Repeat buyers are one of the strongest measures of confidence in any apartment development.

At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.

Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/FH_1EzB-1vs?si=XScVlP1ERsTDJoME" title="YouTube video player" width="560"></iframe>

"I had some boxes I wanted to tick," he says.

Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.

“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.

He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.

[smartcode_project:default project_id=135096 project_image_fid=356818]

After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.

"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."

Today, Keith says the move has completely changed how he experiences Newcastle.

"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."

[smartcode_project:default project_id=135096 project_image_fid=356828]

Beyond the location, he says it's the sense of community that has surprised him most.

"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."

For Aimee and Lyle Goodman, the journey started almost by chance.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/tsioMLcnjas?si=zq-ys3JuWpfa5hFv" title="YouTube video player" width="560"></iframe>

The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.

"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."

As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.

"We actually catch up more as a family now," Aimee says.

"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."

[smartcode_project:default project_id=135096 project_image_fid=356829]

Lyle says their confidence came from GWH's reputation within Newcastle's building industry.

"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."

That confidence only grew throughout the buying process.

"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."

[smartcode_project:default project_id=135096 project_image_fid=351104]

Aimee says one moment stood out.

"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."

The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.

Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.

[smartcode_project:default project_id=135096 project_image_fid=356822]

ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;

The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.

[smartcode_project:default project_id=135096 project_image_fid=356826]

For Keith, the appeal remains straightforward.

"You feel at home even before you've moved into your home."

For Aimee, the change is measured in time.

“I just felt like I had more time,” she says.

[smartcode_project:default project_id=135096 project_image_fid=351102]

Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.

ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.

[smartcode_project_cta:default project_id=135096]

Joel Robinson

From ONE to ERA: Why buyers are choosing GWH again in Newcastle West

Virgate Property Group is preparing to commence construction of Verdé, its new apartment development in Melbourne's Arts Precinct at Southbank, following a strong run of sales that has seen more than half of the project's 173 apartments secured.

Verdé has attracted a broad mix of first home buyers, owner-occupiers upgrading from nearby inner-city suburbs and investors, with younger owner-occupier couples aged between 28 and 45 accounting for the strongest enquiry. Many are already living in Southbank, South Melbourne, Albert Park, Port Melbourne, South Yarra and the CBD.

"Verdé is located in one of the most desirable pockets of southern Melbourne," Blair Property Group Director Darren Blair, who is managing sales at Verdé, said.

"It's within walking distance of the Arts Centre, Royal Botanic Gardens, Albert Park Lake, and Southbank's restaurants and retail. It's a great lifestyle location with strong amenity and liveability, which made it a very attractive choice for the project."

[smartcode_project:default project_id=4661 project_image_fid=372549]

Virgate was already familiar with the precinct, having previously delivered the successful Domain House development in neighbouring South Melbourne. That experience gave the developer confidence to acquire the Coventry Street site and continue expanding its presence in Melbourne's inner south.

"We had been keeping an eye on the site and the broader precinct for a few months before deciding to move forward with the acquisition," Virgate said.

The project was ultimately secured in 2020 following feasibility studies, planning assessments and due diligence, with the brief centred on delivering "a high-quality, considered design that feels both refined and fit for purpose."

[smartcode_project:default project_id=4661 project_image_fid=314259]

Designed by <a href="https://www.apartments.com.au/architects/bruce-henderson-architects">Bruce Henderson Architects</a>, Verdé comprises 173 one, two and three-bedroom apartments priced from $599,000. The architecture is distinguished by a faceted glass façade that responds to both the site's outlook and Melbourne's changing light conditions.

According to Bruce Henderson Architects, the coloured glazing gives the building a distinctive identity while also providing privacy and solar shading, with residences oriented to capture views across the bay, city skyline and surrounding parklands.

Inside, <a href="https://www.apartments.com.au/interior-designers/designoffice">DesignOffice</a> has created interiors focused on natural light, efficient planning and enduring materials. Apartments feature engineered oak flooring, natural stone benchtops, floor-to-ceiling glazing and SMEG appliances, while a restrained material palette aims to complement the expansive outlooks rather than compete with them.

[smartcode_project:default project_id=4661 project_image_fid=372550]

Resident amenity has also been designed around everyday functionality rather than occasional use. Facilities include a concierge-serviced lobby, residents' lounge with fireplace, library and co-working space, gym, terrace garden with barbecue facilities, ground-floor café, and package delivery management.

The project's location continues to be one of its strongest drawcards. Positioned on Coventry Street, Verdé sits within walking distance of the National Gallery of Victoria, Arts Centre Melbourne, Royal Botanic Gardens and Albert Park Lake, while Southbank's dining precinct, Sturt Street trams and the new ANZAC Station are all nearby. The surrounding education catchment also includes Melbourne Grammar, Melbourne Girls Grammar, Mac.Robertson Girls' High School and several major university campuses.

The sales team says buyers have responded particularly well to the combination of location, design quality and long-term liveability.

"They're responding really positively to the quality of the design, premium resident amenities and the uninterrupted views. Many also appreciate the location and how connected it is to everything they need."

The ability to secure stamp duty savings before completion has also been a key factor for purchasers, alongside the opportunity to personalise finishes ahead of settlement.

With construction set to commence soon and more than half the apartments already sold, Verdé enters its next phase as one of the Arts Precinct's more established apartment developments, offering remaining buyers an opportunity to secure a residence before construction advances further. Expected completion is scheduled for late 2027.

[smartcode_project_cta:default project_id=4661]

Virgate's Verdé Southbank moves toward construction as sales fly past halfway stage

Downsizer-focused apartment development Kooyongkoot in Hawthorn has been recognised at the 2026 Better Future Melbourne Design Awards, taking home Gold and Silver awards in two categories.

<a href="https://www.apartments.com.au/new-apartments/kooyongkoot-hawthorn-1-kooyongkoot-road-hawthorn-vic-3122">Kooyongkoot</a>, currently being delivered by developer PQD and designed by Cera Stribley, received Gold in the Interior Design – Proposed category and Silver in the Architecture – Proposed category.

The dual recognition reflects the design approach behind the boutique development on prestigious Kooyongkoot Road, where the focus has been on creating homes for downsizers seeking the space, quality and functionality of a detached house within a low-rise apartment building.

Rather than maximising apartment numbers, <a href="https://www.apartments.com.au/developers/pqd">PQD</a> and <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a> limited the development to just 18 residences, allowing for larger floorplans, greater privacy, generous landscaping and expansive communal spaces.&nbsp;The majority of the apartments also benefit from corner aspects, allowing for dual sources of natural light.

Now around 70 per cent complete and on track for completion in November 2026, Kooyongkoot will comprise a mix of garden residences, ter​race apartments, sub-penthouses, and is crowned by two half-floor penthouses with direct lift access and private rooftop terraces.

[smartcode_project:default project_id=102717 project_image_fid=355297]

The Silver Award for Architecture recognised the way the building responds to its prominent corner position at the ent​rance to Hawthorn's Scotch Hill precinct, one of Melbourne's most established residential neighbourhoods.

Rather than competing with the grand homes that line Kooyongkoot Road, the architectural approach focused on restraint and longevity, using curved brickwork, generous landscaping and carefully considered proportions to integrate with the existing streetscape.

"The form feels fluid and timeless, as though shaped by the landscape itself – architecture that belongs, rather than competes," said Chris Stribley, Co-Founder and Managing Principal of Cera Stribley.

The judging submission also highlighted practical innovations throughout the building, including lift cores servicing only nine homes each, a central landscaped lightcourt designed to bring daylight and ventilation into the building, and fully enclosed private storage rooms with lighting, power and shelving to better accommodate residents transitioning from larger family homes.

[smartcode_project:default project_id=102717 project_image_fid=355293]

The Gold Award for Interior Design recognised the project's focus on long-term liveability rather than display-home aesthetics.

According to the awards submission, the interiors were designed from the inside out, prioritising how homes would function over decades of daily use through generous proportions, practical storage, durable natural materials and flexible layouts.

The specification includes natural stone throughout, upgraded acoustic glazing, V-ZUG appliances and fully enclosed storage rooms, alongside an amenity offering focused on wellness, entertainment and everyday convenience.&nbsp;

Residents will have access to a gym and yoga studio, a wellness centre featuring traditional and infrared saunas, a cold therapy shower and treatment room, as well as a residents' lounge and golf simulator/cinema room for entertainment.&nbsp;Kooyongkoot has also considered the everyday convenience of its residents by offering a private carwash and pet wash facilities on site as well as dedicated parcel lockers and oversized fully enclosed storage rooms.&nbsp;

[smartcode_project:default project_id=102717 project_image_fid=355303]

The project's attention to detail has already resonated with buyers. Earlier this year, Kooyongkoot recorded one of Boroondara's highest apartment sales when an $8 million penthouse was purchased by a Melbourne CEO downsizing from a nearby family home.

"Every detail feels deliberate, from the overall design down to the smallest touches," the purchaser said.

"The level of quality and refinement is exceptional, but what really sold it was how liveable it felt... It felt like a place where everything had been considered, not just a luxury building."

[smartcode_project:default project_id=102717 project_image_fid=355304]

Sustainability also formed a key part of both award submissions. Kooyongkoot is targeting a minimum 7.5-star NatHERS rating across all residences, supported by passive design principles, high-performance glazing, EV charging infrastructure, water reuse systems and a wellness model focused on lower-energy dry facilities rather than pools and large wet areas.

Located within walking distance of Scotch College, Methodist Ladies' College, Koo​yong Lawn Tennis Club, Aubur​n Village and Camberwell Junction, Kooyongkoot continues to target owner-occupiers looking to remain in Melbourne's inner east without compromising on space or quality. A limited selection of two, three and four-bedroom residences remains available, with prices starting from $1.9 million.

[smartcode_project_cta:default project_id=102717]

Kooyongkoot wins Gold and Silver at Better Future Melbourne Design Awards

New apartment supply has become increasingly constrained across <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a> in recent years, with fewer projects progressing through to completion as development conditions have become more challenging.

It makes <a href="https://www.apartments.com.au/developers/novm">NOVM</a>'s 2021-completed <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> one of the most recently completed residential towers on the Parramatta River, and among the newest apartment developments in Sydney's second CBD.

With the project largely completed before the sharp escalation in construction costs and inflation following the pandemic, The Lennox is now offering pricing that would be difficult to replicate in a comparable new development in Parramatta today, or across much of Western Sydney.

The majority of the 413 apartments at The Lennox sold before and shortly after completion. A limited release of the remaining apartments has recently been brought to market by capital partner <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a>, with entry-level pricing from $700,000 and two-bedroom apartments available from under $1 million.

Rising above the Parramatta River at 12 Phillip Street, The Lennox comprises one, two, three and four-bedroom apartments, appealing to first home buyers, young professionals, families, downsizers and interstate investors seeking a completed apartment in one of Australia's fastest-growing economic centres.

[smartcode_project:default project_id=5743 project_image_fid=372394]

Rather than positioning Parramatta as an alternative to Sydney's CBD, Equitifund believes the city has reached a point where it stands on its own merits.

"Parramatta is no longer simply an alternative to Sydney CBD, it's becoming a destination in its own right," Equitifund Executive Chairman Greg Huxley said.

"The Lennox captures that evolution with a level of quality and amenity that's difficult to match at its price point."

[smartcode_project:default project_id=5743 project_image_fid=953]

Designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, the tower responds directly to its riverfront setting through expansive glazing and open-plan layouts that maximise views across the Parramatta River and city skyline. Interiors feature engineered timber flooring, stone benchtops, stainless steel appliances and floor-to-ceiling glazing, while generous balconies extend the living spaces outdoors.

Marchese Partners says the project was conceived to balance high-quality apartment living with practical, long-term functionality, pairing larger, efficient floorplans with amenities more commonly associated with five-star hotels.

That emphasis continues through the resident facilities, which include a 20-metre rooftop swimming pool, fully equipped gym and wellness spaces, full-time concierge, a residents' lounge, function room, private lifts, secure basement parking and rooftop communal areas overlooking the Parramatta River. Ground-floor boardwalk retail and dining further activate the riverfront and integrate the building into the surrounding public realm.

[smartcode_project:default project_id=5743 project_image_fid=925]

Australian housing and finance group Equitifund has secured the remaining apartments, believing there are few completed apartment opportunities in Parramatta that offer the same combination of location, amenity and pricing.

Equitifund National Sales Director Ben Hamblett says buyers are increasingly recognising that premium apartment living no longer needs to come with Sydney CBD pricing.

"The Lennox is where aspirational living becomes attainable," Hamblett said.

"Wake to river and mountain views, step into Sydney's Second CBD, and arrive home to resort-calibre amenities, all without the harbour price tag."

Hamblett says owner-occupiers are also attracted by the convenience of having Westfield Parramatta, Church Street's dining precinct, Parramatta Park, Riverside Theatres, Western Sydney University and major transport connections all within walking distance.

"At The Lennox, lifestyle is not an afterthought, it is the foundation."

[smartcode_project:default project_id=5743 project_image_fid=5374]

The Lennox places residents within walking distance of Parramatta Square, Westfield Parramatta, Church Street Eat Street, Parramatta Station, the ferry wharf, Light Rail, the future Sydney Metro West, Parramatta Park and CommBank Stadium, reinforcing Parramatta's position as one of Australia's most connected metropolitan centres outside Sydney's CBD.

Equitifund says buyers visiting the display suite consistently comment on the quality of the finishes, generous floorplans, river and skyline views, and the walkability of the location. The project has attracted a broad mix of local professionals, upsizers, downsizers, buyers relocating from Sydney's inner suburbs and interstate investors seeking long-term growth opportunities.

That demand aligns with Parramatta's continued evolution as an economic powerhouse. Equitifund Research and Market Insights specialist John Bekiaris says sustained population growth, infrastructure investment and expanding employment opportunities continue to support long-term housing demand across the city.

"Parramatta has evolved from a satellite city into one of Australia's most important economic centres. Population growth, infrastructure investment and employment are all supporting sustained long-term housing demand."

[smartcode_project_cta:default project_id=5743]

The apartment price gap drawing Sydney buyers west

A luxury beachfront apartment at Rainbow Bay has more than doubled in value since it sold off the plan six years ago, setting a new local apartment record in the process.

The three-bedroom apartment in the Flow development on Petrie Street, the first of four new projects locally by Paul Gedoun's S&amp;S Projects, has sold for $7.4 million, after originally selling for $3.27 million when the project launched in 2020.

The seventh-floor apartment, comprising 187 sqm of internal living space and a 54 sqm balcony overlooking Froggies Beach and Snapper Rocks, was purchased by a local family.

The transaction was negotiated by Pezet Matheson director Kerry Pezet and equates to more than $30,000 per sqm.

Pezet said the sale reflected the limited opportunities to buy into the boutique beachfront development.

"The sale highlights the rarity of opportunities within the boutique beachfront development, where residences seldom become available," Pezet said.

"Flow is one of the Gold Coast's most tightly held buildings. Buyers from our database move quickly when residences become available, and achieving an off-market sale at $7.4 million demonstrates the depth of demand for property of this calibre."

<img alt="Flow" data-entity-type="file" data-entity-uuid="c585b206-2130-4eee-a50c-3f27c51a7c70" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-06%20at%208.33.25%E2%80%AFPM.png?VersionId=m3pHRDV62Y3fvN.XQuQHq.52ilTWpRLf" />

Flow was the first of four luxury apartment developments delivered by Paul Gedoun's S&amp;S Projects at Rainbow Bay and was completed in 2023.

Positioned on the beachfront overlooking Snapper Rocks, the residence includes three bedrooms, three bathrooms, a powder room and views stretching north along the coastline towards Surfers Paradise.

Pezet Matheson Residential principal Mitchell Lambert said buyers continued to prioritise quality beachfront apartments in tightly held locations.

"Flow Residences offers a rare combination of elevated beachfront positioning, architectural excellence, comprehensive resident amenity and premium finishes, which is exactly what discerning purchasers are seeking," Lambert said.

"The transaction further reinforces Rainbow Bay's reputation as one of Australia's premier coastal lifestyle destinations, where limited supply and growing demand continue to support strong market performance."

Pezet Matheson originally marketed and sold out Flow off the plan, making the latest transaction a return to one of the project's original buyers.

Paul Gedoun is selling his third project, <a href="https://www.apartments.com.au/new-apartments/radia-rainbow-bay-271-boundary-street-coolangatta-qld-4225">Radia Rainbow Bay</a>, after recently completing, and selling out, <a href="https://www.apartments.com.au/buildings/esprit-217-227-boundary-street-coolangatta-qld-4225">Esprit</a>. He has plans for a <a href="https://www.apartments.com.au/news/qld/first-look-s-s-projects-proposes-88-apartment-wellness-tower-at-coolangattas-boundary-street">fourth building</a>, 88 apartments on <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">Boundary Street</a>.

Rainbow Bay apartment doubles in price since off the plan sale during pandemic

Economy

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<div>The ABS released its Lending Finance data for May 2015 which showed that low interest rates are encouraging greater borrowing across the economy.</div>
<div> </div>
<div>While total lending was a little lower than in April on a seasonally adjusted basis, over the past year the data has strengthened considerably.</div>
<div> </div>
<div>Owner-occupied housing finance has increased to a record high level, while personal finance borrowing is also now tracking at its highest benchmark on record.</div>
<div> </div>
<div>Total lending finance for the month of $74 billion was an increase of 10% on the prior year figure, sending total finance commitments for the past 12 months surging 11% to $846 billion - the highest ever figure on this survey.</div>
<a href="https://1.bp.blogspot.com/-r7zMiNP0hrE/VaMqbW5y3nI/AAAAAAAAW2g/Hv0pU7OKztM/s640/LF3.jpg" target="_blank">Click to enlarge</a>
<img src="https://1.bp.blogspot.com/-r7zMiNP0hrE/VaMqbW5y3nI/AAAAAAAAW2g/Hv0pU7OKztM/s640/LF3.jpg" width="640" height="282"> Sydney property investors running riot 
<div>While property investor loans have evidently passed their peak for this cycle in Western Australia and the Northern Territory, elsewhere investor loans are trending upwards.</div>
<div> </div>
<div>Indeed in New South Wales investor lending is exploding off the top of the chart, with the May 2015 result of $6.07 billion again comfortably the greatest ever month of investment lending in any state or territory.</div>
<div> </div>
<div>Summarily, Sydney now has the highest ever level of investment lending in concert with the lowest stock on market levels we have seen. </div>
<div> </div>
<div>Egg on face for many of the property experts once again, though it should be noted here that the market regulator "should" now be targeting Sydney loans with a vengeance in order to dial back this exuberant level of demand.</div>
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<div>Charted below is the raw data for New South Wales, which shows that investor lending has increased by an extraordinary 137% over the three years since May 2012.</div>
<div> </div>
<div>On a rolling annual basis, investor lending has increased by more than 30% over the past year - yet another monster increase.</div>
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<div>Although not charted here mainly due to laziness, May was also by a whisker the strongest ever month for investment lending in Victoria at $3.27 billion, taking rolling annual lending to $34 billion, a 22 per cent year-on-year increase.</div>
<div> </div>
<div>May was another strong month for Queensland investor lending at $1.73 million. which takes the rolling annual figure 13.3 per cent higher than one year ago.</div>
<div> </div>
<div>It has been a long yet steady recovery for Queensland investors since the financing nadir related to the 2011 floods.</div>
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<div class="separator"> </div>
<div>Investor lending was lower in the month of May in South Australia, but nevertheless on a rolling annual basis has moved 11% higher over the past year.</div>
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<div>Investor lending is now declining in Western Australia, albeit fairly moderately, with low borrowing rates sustaining borrowing for property investment at a historically high level.</div>
<div> </div>
<div><a href="https://2.bp.blogspot.com/-z_r-c3Tek1w/VaMuJO7v2TI/AAAAAAAAW3E/AhROalONWVw/s640/Wa.jpg" target="_blank">Click to enlarge</a></div>
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<div class="separator">The wrap</div>
<div class="separator"> </div>
<div class="separator">Overall, a strong result which suggests that total lending finance on an annualised basis may be heading towards $900 billion in due course, suggesting that easier monetary policy is taking effect.</div>
<div class="separator"> </div>
<div class="separator">Property investor lending continues to be exceptionally strong, particularly in Sydney and Melbourne.</div>
<div class="separator"> </div>
<div class="separator">And indeed the data suggests that this dynamic is now spreading to Hobart, Brisbane, and to a somewhat lesser extent, Adelaide.</div>
<div class="separator"> </div>
<div class="separator">
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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pwargent-M4siyDbqQY

Sydney property investors running riot: Pete Wargent

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GUEST OBSERVER
The Reserve Bank of Australia’s latest Statement on Monetary Policy (May 2015) referenced unique data from Charter Keck Cramer and the National Land Survey Program (NLSP) to highlight imbalances between the strength of purchaser demand and scarcity of developable land supply in capital city greenfield land markets.
The land markets are a critical input into the housing industry and with the decline in the mining sector, investment in new housing is becoming increasingly relied upon to support the domestic economy’s growth. This land market imbalance is also causing localised lot price pressures, especially in Sydney, and will ultimately impact opportunities for dwelling investment and undermine potential growth in the domestic economy.
New housing supply is clearly being supported by historically low interest rates and is further evidenced by the NLSP’s observation of 50,000 lot sales in the year ending March 2015 across the capital cities, which is at peak levels and will to continue to drive high levels of new housing construction.
New housing supply across Australia is also being underpinned by historic high levels of new apartment supply. Charter’s unique insight into the Core apartment markets of the capital cities highlights that there are currently 98,000 apartments under construction or being marketed.
<img src="/images/2015/05/19/700_Papaleo.jpg" alt="" width="715" height="467" style="line-height: 1.3em;">
Robert Papaleo is National Executive Director of market intelligence firm Charter Keck Cramer. He can be contacted <a href="https://charterkc.com.au/people/robert-papaleo/" target="_blank">here</a>.
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Land market imbalance causing localised price pressures: Robert Papaleo

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The former Treasury secretary Martin Parkinson, in his first interview since leaving his job in December, says there isn't and never was a fiscal crisis.
He described the damagingly simple focus on budget surpluses and deficits as a fixation.
"Australia has fantastic opportunities in front of it, the shift of economic weight towards our region, the technological changes, if we grasp them," he told the Australian Financial Review's Laura Tingle.
"How do we go about grasping it? Well first of all, we've got to get our house in order. That means we've got to get our fiscal situation sorted out.
"It's not a crisis, it's never been a crisis. The last thing you'd want to do is start racing back to surplus in the next couple of years: the economy is growing below trend and will continue to do so."
He warned as long as Australia fails to get its budgetary house in order, it remains vulnerable to another shock like the global financial crisis.
"We could get hit at any point with another external shock. If we start from where our debt position is, it won't take very long for us to end up with debt levels that are dramatically higher than we've experienced in modern Australia," he said, adding Ireland's debt position "wasn't a lot different from Australia's" before the GFC.
"I don't envisage we will have to do that, but situations can change and change quickly, so that is why you want to err on the side of caution – get the place to a stronger fiscal position. You don't panic and try to do it in the next couple of years, but over a sustained period. At the moment we are looking at a decade of deficits."
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There is no budget crisis: Martin Parkinson

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Confidence in the real estate and construction sectors remains high, the latest ANZ/Property Council sentiment survey showed.
There was a weakening in some states, especially WA on the transition of the economy from the resources boom, the chief executive of the Property Council Ken Morrison said.
But property - expressly housing - was now the source of economic growth.
 <img src="/images/2015/04/23/anz-april-23-four.jpg" alt="" style="line-height: 1.3em;">
<img src="/images/2015/04/23/anz-april-23-five.jpg" alt="">
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Housing the source of economic growth: ANZ/Property Council

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GUEST OBSERVATION
The 100th anniversary of the ANZAC landings is rapidly approaching and the focus is very rightly on the sacrifices made by those involved.
Much has been made of how the ANZAC spirit shaped the Australian identity. But Gallipoli and the broader conflict also shaped the Australian economy and financial markets.
The most immediate impact of the war on the Australian economy was the disruption to international trade. The slump in exports was shortlived as the war effort geared up. But the weakness in imports persisted for the duration. Imports of manufactured items were particularly hard hit.
The need to replace imported goods gave a significant boost to Australian manufacturing. The steel industry and chemicals are key examples. Production of iron ore rose by 150% during the war years. And crude steel production jumped by 1,200%. The value of chemical production lifted by 88%. Companies that now dominate the business landscape such as BHP rode the wave.
<img src="https://www.urban.com.au/images/2015/04/24/soldier%20april%2024%20one.gif" alt="" width="363" height="342">
The difficulties of trading with Europe saw a re‑orientation of Australia’s trade towards Asia. About 10% of exports went to Asia pre War. This proportion reached 19% by war’s end. Old trading patterns resumed post War. But this tilt towards Asia provided a taste of things to come.
Isolation provided a form of protection for Australian industry. One outcome was a demand for “protection” to continue. Tariffs pre date WWI. But the Tariff Board was set up in 1921 and the Greene Tariff of that year substantially increased protection. The “infant industry” and “national defence” arguments for protection held sway. While production and employment benefited initially, this policy approach did contribute to weak productivity outcomes and some of the structural impediments that the economy is still working through.
Australia’s strong focus on immigration is allied to the defence theme. Immigration virtually ceased during the War years. But the Federal government vigorously promoted migration to Australia when the War finished. Assistance schemes were put in place. These schemes were mainly targeted at British migrants. But interest from Italy and Greece picked up and Australia took the first steps down the multicultural path.
<img src="https://www.urban.com.au/images/2015/04/24/soldier%20april%2024%20two.gif" alt="" width="359" height="337">
Agriculture was the largest sector within the Australian economy. And the rural sector was required to make a significant contribution to the war effort. Governments responded to war needs by seeking orderly marketing through statutory marketing authorities. The first Australian Wheat Board appeared at this time. When policy makers sought to unwind some of these arrangements after the War they found strong support for maintaining formal marketing arrangements backed up by government legislation. As they evolved, many of these schemes came to adversely affect the efficiency of resource use.
Wars are expensive – in treasure as well as lives. And paying for the War wrought some significant changes in fiscal policy and financial markets. Public debt rose from 75% of GDP in 1913 to 123% by 1918. Today’s budget deficits and debt burdens look modest by comparison.
Capital markets in London were difficult to access. And the Government financed the war effort through a series of loans from the public. The War Loan Bonds and the Peace Bonds administered by the Commonwealth Bank were a significant step in the formation of Australian capital markets. These activities and the other demands of a war time economy contributed to the Commonwealth Bank taking on the responsibilities of a central bank. The Reserve Bank of Australia evolved from these central banking activities. The RBA’s success in promoting financial stability and economic activity is now a key underpinning of our economic wellbeing.
<img src="https://www.urban.com.au/images/2015/04/24/soldier%20april%2024%20four.gif" alt="" width="352" height="331">
The government also paid for the war in other ways, the ramifications of which are with us today. The state governments raised most of the revenue prior to the war, including income tax. Federal revenues were mainly from customs and excise duties. But a number of new taxes were in place by the end of the war. These included a federal income tax first levied in 1915/16 and a major revenue source today. The increasing reliance on income taxes and increasing centralisation of tax collections dates from that time. The debate about how to share that revenue and the need to reform the taxation system continues today.
Peace is also an expensive business for governments. The desire to build a country fit for heroes had some ramifications that are still playing out. A War Service Homes Scheme providing 45 year loans at favourable rates began in 1918. The long history of government policy to encourage home ownership was underway. And the Australian love affair with housing has been with us ever since. A Soldier Settlement Scheme was set up to create jobs for returned servicemen and open up land to agriculture. A significant investment in infrastructure was required. And while the scheme struggled to meet its objectives, the infrastructure put in place still provides a significant economic benefit.
A related theme was the acceleration in technological development that accompanied the war. Few would have imagined in 1914 that Qantas would emerge as a commercial airline in 1920!
One trend that might have amused the larrikin Australian soldier of legend at Gallipoli was the drop in sporting attendance during the war. Crowds at the VFL Grand Final did not reach pre‑War levels until 1925!
<img src="https://www.urban.com.au/images/2015/04/24/soldier%20april%2024%20three.gif" alt="" width="356" height="335">
On a more sombre note the War also required a very necessary and deserved lift in Government spending on social welfare. The dark side of war is only too apparent in the spending on war, service and disability pensions which increased by a factor of 23 in the ten years from 1916. The development of the modern welfare system was underway.
A broader financial theme was unfolding behind this domestic government finance and financial market story. The US was a net debtor in global capital markets at the start of the War. And a large net creditor by the end. The centre of economic gravity was shifting from Great Britain to the United States. The centre of global financial markets was shifting from London to New York.
The war also influenced economic thought. Politics and economic directions differed sharply. But the central bank focus on controlling inflation that we see today, for example, had its genesis in the hyperinflation that damaged economies such as Germany after the War. Much of the thinking of the great economic minds, such as Keynes, was shaped by their experiences of war and its aftermath.
Lest we forget.
Michael Blythe is chief economist at CBA.
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MichaelBlythe-eUBDwaTLJ5

ANZACs, the economy and soldier settlement: Michael Blythe

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NSW leading the way: CommSec's State of the States report

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Household consumption – three-fifths of gross state product – strengthened noticeably in NSW over 2014 (+4.1% year on year) alongside faster growth in household income and dwelling prices.
FIGURE 1. POSITIVE GROWTH OUTLOOK FOR NSW
<img src="/images/2015/03/24/anz-mar-24-one.jpg" alt=""> Source: ABS, ANZ Research
Discretionary spending, which is particularly sensitive to the economic cycle, grew strongly over 2014 (Figure 2). Spending on household goods strengthened in line with the pick-up in dwelling construction. Discretionary spending on services – recreation activities and hotels, cafés, and restaurants – also increased significantly over the year.
FIGURE 2. DISCRETIONARY HOUSEHOLD SPENDING HAS STRENGTHENED
<img src="/images/2015/03/24/anz-mar-24-two.jpg" alt=""> Source: ABS, ANZ Research
Consumer spending growth may be less robust this year as labour market conditions outside of Sydney remain challenging (see below) and house price growth is expected to moderate somewhat – retail sales growth in NSW has slowed considerably over the past six months or so (Figure 3). Nevertheless, strong population growth will provide ongoing support to spending and the lower currency will also direct a larger proportion of spending to local businesses.
FIGURE 3. NSW RETAIL SALES AND SYDNEY DWELLING PRICES
<img src="/images/2015/03/24/anz-mar-24-three.jpg" alt=""> Source: ABS, Core Logic RP Data, ANZ Research
INVESTMENT HAS BEEN WEAK OUTSIDE OF HOUSING
Dwelling investment in NSW has grown significantly over the past couple of years following a prolonged period of very low levels of building despite solid population growth (Figure 4). This has been driven by new housing construction, with renovations activity remaining subdued as it has nationwide. In contrast, business and public investment has been weak.
FIGURE 4. NON-RESIDENTIAL INVESTMENT HAS BEEN WEAK
<img src="/images/2015/03/24/anz-mar-24-four.jpg" alt=""> Source: ABS, ANZ Research
Residential construction is expected to grow further in the near term and then remain at a high level for a prolonged period (Figure 5). This would be very different to the typical boom-bust cycles in the past. This time, activity should continue to be supported by strong population growth, pent up demand, very low interest rates and ongoing house price growth in Sydney. Nevertheless, our analysis suggests that a sizeable net housing deficit will remain in NSW (Figure 6).
FIGURE 5. DWELLING INVESTMENT AND COMMENCEMENTS
<img src="/images/2015/03/24/anz-mar-24-five.jpg" alt=""> Source: ABS, ANZ Research
FIGURE 6. NSW HOUSING MARKET DEMAND AND SUPPLY
<img src="/images/2015/03/24/anz-mar-24-six.jpg" alt=""> Source: ABS, ANZ Research
In contrast to the strength in housing construction, business and public investment has been subdued in NSW. Equipment investment has been weak, like it has been nationwide and despite a substantial amount of non-residential building activity in and around the Sydney CBD, overall underlying non-residential construction in NSW declined by 8.1% year on year in 2014.
Falling mining investment has weighed on overall business investment (Figure 7). In contrast, non-mining capex has improved but the outlook remains very uncertain. Encouragingly, non-residential building approvals have risen to a high level and the pipeline of public engineering construction remains healthy despite the equivalent private pipeline weakening (Figures 8 &amp; 9). Office market fundamentals have begun to improve as well.
FIGURE 7. NSW CAPEX &amp; EXPECTATIONS
<img src="/images/2015/03/24/anz-mar-24-seven.jpg" alt=""> Source: ABS, ANZ Research
FIGURE 8. PRIVATE NON-RESIDENTIAL BUILDING APPROVALS
<img src="/images/2015/03/24/anz-mar-24-eight.jpg" alt=""> Source: ABS, ANZ Research
FIGURE 9. NSW ENGINEERING WORK YET TO BE DONE
<img src="/images/2015/03/24/anz-mar-24-nine.jpg" alt=""> Source: ABS, ANZ Research
This article continues on the next page. Please click below.
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INFRASTRUCTURE SPENDING COULD HANG IN THE BALANCE
The NSW government has proposed a large pipeline of public infrastructure projects in recent years, particularly roads, highways, bridges and rail. Of critical importance is the impact that the upcoming election will have on the Government’s infrastructure plans.
The current pipeline of projects under construction and committed to in the Budget will go ahead under a Labor government. But Labor will not commit to stage 3 of WestConnex, a tunnel designed to link the planned M5 East tunnel at St Peters to the future M4 East tunnel near Rozelle. Moreover, the building of a second harbour rail crossing would not begin until 2022 under Labor (it is slated for construction as early as 2017 under LNP). The Coalition has tied $11.3 billion to urban roads and urban public transport, $4.1 billion for regional transport, and $3.5 billion for social infrastructure projects to the proposed asset sales.
Labor has committed around $10 billion less than the Liberal National Coalition to infrastructure as it is opposed to the ‘poles &amp; wires’ privatisation and has a reluctance to increase debt.
FIGURE 10. NSW MAJOR PROJECTS PIPELINE
<img src="/images/2015/03/24/anz-mar-24-ten.jpg" alt=""> Source: BREE, company reports, Deloitte Access Economics, Infrastructure NSW, state government budget papers, ANZ Research
LABOUR MARKET DATA POINTS TO A DIVERGENT ECONOMY
Labour market conditions have been weak outside of Sydney. While the unemployment rate in Sydney has remained within earshot of 5% for some time, the regional unemployment rate has risen sharply to nearly 8% (Figure 11). This will reflect mining-related weakness in some regions but also the lack of property boom seen in Sydney.
FIGURE 11. LABOUR MARKET CONDITIONS ARE WEAK OUTSIDE OF SYDNEY
<img src="/images/2015/03/24/anz-mar-24-eleven.jpg" alt=""> Source: ABS, ANZ Research
THE HOUSING MARKET
The Sydney housing market is very strong. The median dwelling price has risen 30% since January 2013 and sales activity has picked up strongly. Housing investor activity in NSW has been much more pronounced than in other states (Figure 12). Foreign investment has also been strong. In contrast to the Sydney market, regional NSW house price growth has been more moderate (Figure 13).
While Sydney dwelling prices now look to be around fair value, we see further gains of around 8-10% over 2015 amid low interest rates and as demand continues to outstrip supply.
FIGURE 12. HOUSING INVESTOR ACTIVITY VERY STRONG IN NSW
<img src="/images/2015/03/24/anz-mar-24-twelve.jpg" alt=""> Source: ABS, ANZ Research
FIGURE 13. HOUSE PRICE GROWTH MUCH SLOWER OUTSIDE OF SYDNEY
<img src="/images/2015/03/24/anz-mar-24-thirteen.jpg" alt=""> Source: Core Logic RP Data, ANZ Research
THE BUDGET OUTLOOK – RIDING ON THE PROPERTY MARKET
Unlike other states and territories, NSW does not publish a fiscal outlook during the election campaign, which means it is more difficult to ascertain the most up-to-date fiscal outlook for the state.
However, it is expected the state will deliver strong revenue from residential turnover and rising house prices. Figure 14 shows that residential transfer duty has increased sharply after a brief slow-down in the first half of 2014.
FIGURE 14. NEW SOUTH WALES TRANSFER DUTY
<img src="/images/2015/03/24/anz-mar-24-fourteen.jpg" alt=""> Source: NSW Government, ANZ Research
The outlook for housing turnover and house prices suggests that the NSW Government should benefit from elevated levels of residential transfer duty for some time. An easing policy cycle and strong house price growth will continue to spur existing property turnover and encourage the construction of new housing.
The mid-year review revised up the government’s expectations for residential turnover growth to 12% in 2014-15, driven mainly by higher house prices. Given the recent rate cut by the RBA and the expectation for a further cut next month, we would not be surprised if annual growth in residential transfer duty for 2014-15 exceeds this forecast.
The cyclical nature of the government’s own-source taxation revenue means that it needs stable funding to execute long-term infrastructure upgrades. Asset recycling is one way to go about this.
Neither party’s fiscal plans imply deterioration to the AAA stable outlook from both major rating agencies.
NSW SEMI GOVERNMENT BONDS
The aftermath of the Queensland state election saw a significant repricing in the level of Semi government bonds to both the ACGB curve and the swap curve. Queensland Treasury Corporation (QTC) bonds widened by around 20bp in the 10 year part of the curve. NSWTC issues also seem to be affected by this dynamic. Investors have been concerned with the shifting sands of the Australian electorate and this has been reflected in the level of Semi government spreads. It has clearly been a negative for NSWTC, as the first state to face an election since the Queensland poll in late January.
As Figure 15 shows, the spread of NSWTC bonds to the ACGB curve is at the widest point since the Queensland election. This surprises us to an extent for a number of reasons. Firstly, the NSWTC credit rating is stable at AAA. In the case of Queensland, market expectations had priced bonds to reflect the probability that the LNP would be elected. Furthermore, one ratings agency continues to hold a negative outlook on Queensland’s rating.
NSWTC bonds have also come under pressure due to investor preference for the debt of the Supranational borrowing entities from Europe. These borrowers, such as Germany’s KfW and Rentenbank, as well as the European Investment bank (EIB), have seen a strong performance in recent months after the ECB announced they would be bought as part of the ECB’s QE program.
Domestic investors have been better overall sellers of Semi government bonds to buy the Supranational bonds given the yield pick-up and the potential for outperformance of these names.
We believe the underperformance in NSWTC bonds is unwarranted and that the recent widening of spreads would be arrested by a strong mandate for asset sales.
FIGURE 15. WIDENING OF NSWTC BONDS AGAINST THE COMMONWEALTH
<img src="/images/2015/03/24/anz-mar-24-fifteen.jpg" alt=""> Source: Bloomberg, ANZ Research
In the event of a strong election win for the incumbent government, we believe NSWTC bonds should tighten by 8-12bp against the ACGB curve. The borrowing requirements for NSW remain low, with $4.6 billion of term issuance for the FY 2014-15. Moreover, as outlined above, the NSW economy is in a robust position which should be reflected in the spread to other borrowers.
We also see the potential performance of the NSWTC index linked issuance. Much of the issuance of NSWTC’s index linked bond curve comes from electricity assets. In the event of asset sales, the need for this issuance would be reduced and should see the NSWTC index linked curve tighten against both the nominal and the ACGB curve.
FIGURE 16. WIDENING OF NSWTC LINKERS AGAINST THE COMMONWEALTH
<img src="/images/2015/03/24/anz-mar-24-sixteen.jpg" alt=""> Source: Bloomberg, ANZ Research
FIGURE 17. NSWTC INFLATION BREAKEVEN SPREAD
<img src="/images/2015/03/24/anz-mar-24-seventeen.jpg" alt=""> Source: Bloomberg, ANZ Research
Kirk Zammit is an economist with ANZ Research.
Justin Fabo is senior economist with ANZ Research.
Cherelle Murphy is senior economist with ANZ Research.
Martin Whetton is senior rates strategist with ANZ Research.
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Economy is strong, but little investment outside of housing: ANZ Research's NSW scorecard

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The Reserve Bank of Australia governor Glenn Stevens has urged the Federal government to stay the course on meaningful budget repair or it will face consequences as the debt blows out.
"We're not on the correct path for the long run and we need to get onto a better path I think during benign times," RBA governor Glenn Stevens said on Friday.
We don't have a budgetary crisis, he added.
But during questioning Glenn Stevens told an Australia America Chamber of Commerce lunch that the budget repair should happen during "benign times" to build resilience for the next downturn.
"We should be taking early measured steps that build up in their effect over the long term so that we sustain the position we have," he said.
"If God forbid a large negative shock came along right now, we still have macroeconomic scope to respond to that" with the fiscal firepower to respond, he said.
"A deficit that's 3% of GDP right now that would be at 5 or 6 or 7% very quickly if we had a significant recession. If you were then thinking we'd like to do some discretionary stimulus on top of that then you are talking about pretty big deficits," Stevens said.
But scope for discretionary stimulus on top of that could be limited, if the deficit was already high. 
"When you go into a downtown the deficit gets bigger anyway because the government does nothing because of the so-called automatic stabilisers and that's appropriate," he said.
His formal notes advised that looking back at the history: "If we come through this terms of trade event with neither a major outbreak of inflation in the upswing nor a major crash in the downswing, even if we have a period of sub-average growth in the process, we will have done far, far better than in any previous event of this kind, let alone one of this magnitude."
"I still think that is the most likely outcome.
"Even so, the lower terms of trade mean that, all other things equal, the path of future incomes is not as high as it might have looked a few years ago.
"Even allowing for the fact that we all knew, intellectually, that at least part of the boom was not permanent, there is a human tendency to project what we see now (good or bad) into the future. Eventually reality intrudes and we have to re-evaluate.
"That has happened countless times before and will again, no doubt."
Glenn Stevens noted while that the economy continued in its adjustment to the end of the investment phase of the ‘mining boom’. 
"The massive run-up in resources sector capital spending that was a natural response to earlier very high prices is reversing, causing a drag on demand. 
"So we hope for other sources of demand to speed up to help make up the difference. 
"Some of them are, though not as seamlessly as any of us would like. 
"It is a major transition. 
"We can hope to assist it, and the Reserve Bank is doing that, and will continue to lend what support it can, within the limits of its powers and consistent with its mandate.
"The decline in the exchange rate is assisting the transition (as it assisted in absorbing the earlier phase of the mining boom). 
"But we have always said we cannot hope to fine-tune this transition, however much we may wish otherwise."
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There's hope if a large negative shock hits Australia: RBA's Glenn Stevens

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With construction beginning on more than 50,000 dwelling units in the September 2014 quarter, up almost 20% on the previous year, is the construction sector all that's holding Australia back from a recession?
That may certainly be the case, according to comments from BIS Shrapnel economists at its Melbourne business forecasting conference earlier this week. And the Reserve Bank (RBA) board may just agree.
In its March meeting minutes, the RBA board noted further softening in the mining sector, with "steep declines" in mining investment contributing to below-trend gross domestic product (GDP) growth in the December quarter.
"The ABS survey of capital expenditure intentions implied further large falls in mining investment, as current projects were completed and few new projects were likely to proceed," the minutes read.
Meanwhile, income growth stayed low by historical measures and "the unemployment rate had continued its gradual upward trend".
Aside from low oil prices, the RBA board didn't see much that would continue to support consumer demand – except for residential investment.
"The current strength of housing construction and the increase in housing prices were expected to provide a measure of support for consumption," read March's minutes.
"A range of indicators, including residential building approvals, suggested further strong growth of dwelling investment in the near term."
The Reserve Bank's comments crediting construction investment with supporting the domestic economy are supported by the Australian Bureau of Statistics' (ABS) December quarter GDP figures. The ABS noted that: "In seasonally adjusted terms, the main contributors to GDP growth were Construction and Health care and social assistance each contributing 0.1 percentage points to the increase in GDP."
According to the ABS, $50.35 billion worth of construction work was done (on a seasonally adjusted basis) in the final quarter of 2014. While the figure is slightly down from its previous peak in the final quarter of 2012 (<a href="https://petewargent.blogspot.com.au/2015/02/construction-holds-up-well-thanks-to" target="_blank">as noted by Pete Wargent</a>), on a historical basis, the pace of Australia's construction industry in the past few years has been unprecedented.
<img src="/images/2015/03/23/bis-mar-23-one.jpg" alt="">
The value of total construction work done in the December 2014 quarter was also down on the figure recorded in the same period in 2013, by 4.8%. However, the decline can be attributed to engineering work and commercial construction, down 12.3% and 4.8% respectively over the year.
In fact, BIS Shrapnel managing director Robert Mellor noted on Tuesday that the state with the strongest relative commercial property construction sector currently was Tasmania, thanks to the Royal Hobart Hospital redevelopment.
Nationally, the value of residential work was up 12.7% from the December 2013 quarter.
<img src="/images/2015/03/23/bis-mar-23-two.jpg" alt="">
The Reserve Bank has also acknowledged the weak commercial property construction figures, noting in the March minutes that:
"Overall, survey measures of business conditions had remained around their average levels, while the trend in non-residential building approvals was at a low level and conditions in the commercial property market remained weak, with office vacancy rates in all capital cities at high levels."
But while residential investment has been able to buoy a flagging commercial property market, can it continue to uphold the entire economy as the mining sector slows further?
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jrichardson-uRX5hFdKfN

Has the apartment construction boom saved Australia from recession?

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The ABS released its <a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/allprimarymainfeatures/3685CE437B16298ACA257AFC000E9FB3?opendocument" target="_blank">Detailed Labour Force</a> figures for February 2015 and for the quarter, and the news was somewhat mixed.
This data series is not seasonally adjusted, and total jobs growth over the past 12 months was surprisingly strong, with the total number of employed persons surging to 11,762,700. Employment growth was driven overwhelmingly job gains in Melbourne, Sydney, Perth and Brisbane.
It will be interesting to see whether this strength is ultimately mirrored in the seasonally adjusted Labour Force data in due course. Let's take a look in four short parts.
 Part 1 - Mining and manufacturing jobs go
While it can hardly be a surprise, the fall in the number of employees in the mining sector has been dramatic, tailing all the way from 270,000 to just 220,400, with nearly 50,000 positions cut in just 12 months.
Manufacturing industries have also shed -23,500 jobs over the past year.
It has long been my contention that the end of the mining investment boom will represent adverse news for many of Australia's regional property markets, a number of which had performed surprisingly well through a once-off decade long resources investment boom.
The decline in manufacturing employment is also in my opinion likely to represent a significant headwind for the city of Adelaide, though for the purposes of balance I do note that a number of other commentators strongly disagree with me on this point.
 Part 2 - Services employment increases
On the positive side of the employment ledger there now is some evidence of rebalancing over the past 12 months, with construction and services jobs helping to more than offset the jobs losses in mining and manufacturing.
As I noted <a href="https://petewargent.blogspot.com.au/2015/03/sydney-construction-boom" target="_blank">in by blog post last week</a>, despite the inevitable contraction in the resources sector, total construction employment is still pumping with a net +45,800 jobs added over the past 12 months.
Meanwhile professional, scientific and technical services employment surged by +98,800 from 889,000 to 997,800.
Other non-trivial gains were seen in accommodation and food services (+43,500), arts and recreation (+31,300) and media and telecoms (+24,500).
Generally speaking this is good news for the four largest capital cities, and not such happy news for regional Australia or Adelaide.
Part 3 - Employment by region
Over the past year the greatest absolute employment growth has been seen in Melbourne (+94,800) and Sydney (+49,600).
<img src="https://2.bp.blogspot.com/-2x2GN1SDvR4/VQstUPtkehI/AAAAAAAAT2U/1I5VHfnHuFQ/s1600/dlf3.jpg"> <a href="https://2.bp.blogspot.com/-2x2GN1SDvR4/VQstUPtkehI/AAAAAAAAT2U/1I5VHfnHuFQ/s1600/dlf3.jpg"></a>
By contrast, regional employment growth has been weak leading to a divergence in unemployment rates in New South Wales in particular - a dearth of employment growth on a net basis over the past two years has seen regional unemployment in NSW rising to above 8%.
This has partly been driven by mining jobs losses in the coal sector, and on a smoothed moving average basis, the unemployment trend becomes clear.
<img src="https://3.bp.blogspot.com/-VRGNTMkVQ_k/VQstS3JQr7I/AAAAAAAAT10/g1Y5NxzVWvQ/s1600/DLF6.jpg"> <a href="https://3.bp.blogspot.com/-VRGNTMkVQ_k/VQstS3JQr7I/AAAAAAAAT10/g1Y5NxzVWvQ/s1600/DLF6.jpg"></a>
In other states, both Perth (+35,700) and Brisbane (+33,200) have recorded robust employment growth over the year to February 2015, with residential property construction having a key role to play.
However, regional employment growth has been weak in Queensland and Western Australia too.
Meanwhile over the past two years total employment in Adelaide has declined (-11,900), with further job losses expected due to Holden's departure.
<img src="https://3.bp.blogspot.com/-j5Fbcz5JmlA/VQstTP_yWKI/AAAAAAAAT14/_IwGI2MHbT8/s1600/DLF4.jpg"> 
Looking at these results across a range of time horizons shows how the bulk of employment growth has consistently been seen in the four largest capital cities plus regional Queensland.
<img src="https://1.bp.blogspot.com/-H0qMSobbRjc/VQstUFb7chI/AAAAAAAAT2M/TqSSOhV5yzo/s1600/dlf5.jpg">
 Part 4 - Unemployment The month to month unemployment figures are very volatile, but for completeness here they are.
<img src="https://4.bp.blogspot.com/-h4KjNZbSYBw/VQstSpeAdvI/AAAAAAAAT1w/tiQH1F2qcbo/s1600/DLF2.jpg">
In order to make some kind of sense of the capital city unemployment rates (which are not seasonally adjusted) I've run them below on a smoothed moving average basis.
One key takeaway point here for mine is that the unemployment rate in Perth has been trending upwards fairly sharply since 2013, continuing a trend away from near full employment in the period leading up to 2008.
There has been some talk of weakening employment markets in Darwin, though in truth there has not been much evidence of this in the data to date.
On the other hand, the outlook in Tasmania is improving with the unemployment rate beginning to decline and a number of other positive data releases being recorded here on this blog over the past 12 months, including for <a href="https://petewargent.blogspot.com.au/2015/03/retail-trade-lifts-in-january" target="_blank">retail trade</a> and <a href="https://petewargent.blogspot.com.au/2015/03/economy-grows-by-25-percent-in-2014" target="_blank">state final demand</a>.
<img src="https://4.bp.blogspot.com/-BY7T7X-PgAY/VQstTtPwl8I/AAAAAAAAT2A/hpM-pOCOLeY/s1600/dlf1.jpg">
In fact, while I don't recommend on this blog that anyone dashes out to invest in property in Hobart (or for that matter, anywhere), the Tasmanian capital could well be the surprise package property market of the next few years.
Firstly, this is because so many years of inertia have seen the <a href="https://petewargent.blogspot.com.au/2015/03/vacancy-rates-tighten-in-february" target="_blank">rental market tightening considerably</a>.
And while population growth and employment growth have certainly been very weak in Tasmania over recent years, the "X factor" could be Chinese investment capital, with record numbers of Chinese visitors enjoying the fresh produce and fresh air of the Apple Isle.
I haven't been down to Tassie since spending a month there while the dollar was busily crippling the forestry industry, but I've heard from more than one source this week that Chinese tourism is dribving a rebound.
I even received a Tweet to that effect:
<img src="https://4.bp.blogspot.com/-ZhgL4zMboQM/VQtGIsykihI/AAAAAAAAT2o/NzT7qlnfH-I/s1600/TAS.jpg">
Moreover, Tasmania has a small enough population that new investment could impact markets more materially at the margin.
Regional unemployment
I'll cover the regional unemployment rates data in a separate blog post, but the areas of concern include:
<ul>
<li>Central Coast</li>
<li>Hunter Valley ex-Newcastle (now 12.4% unemployment in February 2015 as coal mining job losses bit)</li>
<li>Newcastle and Lake Macquarie</li>
<li>Richmond Tweed</li>
<li>Logan-Beaudesert</li>
<li>Moreton Bay North</li>
<li>Mackay</li>
<li>Wide Bay</li>
</ul>
 
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 book '<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>' is out now.
 
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