrow, constrained strip of land between swamps to the north and marshy river edges to the south. These low-lying areas fuelled plagues of mosquitos and, once polluted, deadly typhoid outbreaks.
In time, due to a lingering discomfort with Perth’s “unsanitary” wetlands, more than 200,000 hectares – an area equivalent to 500 Kings Parks – were drained on the Swan Coastal Plain. These biologically productive areas directly or indirectly support most of the coastal plain’s wildlife, so the effects on biodiversity have been catastrophic.
Furthermore, a perception of the Banksia woodland and coastal heath on Perth’s fringes as unattractive and useless has seen much of it cleared for the expansion of the city. Between 2001 and 2009, suburban growth consumed an annual average of 851ha of highly biodiverse land on the urban fringe.
The lesson from this experience is that any future growth in a biodiversity hotspot, or indeed elsewhere, has to be founded on the understanding that we cannot continue to bend nature to our will. We must learn how to work with it.
Within this humbling process, we need to recognise that working with the land is not an entirely pure or noble act; rather, it is imperative for humanity’s survival. As species and ecosystems become threatened and vanish, so too do the ecosystem services that support human wellbeing.
Perth’s Green Growth Plan
The release of the state government’s long-anticipated Perth and Peel Green Growth Plan for 3.5 million may herald a shift in the relationshipbetween the city and the biodiversity hotspot. The plan encapsulates two broad goals:
<ul>
<li>to protect fringe bushland, rivers, wetlands and wildlife in an impressive 170,000 hectares of new and expanded reserves on Perth’s fringe</li>
<li>to cut red tape by securing upfront Commonwealth environmental approvals for outer suburban development.</li>
</ul>
While ostensibly positive achievements, a question remains as to the implications of clearing a further 45,000ha (3% of the Swan Coastal Plain) of remnant bushland which is not protected by the conservation reserves.
Furthermore, the typically disconnected conservation reserves proposed in the Green Growth Plan lack overall legibility. This stymies the public’s ability to conceptualise the city’s edge, which leads them to care about it (like London’s greenbelt, for instance).
Finally, a question remains about how a plan that places restrictions on outer suburban development will accommodate the powerful local land development industry over time. This is a concern given the frequent “urban break-outs” – where urban development occurs outside nominated growth areas – between 1970 and 2005.
In 2003, the ABC asked revered Western Australian landscape architect Marion Blackwell, “Are we at home now in the land we live in?” She replied, “No, we’re not. We don’t know enough about it, and not enough people know anything about it.”
We still have work to do on our engagement with biodiversity in Western Australia, and Perth specifically, before we can become a model for future cities.
Julian Bolleter is research fellow, Australian Urban Design Research Centre, University of Western Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/julian-bolleter-292111" target="_blank">here</a>.
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Squandering riches: can Perth realise the value of its biodiversity?

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GUEST OBSERVER
Consumer Sentiment has been remarkably stable for the last six months. Over that period the Index has averaged 100.3 so today’s reading is just 1.0 percent above this average. 
Indeed the September reading is just 1.7 percent above the average reading over the previous six month period to March as well. 
This stability over the last six months has been despite significant events that can usually be expected to impact confidence: two interest rate cuts from the Reserve Bank and associated reductions in mortgage rates; a Commonwealth Budget; a Federal election; and some major developments offshore such as the surprise UK referendum result (‘Brexit’) and the build -up leading into November’s US election. 
In the September survey we have the benefit of respondents nominating those news categories that they most recalled and whether that news was favourable or unfavourable. There have been some important trends that might explain the stability of confidence at a reasonably solid level.
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A year ago the most recalled news items were around ‘economic conditions’ (53.9 percent of respondents) and ‘international events’ (41.8 percent of respondents). Recall on these topics is now down to 21.9 percent and 11.4 percent respectively. Not surprisingly, the news is assessed to be considerably less unfavourable today than last year. Having said that there has been a marginal deterioration in the assessment of domestic economic conditions since June. That move has been more than matched by a significant improvement in the assessment of news on international conditions over the last three months. 
The most recalled news category in September was ‘Budget and taxation’ (26 percent). News on this category has been assessed as more unfavourable than in June but still less unfavourable than a year ago. 
Recall levels for news items on ‘interest rates’ (15.2 percent); ‘employment’ (11.9 percent); and ‘inflation’ (6.4 percent) have been fairly steady over the last year. However for all of these categories, we have seen significant improvements in how news has been viewed. 
That theme of improving assessment of the jobs market is supported by the Westpac Melbourne Institute Unemployment Expectations Index. This fell from 141.2 in August to 138.4 in September (down 2 percent, recalling that a lower print means fewer respondents expect the unemployment rate to rise in the year ahead). The Index is now down 11.5 percent over the last year and 10.5 percent since September 2014. The Index was stubbornly high through 2012- 2015 so it is very encouraging that confidence seems to be gradually returning to the jobs market. 
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Confidence in the housing market is improving. The ‘time to buy a dwelling’ index fell 2.5% in September from 112.1 in August to 109.3 in September. The Index is still 7.5 percent above its level from a year ago and 4.3 percent above its average for the last six months. Confidence in both the major markets improved over the month. Sydney lifted by 4.0 percent and Melbourne rose by 5.1 percent. 
Confirmation of a continuation of improvements in the housing market was apparent in the Westpac Melbourne Institute Consumer House Price Expectations Index which increased by 3.0 percent for the month to be up by 6.0 percent for the year. Increases were recorded in NSW, Victoria and Queensland. 
There were mixed messages around the components of the Index. Of most significance was a 3.5 percent jump in the sub-index tracking assessments of ‘family finances vs a year ago’. Readers will recall that the Reserve Bank usually highlights this component when discussing its assessment of the consumer in its quarterly Statement on Monetary Policy. Less encouraging was a 2.3 percent fall in the subindex tracking views on ‘family finances over the next 12 months’. While the overall Index is up 8 percent over the last year both ‘family finances’ components are around the same levels. 
Confidence around the economic outlook deteriorated somewhat. The sub-index tracking views on ‘economic conditions over the next 12 months’ fell by 4.6% while the ‘economic conditions over the next 5 years’ sub index increased by 1.1 percent. 
The sub-index tracking assessments of ‘time to buy major household Item’ increased by 3.5 percent to now be 16.5 percent up on a year ago. 
In this survey, we also receive information on respondents’ saving preferences .These responses are particularly important for assessing whether there has been a change in risk aversion. Consistent with ‘stability’ in the overall survey we saw little change in saving preferences. Most respondents still see bank deposits as the wisest form of saving (29.9 percent up marginally from 29.5 percent in June). That proportion compares to the 40yr peak of 39% in 2012 when risk aversion was much higher.
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A second measure of risk aversion is the component ‘pay down debt’. That proportion increased from 20.0 percent to 21.0 percent and compares with record high of 27 percent in 2010. However the ‘pay down debt’ component has steadily lifted over the last three years. 
The proportions favouring ‘real estate’ (15.4 percent) and ‘shares’ (8.6 percent) remained steady in September. 
The Reserve Bank Board next meets on October 4. This will be the first meeting under the new Governor Lowe. It is extremely unlikely that there will be any change to rates at that meeting. 
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Since the cash rate returned to its historical low of 3% in 2013 all six subsequent cuts have occurred on the meetings in February/ May/August and November when the Bank has a ‘fresh’ print on inflation and is able to communicate any forecast changes in its quarterly Statement on Monetary Policy. That really suggests that the next ‘live’ meeting will be November 1. 
We expect rates will be held steady in November as well. Signs of stability in the real economy, as signalled in this report, point to steady rates being the most appropriate policy. Of course there is always the possibility of a shock from the inflation report on October 26 but both our inflation forecasts and our assessment of current high RBA inertia to moving again this year point to stability in November. 
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BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Consumer sentiment stabilises at solid level: Westpac's Bill Evans

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GUEST OBSERVER
Australia's economy has done well, considering it has had to absorb a significant negative shock from the end of the mining boom. 
Over the past few years, commodity prices have fallen by 60 percent and mining investment has declined from around 8 percent to 3.5 percent of GDP. 
Historically, much smaller falls have typically caused recessions. But, as last week's GDP figures clearly illustrated, Australia's 'R-word' has been rebalancing not recession. Although business investment was a -1.6ppt drag on growth, overall GDP grew by a strong 3.3 percent y-o-y in Q2. 
The mining investment fall has been more than offset by a ramp up in resources exports and growth in services exports, housing construction and household spending. Looking forward, the drag from mining investment and falling commodity prices should now fade. This is expected to mean continued solid overall GDP growth, despite the housing construction boom nearing its end. We see the RBA on hold in coming quarters. 
The more downbeat economic observers have, in recent years, described the economy as falling off the 'mining investment cliff' and said that Australia would have an 'income recession' as a result of the fall in commodity prices. The end of the mining boom has, indeed, been a big negative shock to absorb. 
But although mining investment has fallen significantly and declining commodity prices have weighed on nominal GDP, growth in real GDP and employment has remained solid. Last week's GDP numbers showed that Australia's economy grew at an above-trend 3.3 percent over the year to Q2 2016. Over the past five years, GDP growth has averaged 2.8 percent (which is around its trend rate) and jobs growth has been strong enough to see the unemployment rate fall from its early-2015 peak of 6.25 percent to now sit around 5.75 percent. 
How has this happened? Australia's growth has been rebalancing from the mining to the non- mining sectors ('Australia's great rebalancing act', December 2012). Low interest rates have supported a housing price and construction boom while the lower AUD and rising middle class incomes in Asia are driving increased demand for Australia's services exports, including tourism, education and business services. 
Importantly, the big drag from mining investment and commodity prices is almost done. The worst is in the past. As a result, even those that have been pessimistic about the impact of the end of the mining boom should now have less to worry about. 
Mining investment, which has been a drag of a hefty 4.5ppts of GDP over the past four years, will stop being a drag soon. On our estimates, mining investment subtracted around 1.8ppts from GDP over the year to Q2 2016, but will only subtract 0.5ppts from growth in the year to Q2 2017 and will not be a drag the following year. 
The drag will therefore subside by 1.3ppt this coming year and 0.5ppt the next year. And, because the LNG export ramp up will still be underway, the resources sector as a whole should contribute to overall real GDP growth. 
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We also expect that commodity prices have already passed the trough. If so, nominal GDP growth, tax revenues and even wages should get some support. Commodity prices have already made up the losses from late last year and are flat y-o-y, so are no longer a drag. On our forecasts, nominal GDP growth could pick-up from 3.4 percent y-o-y in Q2 2016 to 6 percent y-o-y by Q2 2017. 
Other downbeat commentators now point out that the end of Australia's housing price and construction boom could see weaker growth next year and into 2018. Having grown so strongly recently, housing construction will fall at some point and weaker house prices could deliver a negative wealth effect. While we agree that the housing price boom is over and that housing construction will start to be a drag on growth from around mid-2017, to us, the arithmetic suggests that this will be more than offset by the subsiding mining investment drag. 
Mining will stop being a drag just as the housing sector becomes one. The net of the two effects should still leave the economy growing, as the fall in mining investment was much bigger than the decline in housing investment is likely to be. 
We see little evidence that the housing price boom has driven a particularly strong positive wealth effect so doubt that the cooling of the housing price boom will see a significant negative one. 
What will be the main driver of growth? Services exports, led by tourism, education and business services. It's already happening, and in our view, is set to continue. Keep in mind that the services sector accounts for over 70 percent of Australia's GDP. 
This should continue to support jobs growth, as it has done in recent years. It should also start to spur more business investment. Last week's GDP numbers showed tentative signs of a pick-up in non-mining business investment. 
Australia's rebalancing is almost complete, at which point we expect domestic wages and inflation to stabilise. Once we have passed the trough in domestic wages and underlying inflation we expect that the RBA is unlikely to cut further. Our central case has the RBA on hold at 1.50 eprcent in coming quarters. 
 <a href="https://www.about.hsbc.com.au/hsbc-in-australia/management-team" target="_blank">PAUL BLOXHAM</a> IS CHIEF ECONOMIST (AUSTRALIA AND NEW ZEALAND) FOR HSBC. 
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Property 101: Mining's big drag is almost done: HSBC's Paul Bloxham

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The Reserve Bank of Australia announced it will hold the official cash rate in September at the historically low rate of 1.50 percent.
The decline of rates throughout 2016 may be partly attributed to the stubborn Australian dollar, which hovered around US$0.76 for most of July and August. The RBA have used subtle language and interest rate cuts in an attempt to de-value the Australian currency over the year.
A lower Australian dollar increases competitiveness of Australian goods. It also increases general prices through imported inflation, lifting the price of imported inputs for Australian goods and services. The annual inflation rate of just 1% to June in Australia looks set to remain low, at least over the remainder of the year.  
Despite the best efforts of the RBA, the AUD continued to climb gradually since May, which partially contributed to the August cut. The persistently high AUD made a case for further rate cuts.
That was, until, Federal Reserve Chair Janet Yellen spoke at a symposium on the 26th of August.
Yellen argued that strengthening in the US labour force meant “the case for an increase in the federal funds rate has strengthened in recent months”. The speech was followed by comments from the Vice Chair Stanley Fischer, who indicated that US rates could rise as soon as September.
This hint at higher interest rates saw a boost to the USD, and a complementary weakening in the AUD. Graph 1 shows the movement of the AUD relative to the USD over August. This took pressure off the RBA to use monetary policy as a means to lower the dollar, and may have contributed to the hold decision this month.
Graph 1: AUD/USD-August 2016
<a href="/images/2016/09/08/Screen%20Shot%202016-09-09%20at%208.50.40%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/08/Screen%20Shot%202016-09-09%20at%208.50.40%20AM.png" alt="">
Source: RBA &amp; Trading Economics
The next Fed rate decision is September 22nd, and an increase is likely to place further downwards pressure on the AUD and potentially create room for the RBA to delay further rate cuts.
This is important, because residential property value growth and dwelling approvals in Sydney and Melbourne have continued to be reactive to rate cuts earlier this year. Across Australia, dwelling construction saw a 1.2% increase over the June quarter, and a strong 6% increase over the year. Meanwhile, other sectors of construction work fell dramatically: engineering work fell by 9% in the quarter, and private construction fell by 14% over the period. 
Building approvals were up across Australia in July, as the number of units approved increased 4.97% year on year. However, across the country the number of separate houses approved fell by 3.19%. Much of the growth in dwelling approvals for the year was driven by the Sydney and Melbourne markets. This was expected following a May rate cut as more dwelling development projects gain cost benefit. A hold in rates is likely to see the market steady.  
Graph 2: Trend Data - Residential Dwelling Approvals Australia Wide
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<img src="/images/2016/09/08/Screen%20Shot%202016-09-09%20at%208.49.29%20AM.png" alt="">
Source: RBA &amp; Onthehouse.com.au
Graph 3: Trend Data - Total Residential Dwelling Approvals by Capital City
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Source: RBA &amp; Onthehouse.com.au
The number of dwelling approvals across Australia over time is shown in Graph 2. While 2012-15 saw a steep increase in the number of dwelling approvals, another small upward trend can be seen over 2016. Graph 3 shows the original monthly data of total dwelling approvals by capital city (which is volatile relative to the trend data), with Sydney and Melbourne experiencing a significant surge.
The movements in dwelling approval data is expected, as it follows capital growth in the dwelling market. Following the May rate cut, Residex observed strong growth in Sydney and Melbourne dwellings for the June quarter, including a 1.85 percent surge in Sydney units, and 2.29 percent in Melbourne units.
The RBA faces a two-tiered economy in which housing has boosted growth in the south-east coast of Australia, while growth in other cities across Australia is subdued. Part time employment in Australia also reached a record high of 31.63 percent in July, suggesting ongoing structural challenges in full time job creation and wage growth. As the rate is held for September, we may expect these east coast markets to steady a little, and growth in approvals start to flatten.
Eliza Owen is market analyst for Onthehouse.com.au and can be contacted <a href="https://www.onthehouse.com.au/" target="_blank">here</a>.
 
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The RBA faces a two-tiered economy: Eliza Owen

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GUEST OBSERVER
The Australian economy has just completed 25 consecutive years of economic growth. The last recession ended in June 1991.  
Solid growth: The economy grew by 0.5 percent in the June quarter with annual growth lifting from 3.0 percent to 3.3 percent.  
Contribution to growth: The biggest contributions to growth came from public investment (+0.7 percentage points) (pp), government consumption and inventories (both +0.3pp), household spending (+0.2pp), dwelling investment and private equipment investment (both +0.1pp). The biggest drag on growth was from non-residential building (-0.8 percentage points) and net exports (-0.2pp).  
Income: Real gross national income rose by 0.6 percent in the June quarter to be up 2.5 percent on the year. In nominal terms GDP lifted 1.3 percent in the quarter and rose by 3.4 percent over the year.  
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Productivity: Gross value added per hours worked in the market sector rose by 1.5 percent in the June quarter and by 2.9 percent over the year.  
Industry sectors: Fourteen of the 19 industry sectors expanded in the June quarter. The strongest sector was Professional, scientific and technical services, up 3.2 percent and adding 0.2 percentage points (pp) to growth. Eight other sectors added 0.1pp to overall growth. The Mining sector fell by 3.5 percent in the quarter and cutting 0.3pp from overall growth.  
What does it all mean?  
 There are no signs that Australia’s record economic expansion is coming to an end. Far from it – annual growth has lifted to 4-year highs. Australia has now notched up 100 quarters without a recession. Netherlands holds the record for the longest expansion at 103 quarters. Over the next year Australia should pick up the gold medal for the longest economic expansion of a developed economy in the modern era.  
It’s worth reflecting on Australia’s economic position. Economic growth is the fastest in four years and above long- term averages. Inflation stands at 1.0 percent. Interest rates stand at 1.5 percent. Unemployment stands at 5.7 percent. The mining construction boom may be over, but it has been replaced by a housing construction boom. There is much to like and celebrate about Australia’s economy.  
Could we be doing even better? There is always room for improvement. For instance, we could have even lower unemployment but still keeping inflationary pressures contained. The challenge for the authorities is to keep the expansion intact.  
The Reserve Bank could still cut rates – that is, if inflation remains low, rates could be cut to allow the economy to grow even faster. We continue to pencil in a rate cut in November. The question though is whether rates are already low enough to boost growth.  What do the figures show?  National Accounts:
Economic Growth: The Australian economy grew by 0.5 percent in the June quarter after a downwardly-revised 1.0 percent increase in the March quarter (previously up 1.1 percent). Forecasts had centred on 0.5 percent growth in the economy in the quarter. The economy still hasn’t experienced a recession for 25 years.  
The economy has grown 3.3 percent over the past year, above the decade-average growth rate of 2.8 percent and above the 15-year average of 3.0 percent. Annualised growth over the past six months has been 3.2 percent.  
The non-farm economy grew by 0.6 percent in the June quarter after a rising by 1.0 percent in the March quarter. Annual growth stands at 3.4 percent.  
Farm GDP fell by 4.3 percent in the June quarter after expanding by 3.4 percent in the March quarter. Farm GDP fell 3.3 percent over the year.  
At current prices, GDP rose by 1.3 percent in the June quarter to be up 3.4 percent on the year. The annual growth rate is still well below the decade average of 6.2 percent. Over the year to June 2016, the Australian economy was valued at $1,650 billion.  
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Growth drivers: The biggest contributions to growth came from public investment (+0.7 percentage points), government consumption and inventories (both +0.3pp), household spending (+0.2pp) and dwelling investment and private equipment investment (both +0.1pp). The biggest drag on growth was from non-residential building (- 0.8 percentage points) and net exports (-0.2pp).  
Inflation: In terms of domestic price pressures, the household consumption implicit price deflator rose by 0.4 percent in the June quarter after a 0.1 percent fall in the March quarter. Annual growth stands at just 0.9 percent – the lowest rate in 17 years. Real non-farm unit labour costs fell by 0.8 percent in the June quarter after a flat result in the March quarter. Real non-farm unit labour costs fell by 0.6 percent over the year.  
Productivity: Gross value added per hour worked market sector rose by 1.5 percent in the quarter and by 2.9 percent on the year. GDP per hour worked rose by 1.2 percent in the quarter and by 2.7 percent over the year. And hours worked in the market sector fell by 1.1 percent in the quarter to be up 0.1 percent on the year.  
States &amp; Territories: The only data available is state final demand (more accurate data would include net exports but it is not available for all states and territories). The ACT had the fastest annual growth rate in the June quarter (up 6.0 percent), followed by NSW (up 3.8 percent), Victoria (up 3.5 percent), Tasmania (up 1.9 percent), South Australia (up 1.7 percent) and Queensland (up 0.4 percent). The Northern Territory contracted by 10.4 percent,   followed by Western Australia (down 7.3 percent).
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Only five State and Territory economies had data on exports and imports. If you add in the trade figures, the ACT economy was up 6.3 percent over the year with NSW up 5.2 percent, Victoria up 4.5 percent, South Australia up 3.0 percent and Queensland up 1.3 percent.  
Consumer spending lifts. Household spending rose by 0.4 percent in the June quarter to be up 2.9 percent for the year. Only six of the 17 sectors recorded weaker spending in the quarter. Spending fell most in in Cigarettes &amp; tobacco (down 2.3 percent) and Electricity, gas and other fuel (down 2.2 percent). Spending rose most in Purchase of vehicles (up by 2.8 percent) and Health (up 2.1 percent).  
Industry sectors: Fourteen of the 19 industry sectors expanded in the June quarter. The strongest sector was Professional, scientific and technical services, up 3.2 percent and adding 0.2 percentage points (pp) to growth. Eight other sectors added 0.1pp to growth. The Mining sector fell by 3.5 percent in the quarter cutting 0.3pp from overall growth.  
Other points:
Profit share rises. In seasonally adjusted terms, the ratio of profits to total factor income rose from 24.5 percent to 24.9 percent in the June quarter. The wages share was steady at 54.1 percent.  
Household savings ratio steady. The household saving ratio was steady at 8.0 percent in seasonally adjusted terms in the June quarter. In trend terms household saving was steady at 7.9 percent in the June  quarter.  
Imports rose as a share of spending. The imports to sales ratio rose from 0.373 in the March quarter to  0.377 in the June quarter.  
The inventory to sales ratio was steady at 0.622 in the June quarter.  What is the importance of the economic data?  
The quarterly National Income, Expenditure and Product release (national accounts) from the Bureau of Statistics is the most complete assessment of Australia’s economic performance. Detailed estimates are provided on incomes (wages, profits), spending (such as household, dwelling investment and trade (exports and imports) and production (comparing industry performance). Other data includes household saving and the economic performance of States and Territories.  
The main use of the national accounts figures is as a historical record of economic performance. The information has little forward-looking value for currency, interest rate or share markets.  What are the implications for interest rates and investors?  
The national accounts data is backward looking. But the data is taken into account by the Reserve Bank, serving as a base for forecasts. The Reserve Bank uses six-month annualised growth figures to ascertain how the economy is travelling. And in that context growth annualises at around 3.2 per cent. The Reserve Bank had assumed growth of 3.25 percent in the June quarter.  
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Labour costs are falling, meaning that there probably hasn’t been a better time to be taking on staff. Inflation remains low but real wage gains are still occurring – wages are growing faster than prices. So there is also good news for consumers.  
Productivity calculations are more problematic. Hours worked in the market sector fell. But gross value added per hour worked market sector rose 1.5 per cent in the June quarter to be up a healthy 2.9 per cent over the year. Ideally you would like to see more employment and hours worked as well as higher output. As always, there is   scope for improvement.
GDP per capita continues to edge higher in real terms, indicating that our standard of living continues to rise. Perhaps growth is slower than in the past, but it is still rising.  
Should the Reserve Bank cut rates again?
There is nothing in the data to prevent the Reserve Bank cutting rates again. The debate to be had though is whether rate cuts at historically-low levels are actually still stimulative. The only real sign of inflation is the “ownership transfer costs” or costs associated with buying or selling a home – up 9.5 per cent over the year.  
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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Happy 25th birthday Australian economy: CommSec's Craig James

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<div>In Britain the topical political and media talk is of whether an "Australian-style" points based immigration system should be introduced, without any real clarity about what that would mean in practice.</div>
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<div>Back Down Under it's often said that Australia's population growth must slow if the economy isn't creating enough jobs. This is essentially true for 457 visas, but does overlook the potential underlying demand for other visa classes.</div>
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<div>I previously looked at the newly relaxed international student visa rules which were made effective from 1 July, easing the rules for parents and guardians of primary school age students in Australia. The recent election campaign also led to some potentially interesting shifts via proposed policies for...</div>
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<div>Parent visa rules</div>
In 2016, the percentage of Australians born overseas hit its highest level in 120 years at a massive 28 per cent. 
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Immigration policies understandably prefer immigrants to be of the young, working (or creating jobs through business), and tax-paying demographic. Thus over the 2015/16 Migration Programme year, parent visa places were capped as follows:
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<li>1,500 places allocated to Parent (non-contributory) visas </li>
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7,175 places allocated to Contributory Parent visas </li>
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<div>This means that your best chance of getting a parent visa in the last financial year was likely <a href="https://www.border.gov.au/Trav/Visa/Fees" target="_blank">to pay</a> the prohibitive A$47,000 for a contributory visa - about A$100,000 for a couple! - while successful sponsorship for standard parent visas was extremely hard to come by. </div>
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<div>The unattractive alternative for parents wanting to join their families in Australia was to come in on a one year visitor visa, then leave the country for six months on each occasion. It would be a sore test of anyone's resolve to repeat this process over any meaningful period of time! </div>
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With some 6.8 million Australians having been born overseas the potential demand for parent visas is massive and growing, particularly from China and India.  I wouldn't believe anything a politician told me these days, but Google trends activity shows that there has been an explosion of interest in parent visas since the last full Census in 2011.
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It's worth noting that previous rules weren't favourable to Chinese families, due to China's one child policy meaning that most parents naturally had only one child in Australia, which was an obvious mathematical hindrance in proving that the balance of your family lived here.  As at 30 June 2016 due to the caps there were 38,770 persons in the queue for standard parent visas (up 59 percent from last year), and another 5,160 persons for aged parent visas (up 28 percent). 
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<div>With standard parent visas presently capped at 1,500 per year, a queue of this size at 30 June equated to a ridiculous 25.8 year average wait time for an application to be processed. </div>
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<div>Election pledges</div>
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<div>During a keenly contested election campaign the Australian Labor Party (ALP) announced plans to extend visitor visas to parents out to a far more palatable three years - with parents only being required to leave the country for four weeks at the end of each visa term and paying a $5,000 bond to ensure cover for medical and social services. Surely a potential vote-winner for the ALP in the rapidly growing migrant communities, particularly in an era where so many young families also strive to be dual-income households. </div>
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<div>As tends to be the way of these things, the Coalition's knee-jerk response was to announce a new parent visa plan itself, especially aimed at Chinese and Indian visitors (provided that new arrivals pay for health insurance and don't rely on the welfare state for health care, shamelessly piggybacking from the ALP proposals!) and allowing for continuous five year visitor visas. </div>
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<div>Given that the number of overseas born Aussies is soon to pass 7 million, such a policy could potentially lead to hundreds of thousands of applicants for visitor visas from parents sponsored by Australian citizens, largely from ageing, non-English speakers hailing from Asia (which is not really the ideal target demographic for policy makers). For this reason the Coalition's proposed policy denotes that parents of Australian citizens and permanent residents who have lodged a permanent parental visa application "may" be issued a five year visa "on a case-by-case basis". </div>
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<div>In other words, this is an 'out'. Minister Dutton has the discretion to limit the number of visas issued and retains the right for policy to change course henceforth. </div>
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<div>The wrap</div>
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<div>At this juncture there appears to be very little clarity surrounding what will happen with respect to parent visas.</div>
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<div>The Coalition probably doesn't know the answer itself, election pledges doubtless being dreamed up on the hoof in response to the ALP's evidently popular proposal. </div>
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<div>A point here relevant to the property markets is that if Australia does end up with an oversupply of thousands of apartments as many have forecast, there are levers that can be pulled to loosen immigration policies.</div>
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<div>After all, a sceptic would say that if there's a policy that's always guaranteed to garner support from governing parties of either persuasion, it's one aimed at propping up ailing capital city housing markets. </div>
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PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>. 
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.
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