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

TimoHenckel-dMcwuZpzVD

Interest rates decision could boil down to oil: RBA Shadow Board

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Guest observation
I’m not happy about it, but Australia's housing market has a potentially tough year ahead of it.
There are no guarantees in forecasting, but when half-trillon-dollar investment managers start throwing around phrases like "looming housing correction," you know there could be a problem.
In its recent report on Australia's economy, Alliance Bernstein used just that phrase. The report concluded, "There's a clear risk that falling house prices may be the next phase in the post-commodity–adjustment story."
(<a href="https://www.apple.com/">Jessie Richardson</a> covered this report. Get your own <a href="https://www.apple.com/">PDF copy</a> here.)
I'm certainly not one of those who think investment bankers are always right. Perhaps only investment bankers themselves fall for that fallacy.
There is strong evidence, however, that residential prices in the capital cities will either stall or fall in the coming 12 months. Here are four of the key points:
<ol>
<li>Australia is facing an income recession and weak GDP growth. In trend terms, GDP increased only 0.5 percent in the September quarter 2014. Australia's <a href="https://www.ft.com/cms/s/0/50fbcf2e-9d4b-11e4-9b22-00144feabdc0#ixzz3PUJBQwE4">income recession</a> is mostly due to lower prices for our biggest exports, resources. Gross domestic income fell 0.3% and 0.4% in the second and third quarters of 2014, respectively. As a result, real wages are falling for the first time since 1992. 
</li>
<li>Conditions in the labour market, as the Reserve Bank points out in its <a href="https://www.rba.gov.au/publications/smp/2014/nov/html/overview">November statement</a>, remain subdued. Weak employment and weak housing markets tend to reinforce each other. This was shown most clearly in the wake of the GFC in the US. <a href="https://www.bls.gov/opub/mlr/2013/article/the-relationship-between-the-housing-and-labor-market-crises-and-doubling-up.htm">Many studies</a> found increased “doubling up” of families sharing homes, and more young adults remained in their parents' homes instead of starting their own households. As one newspaper put it, “Love isn’t all that’s keeping family together today. The bruising housing market is too.” 
</li>
<li>Bloomberg news <a href="https://www.bloomberg.com/news/2014-11-05/australia-needs-stimulus-to-avoid-recession-morgan-stanley-says">concluded recently</a> that Australia may well have a recession this year, unless the government "acts decisively to stimulate the economy." One of the government's roles is to help balance out the business cycle. The Abbott government promised to do this with big investments in infrastructure. Unfortunately, even today that is still more an aspiration than a reality. 
</li>
<li>Investors are likely to play a smaller part in the housing market this year, as the Australian Prudential Regulation Authority has begun discouraging banks from engaging in higher-risk lending. Risky interest-only loans (popular with onshore investors) accounted for 42.5% –almost half– of new housing loan approvals in the September quarter. That's such an outsized role that any significant drop in investor transactions will take real heat out of the housing market.</li>
</ol>
 All things considered, housing could indeed have a tough year in 2015. It will certainly be poor by comparison to last year's performance.
ANDREW TAYLOR is the co-CEO of Juwai.com, China’s No. 1 international property portal and recent winner of the "most influential international property site in China 2014" award from the country’s peak e-commerce body. 
Forbes calls Juwai.com “China's biggest real estate source for those looking to buy overseas.”
 
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ataylor-LB7AWVFTs9

Income recession one of four reasons 2015 might not be celebratory

<html><body>
Business outlook on profitability has hit a 23-year low for the December quarter, but Small Business Minister Bruce Billson says there are plenty of positive “green shoots” to give the small business community confidence in 2015.
The latest Australian Chamber of Commerce and Industry Survey of Investor Confidence shows businesses had a <a href="https://www.smartcompany.com.au/growth/economy/44757-aussies-tipped-to-spend-30-billion-in-december-but-it-s-not-all-holiday-cheer-the-three-biggest-problems-facing-retailers-this-christmas" target="_blank">tough Christmas period</a> and have a gloomy outlook for the year ahead.
The survey’s 641 respondents, mainly from the construction and manufacturing industries, said conditions in their own businesses had fallen further into negative territory, from 49.5 to 48.6 over the December quarter. Sales and profits indicators also dipped for the quarter.
Outlook on profitability hit its lowest level in 23 years, drastically falling from 44.4 to 41.7 in the December quarter.  The profitability index has remained in negative territory since the global financial crisis, but has tumbled steeply over the last two quarters.
Businesses’ expectations for their own prospects are also on a downward slide, with respondents saying they are pessimistic about the prospects for broader economic growth and the general investment climate.
ACCI chief executive Kate Carnell used the results to call on the federal government to act.
"We need the government, and the Parliament to act to restore business confidence by fixing the budget and undertaking productivity-enhancing structural reforms,” Carnell said in a statement.
Billson said this morning Carnell’s comments point to the need for Parliament to be more constructive and collaborative around budget repair.
“I think you’ll find the political climate quite unsettled for the business community,” says Billson.
And Billson blames Labor’s “negativity” for the downturn in confidence.
“Labor has returned to type as a party of protest. Bill Shorten has proved he is a purveyor of pessimism. They are creating uncertainty and undermining the surefootedness that the business community needs,” Billson says.
“This [survey] is a wake-up call to the Labor opposition. There is too much at stake to be playing short-term populism.”
Billson urges the small business community to look at several economic “green shoots”, including rising job numbers, <a href="https://www.smartcompany.com.au/growth/economy/45291-australia-japan-fta-comes-into-effect-today-what-it-will-mean-for-your-business" target="_blank">recent trade agreements</a> and retail trade figures for Christmas.
“The survey also highlights that many businesses are faring better than anticipated,” says Billson.
“Focusing exclusively on the negative suffocates news that, I certainly feel, adds to optimism about the new year,” he says.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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krobb-aCrRNnPq6D

Business confidence lowest in 23 years

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New South Wales and the Northern Territory have the strongest economies in Australia, according to the latest instalment in CommSec’s <a href="https://www.commsec.com.au/content/dam/EN/ResearchNews/MD-State_of_the_States_January_15%20(web).pdf" target="_blank">State of the States report</a>.
Each quarter CommSec <a href="https://www.smartcompany.com.au/growth/economy/32775-act-shoots-forward-in-state-of-the-states-report--but-western-australia-still-first-by-a-mile" target="_blank">measures the performance of the state and territory economies</a> against eight key indicators, including economic growth, retail spending, equipment investment, unemployment, construction work down, population growth, housing finance and dwelling commencements.
Each indicator is compared with decade averages or the ‘normal’ performance of the indicators in that state.
NSW took out the top spot in the quarter, snatching the mantle from Western Australia and retained its number one rank in the last quarter.
According to CommSec economist Craig James, NSW’s top ranking on population growth and retail trade is keeping it at the top of the list, while its second ranking in business investment and dwelling starts is also contributing to its overall economic performance. The state is ranked fourth in terms of housing finance and overall construction work and fifth in terms of economic growth.
But joining NSW at the top of the list is the Northern Territory, which has overtaken WA, thanks to gas projects which are driving growth for the state. The NT tops the rankings when it comes to construction work and equipment investment, as well as job market idicators, but comes in at third place for the retail trade, sixth for housing finance and seventh for population growth
Western Australia now sits at number three on the list, with declines in housing finance, dwelling starts and unemployment all contributing to the slide. However, the west is the country’s second best performing region in terms of economic growth, retail trade and construction work.
Victoria is ranked the fourth best-performing economy, following by Queensland, the Australian Capital Territory, South Australia and Tasmania.
Speaking to SmartCompany, James says the results are good news for small and medium businesses, especially housing-related businesses, which can expect another strong 12 months.
“The drivers that tend to be very important for small and medium businesses tend to be from the housing sector,” James says.
“For builders and tradespeople and retail items to do with homes, like curtains and fittings.”
James says CommSec is seeing “a degree of strength in housing across the nation”, including the construction of new housing, and this is particularly the case in NSW and the NT.
“We’re not seeing the same growth in dwellings in South Australia and Tasmania,” he says.
James says strong housing numbers have a flow-on effect to consumer confidence and rising house prices in all regions except for Canberra are also a positive as individuals are buying homes or paying off their mortgages and this means housing value is also on the up.
Click to open in new window: 
<a href="/images/2015/01/20/sta%20jan%2020%20one.jpg" target="_blank"><img src="/images/2015/01/20/sta%20jan%2020%20one.jpg" alt=""></a>
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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ekeating-PWvazjYE25

NSW and NT boast the strongest economies: Housing sector fueling growth

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GUEST OBSERVATION
As Australian companies enter the new year, IBISWorld reveals the five industries expected to soar and the five expected to sink.
We expect 2015 to be a boom year for a wide array of industries. Coal seam gas extraction will provide the benchmark for others to chase, with online grocery sales, fast fashion, private equity and hydroponic crop farming also expected to soar in the coming year.
While some industries are set for a bumper year, there are many that will be dreading the year ahead. Petroleum exploration is tipped to be the biggest loser in 2015 as oil prices plunge, while mining and construction machinery manufacturing, cigarette manufacturing, motion picture and video distribution, and electricity distribution are all expected to endure a difficult year.
Industries set to fly
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top">
Industries
</td>
<td valign="top">
Revenue 2014 ($m)
</td>
<td valign="top">
Revenue 2015 ($m)
</td>
<td valign="top">
Growth (%)
</td>
</tr>
<tr>
<td valign="top">
Coal seam gas extraction
</td>
<td valign="top">
737.9
</td>
<td valign="top">
1830.0
</td>
<td valign="top">
148.0
</td>
</tr>
<tr>
<td valign="top">
Online grocery sales
</td>
<td valign="top">
1914.2
</td>
<td valign="top">
2194.0
</td>
<td valign="top">
14.6
</td>
</tr>
<tr>
<td valign="top">
Fast fashion
</td>
<td valign="top">
1219.4
</td>
<td valign="top">
1346.5
</td>
<td valign="top">
10.4
</td>
</tr>
<tr>
<td valign="top">
Private equity
</td>
<td valign="top">
365.0
</td>
<td valign="top">
401.8
</td>
<td valign="top">
10.1
</td>
</tr>
<tr>
<td valign="top">
Hydroponic crop farming
</td>
<td valign="top">
791.7
</td>
<td valign="top">
836.4
</td>
<td valign="top">
5.6
</td>
</tr>
</tbody></table>
Coal seam gas extraction
The coal seam gas extraction industry is undergoing a significant transformation. Industry revenue is forecast to rise by 148.0% over the next year, to reach $1.83 billion. While coal seam gas projects have become more viable due to new and improving extraction techniques, it is the development of export capabilities that is expected to drive rapid industry growth.
The opening of the domestic east coast gas market to the international market is expected to push gas prices higher – particularly as Australia is well-positioned to meet strong demand from Japan, China and South Korea, which are the world’s three largest natural gas importers.
Supply to these markets from considerable coal seam reserves in Queensland will be boosted in 2015 as the Curtis Island LNG plant becomes operational. Once operational, the Curtis Island LNG plant will be the world’s first project to turn coal seam gas into liquefied natural gas, which will be a boon to operators of newly developed coal seam gas fields in the Cooper Basin.
Online grocery sales
Online grocery shopping has been slow to catch on within the Australian market, even as local online shopping as a whole has exploded in popularity over the past five years. The uptake of online shopping is typically driven by the improved ease of use of online stores and fast, affordable delivery options. As consumers become more adept at using online stores and gain more experience buying items online, online shopping expands.
Such a phenomenon is anticipated to occur for online grocery stores in 2015, leading to revenue growth of 14.6% for the year. While grocery shopping is not a difficult undertaking as there are supermarkets scattered across all pockets of the country, time-conscious consumers are increasingly realising the benefits of online grocery shopping.
The increased prevalence of click-and-collect options and greater comfort with purchasing perishable items like fresh fruit online are expected to boost industry revenue over the coming year.
Fast fashion
Fast fashion stores are expanding rapidly across Australia. While the industry was previously dominated by Australian mainstay Cotton On, international operators including Zara, Topshop, H&amp;M, Uniqlo and Forever 21 have taken the country by storm. Zara is expected to continue its phenomenal growth, while 2015 will be the first full calendar year of Australian operations for H&amp;M, Uniqlo and Forever 21, leading to projected industry revenue growth of 10.4% over the year.
Zara posted exponential revenue growth with extremely high retail profit margins over its first three years of operation in Australia, and IBISWorld expects this growth to continue in 2015. The rousing success of the grand openings of H&amp;M and Uniqlo in Melbourne in April 2014 is expected to result in similar growth for these stores, which will generate significant growth for the overall fast fashion industry.
Private equity
2014 was a highly successful year for the private equity industry, which is expected to achieve similar prosperity in 2015. Private equity firms generate revenue from management fees paid by outside investors and the gains made on investing their own funds.
Merger and acquisition (M&amp;A) activity is expected to rise in 2015. As private equity firms will play a key role in upcoming M&amp;A deals, this should result in growth in management fees earned and potential investment returns, ultimately leading to forecast industry revenue growth of 10.1% for the year.
Growth in M&amp;A activity in Australia coincides with greater global interest in M&amp;A, as Europe and particularly the United States are emerging from a prolonged period of crisis and subdued growth.
Hydroponic crop farming
Hydroponic crop farming holds a relatively small place in the overall scheme of Australian agricultural production, but is undergoing strong and steady growth. Water conservation is the driving force behind hydroponics, as hydroponically grown produce typically uses only one-fifth the amount of water that soil-grown produce requires.
In addition to water conservation, hydroponics allow for higher production yields of high-quality produce. Vertically tiered plants enable greater productivity, while greater quality control, faster plant growth and longer growing seasons offset the added cost of hydroponic systems over conventional agricultural practices.
Rising capacity in the hydroponic crop farming industry should meet sustained demand from retailers and consumers in 2015, and lead to revenue growth of a forecast 5.6% for the year.
Article continues on the next page. Please click below.
<hr class="system-pagebreak">
Industries to fall
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top">
Industries
</td>
<td valign="top">
Revenue 2014 ($m)
</td>
<td valign="top">
Revenue 2015 ($m)
</td>
<td valign="top">
Growth (%)
</td>
</tr>
<tr>
<td valign="top">
Petroleum exploration
</td>
<td valign="top">
4631.0
</td>
<td valign="top">
3755.3
</td>
<td valign="top">
-18.9
</td>
</tr>
<tr>
<td valign="top">
Cigarette &amp; tobacco manufacture
</td>
<td valign="top">
1895.3
</td>
<td valign="top">
1685.1
</td>
<td valign="top">
-11.1
</td>
</tr>
<tr>
<td valign="top">
Electricity distribution
</td>
<td valign="top">
18547.6
</td>
<td valign="top">
16694.7
</td>
<td valign="top">
-10.0
</td>
</tr>
<tr>
<td valign="top">
Mining &amp; construction machinery manufacture
</td>
<td valign="top">
5425.0
</td>
<td valign="top">
5092.1
</td>
<td valign="top">
-6.1
</td>
</tr>
<tr>
<td valign="top">
Film &amp; video distribution
</td>
<td valign="top">
1857.5
</td>
<td valign="top">
1788.4
</td>
<td valign="top">
-3.7
</td>
</tr>
</tbody></table>
Petroleum exploration
The world price of crude oil is plummeting due to an enormous supply glut spurred by overproduction from members of OPEC, the United States and Russia. The severe crash in oil prices means that the investment returns available from petroleum exploration activities are drastically reduced.
Exploration projects have therefore become far less viable for Australian firms, particularly as the stock prices of such firms have begun to dive. These conditions are projected to result in an 18.9% decline in industry revenue in 2015.
High oil prices have acted as an incentive for global companies to invest in petroleum exploration over the past five years. However, the subsequent oversupply is going to hamper exploration in 2015, as Australian firms are unable to compete with the low production costs and high production volumes from the world’s major oil producers.
The best-performing segment in the industry is expected to be natural gas exploration – but investment has already peaked for the segment, and additional gas extraction capacity will not be needed until export facilities become fully operational.
Cigarette and tobacco
In Australia, cigarette manufacturing has historically been dominated by British American Tobacco and Philip Morris, with Imperial Tobacco importing cigarettes rather than manufacturing them locally. The industry is headed for a severe decline in 2015, as Philip Morris offshored its cigarette manufacturing for the Australian market to its Korean facilities in 2014.
The loss of Philip Morris is forecast to result in an 11.1% revenue decline for the industry in 2015. Philip Morris held just over one-third of the industry’s market share. The loss of the company from the industry will be keenly felt as the number of companies manufacturing cigarettes and tobacco products in Australia falls from two down to one.
High regulatory barriers in Australia, requiring more stringent quality control, meant there were few export opportunities for the company’s local facility. Meanwhile, rapidly rising taxes on cigarettes and the advent of plain packaging have meant that smokers are increasingly buying cheaper cigarettes, such as those manufactured by British American Tobacco.
Electricity distribution
The cost of retail energy has surged over the past five years. Earlier projections of continued growth in electricity use per capita and rising peak demand led the industry to gold-plate electricity networks, and the Australian Energy Regulator (AER) allowed fees to rise to cover capital costs. A subsequent decline in the use of centrally generated electricity means there is a surplus of network capacity.
The AER has slashed revenue limits in New South Wales and Tasmania, as consumers have been paying for networks’ overinvestment. This is expected to result in an overall industry revenue decline of 10.0% in 2015.
The AER has cut revenue limits substantially for the three networks operating in New South Wales for 2015-16 – in some cases, by over 30.0% when compared with 2014-15. Similarly, Aurora Energy in Tasmania suffered a regulated revenue cut that will hit the industry in 2015.
The industry is further threatened by the increased use of small-scale electricity generation through solar photovoltaic panels, which could reduce demand for distribution networks as consumers go off the grid.
Mining and construction machinery manufacturing
Demand for mining machinery has been driven by investment in new mines, along with mine expansion projects. Mining companies are expected to revise down their expectations of revenue growth during 2015, as the prices of commodities like iron ore have plunged. Demand for mining machinery is expected to fall as a result, leading to a forecast revenue decline of 6.1% over 2015.
The development of new mines, and the expansion of existing mines, generally requires mining firms to purchase new machinery, leading to revenue growth for mining machinery manufacturers. As the mining boom moves from its investment phase to a production phase, and as falling iron ore prices deter further investment, demand for machinery is likely to suffer in 2015.
Film and video distribution
Australian motion picture and video distributors have been hit with a barrage of new media formats and consumer behaviours that have made the industry less profitable and resulted in declining revenue over the past five years. Video-on-demand services are expected to boom in 2015, cannibalising sales of DVDs and Blu-ray Discs, which generate greater revenue. The continuous decline of DVD and video hire outlets, along with the negative effects of piracy, are projected to lead to a 3.7% dip in revenue in 2015.
The introduction of US-based streaming service behemoth Netflix, along with local entrants Stan and Presto, is tipped to be a win for consumers but a loss for distributors. Consumers will be able to pay monthly subscription fees to view a wide range of content, in contrast to paying a set price for each single film or TV show – which added up to a much larger hit to the hip pocket.
David Whytcross is an industry analyst at <a href="https://www.ibisworld.com.au" target="_blank">IBISWorld</a>.
For more information on these, or any of Australia’s 500 industries, log onto <a href="https://www.smartcompany.com.au/www.ibisworld.com.au" target="_blank">www.ibisworld.com.au</a>, or follow IBISWorldAU on Twitter.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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po-LsXgBTHBmX

The Australian industries set to fly and fall in 2015

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GUEST OBSERVATION
Judging from the first week of campaigning, the 2015 Queensland election is going to be very much about economics – and jobs in particular.
On the one hand, Premier Campbell Newman and his Liberal National Party stress that <a href="https://qld.lnp.org.au/lnp-unveils-plan-jobs-tomorrow/" target="_blank">under their “strong economic management”</a>, 1,100 new jobs are being created every month and Queensland is on track to become the fastest growing state economy in Australia.
On the other hand, the Labor opposition, led by Annastacia Palaszczuk, has focused on <a href="https://www.brisbanetimes.com.au/queensland/queensland-state-election-2015/queensland-election-2015-remember-the-cutbacks-says-alp-20150108-12jrrw" target="_blank">“the savage cuts to jobs”</a> under the Newman government, arguing those cuts have affected the delivery of adequate services, especially in health.
For voters trying to discern the facts behind each party’s spin, two crucial questions are:
<ul>
<li>How does Queensland’s economy compare to the rest of Australia?</li>
<li>How has the economy performed since Newman’s Liberal National government took over from Anna Bligh’s Labor back in March 2012?</li>
</ul>
The short answer to the first question is: around the average, with some local situations that tend to be among the worst in the country.
As for the second question, I was a little surprised by what the data showed: that Queensland’s economy has fared worse over the past three years than it might appear at first sight.
To offer an independent analysis of those two questions, I have used data publicly available from the Australian Bureau of Statistics. Monthly data for employment and unemployment are adjusted for seasonality using the X-12 software package of the US Census Bureau.
Now, let me add some substance to those short answers.
A snapshot of the Queensland economy today
Table 1 below reports a set of key macroeconomic indicators (looking at the economy as a whole) for each Australian state and for the aggregate Australian economy. See the notes beneath the table for technical definitions.
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/68651/area14mp/image-20150112-23812-r3fzs1.png" target="_blank"><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/68651/width668/image-20150112-23812-r3fzs1.png" alt=""></a>
 Source: Author’s calculations based on data from the Australian Bureaus of Statistics 
Notes: GDP is Gross Domestic Product, GDI is Gross Domestic Income, Unemployment rate is number of unemployed persons in percent of total labour force, Youth unemployment rate is the rate of unemployment of persons ages 15-24, and the employment rate is the number of employed individuals in percent of total working age population. GDP and GDI growth rates refer to the period June 2013-June2014. The unemployment rate refers to November 2014, youth unemployment is the 12 month average to November 2014 and the employment rate is the 3 months average to November 2014. Author provided
In terms of Gross Domestic Product (GDP) growth in aggregate and per capita (meaning per person), the Queensland economy is broadly in line with the Australian average. Only Western Australia and Northern Territory appear to clearly outperform the Sunshine State.
But data on Gross Domestic Income (GDI) show that Queensland is well below the Australian average. In particular, GDI per-capita in Queensland has decreased by 1% between June 2013 and June 2014. This is the second largest decline in the entire country.
Conceptually, GDP and GDI measure the same thing: output. However, they do that from two different perspectives. GDP measures “expenditures” while GDI measures “incomes”. The discrepancy between the two arises because of measurement errors.
GDP is the more popular of the two measures, but recently most Statistical Offices have started reporting both. In fact, it has been shown that GDI tends to suffer from a smaller measurement error than GDP.
GDI is therefore likely to be a more reliable predictor of the business cycle of the economy. And this is not good news for Queensland, because it means that we might be going through a much less favourable economic phase than we believe.
In terms of labour market performance, Queensland currently has the equal highest unemployment rate in the country (6.9%), matched only by Tasmania, even though this is only a few decimal points higher than the Australian average (6.3%).
Youth unemployment in Queensland (14.1%) is marginally below the Australian average of 14.5%. However, there is a lot of regional variation within Queensland. In Cairns, for instance, youth unemployment is above 21%, one of the highest rates observed in Australia. Conversely, in Mackay youth unemployment drops to 8.6%.
Article continues on the next page. Please click below.
<hr class="system-pagebreak">
Newman vs Bligh on jobs and growth
In Table 2, I report the change in several macroeconomic variables since 2007. The period of observation is split in three sub-periods corresponding to the latest three Queensland governments: Bligh I (September 2007-March 2009), Bligh II (March 2009-March 2012), and Newman (March 2012 to the latest available information).
The table reports the data for Queensland and Australia overall. In terms of economic growth, again GDP and GDI provide quite different indications. According to GDP, the Queensland economy under the LNP government has performed on par with the Australian aggregate – slightly better, in fact.
Conversely, GDI data present quite a dim picture, with Queensland doing much worse than the Australian average and, more importantly, experiencing a net 2% decline in income per-capita. In this respect, the LNP government has delivered a significantly worse outcome than the previous two Labor governments.
Employment performance appears to be the highlight of the LNP government. The increase reported in the table corresponds to an average of about 970 new jobs per month between March 2012 and November 2014.
But, unfortunately for Queensland, this is only part of the story. First, practically all of the new jobs created are part-time. In fact, full-time employment decreased during the period of observation from 1.634 million to 1.626 million. Those are “original” figures; the seasonally adjusted figures show an even stronger decline. (You can read more about seasonal adjustment of jobs data <a href="https://theconversation.com/hockey-plays-the-abs-blame-game-while-unemployment-hovers-32746">here</a>.)
Second, unemployment has grown. Now, the increase shown in the table refers to the seasonally adjusted data and is considerably larger than the increase resulting from the original data. Still, the creation of new jobs occurred while existing jobs were being destroyed.
As a result, the seasonally adjusted unemployment rate increased from 5.5% in March 2012 to 6.9% in November 2014. Even the original data show an increase in the unemployment rate, albeit of a much more modest magnitude.
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/68652/area14mp/image-20150112-23782-1amuzxq.png" target="_blank"><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/68652/width668/image-20150112-23782-1amuzxq.png" alt=""></a>
 Source: Author’s calculations based on data from the Australian Bureau of Statistics 
Notes: Growth rates of GDP and GDP are annual averages. Growth rates of employment and unemployment are measured over the entire period of each government using seasonally adjusted monthly data. In addition to the growth, the table also reports the simple change in level (i.e. change in the number of people employed and unemployed). The change in unemployment rate is simply the difference between unemployment rate at the beginning of the period and unemployment rate at the end of the period. Author provided
Overall, under the LNP government, the Queensland labour market appears to have performed worse than the Australian average.
Also, it does not seem that the Newman government has outperformed either of the two Bligh governments. During Bligh’s time in power, from September 2007 to March 2012, the Queensland economy experienced higher GDI growth, faster employment growth, and a smaller increase in the rate of unemployment.
The Newman government did marginally better than the Labor government in terms of GDP per-capita growth and better than Bligh I in terms of limiting the growth in the number of unemployed people. However, the growth in unemployment during Bligh I occurred at a time when Australian unemployment was growing even faster.
Fabrizio Carmignani is professor, Griffith Business School at Griffith University.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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FabrizioCarmignani-GxUevkhNYc

The true state of Queensland’s economy, without the spin

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The onetime bearish strategist at Morgan Stanley, Gerard Minack, has addressed his housing market concerns in his first expansive interview since he went solo 18 months ago.
"When we get across-the-board unemployment then we’ll get an across-the-board downturn in house prices; it’s just a matter of time," Morgan Stanley’s former head of global developed markets and now publisher of Downunder Daily advised when asked by the Australian Financial Review on how vulnerable the housing market is.
"I don’t think there’s anything exceptional about our housing market, except that we’ve gone 23 years without a downturn," he added.
"Far better to take some excess out of the market now."
On monetary policy he suggested "you either get nothing or more than two [cuts]".
"If the leading indicators of employment roll over, then for me recession is the most likely outcome," Minack said.
"We have national domestic demand growth of 1%. Here in NSW it’s 4.5% while in the rest of the country it’s falling.
"We know this year that residential investment will contribute less to growth, we know car workers will start to get fired.
"We know mining capex starts to accelerate to the downside.
"The one thing that looks half-good are leading indicators of employment.
"The ANZ and ABS jobs ads, and the components of the monthly purchasing managers index, look OK.
"But if they roll over we’ve got a problem, and already we’ve seen them wobble, which is partly due to politics.
"One of the few areas of bipartisanship we’ve had over the past dozen years is both parties have agreed to be short term and second rate!"
When asked by the AFR's Patrick Commins what are the big global risks, Minack pointed to central bank credibility.
"If (European Central Bank president Mario) Draghi was a stock he’d be on a P/E of 200! (US Fed chair Janet) Yellen’s on 100.
"When that bubble pops, all hell will break loose again, and there you really just want to be in cash."
In October, Minack said while many people have been wrong calling a collapse in the Australian property market, he still saw the sector, along with investing in the major banks, as great risks to the economy in the year ahead.
“Australia has not had a housing bubble blow-up or a recession but let’s not forget at other times [market bears] have made money from it, so they are willing to give it another go.
"My advice is . . . I think it is a little too early. I think down the track this will be a problem.
"I’m not so sure you look for this to be a problem in Australia on a six-month view,” said Minack.
Minack's comments came just ahead of ANZ announcing its latest survey showed job advertisements rose a further 1.8% m/m in December to record their seventh consecutive monthly rise (in seasonally adjusted terms). 
Job ads have now trended higher for 14 months and are up 11.4% over the year to December.
The ANZ chief economist Warren Hogan said the data was an encouraging sign that labour demand was firming. 
"Annual growth in job advertisements is now at 11.4%, a moderate rate by historical standards but the fastest rate in over 3½ years. 
"The improving trend in job ads appears to be at odds with the official employment data which continues to depict a rising unemployment rate. 
"In all likelihood, this divergence can be explained by a higher than usual rate of job losses in the economy. 
"The good news is that the economy continues to produce new employment opportunities.
"The bad news is that this has not been quite enough to counteract the flow of new workers into the economy plus the on-going loss of jobs in certain sectors.”
“As a result labour market conditions can be described as soft which will continue to cap wage increases.
"Together with the recent decline in oil prices, this will feed through to relatively subdued inflation outcomes through 2015.
"For monetary policy, the most likely course remains for the RBA to keep rates in a holding pattern for most of 2015.
"However a softer inflation outlook suggests the RBA could have a little more wriggle room than previously anticipated to support business and consumer confidence.
"Right now we think the best course of action is for the RBA to maintain a steady hand on interest rates. 
"But with global energy costs falling substantially, and inflation likely to be lower than previously thought, there is increasing scope for Australian interest rates to fall a little over the first half of 2015,” Warren Hogan said.
 
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jchancellor-FAypfDUnLy

Unemployment the key in 2015 house price direction: Gerard Minack

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GUEST OBSERVATION
Australia’s private debt dynamics have been thoroughly <a href="https://www.macrobusiness.com.au/2014/10/australias-addiction-to-private-debt/">explored elsewhere</a>, but less well understood is the country’s position relative to the <a href="https://en.wikipedia.org/wiki/Organisation_for_Economic_Co-operation_and_Development" target="_blank">OECD</a> and <a href="https://en.wikipedia.org/wiki/BRIC" target="_blank">BRIC</a> nations.
Thankfully, the Bank for International Settlements (<a href="https://www.bis.org/" target="_blank">BIS</a>) provides a useful database of unconsolidated household, non-financial business and total sector debts to enable a meaningful comparison.
The difference between consolidated and unconsolidated debts is an important consideration. The former constitutes debt that is netted out within the sector, and only records debts owed to other sectors, while the latter is the actual debt a sector owes, irrespective of to whom. Unconsolidated debts are typically larger than consolidated debts.
Caution must be taken when using measures of consolidated debts as it assumes intra-sector solvency; an assumption the global financial crisis (GFC) revealed to be precarious. Consolidated debts disguise the risk of intra-sector debts that can metastasise and threaten financial stability.
In retrospect, Ireland, Spain and the US are three countries that clearly experienced debt-financed housing bubbles, thus providing a useful benchmark for comparison. Australia’s household debt to GDP ratio is clearly higher than both Spain and the US at their peaks, and remains only slightly below Ireland’s peak. <img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/Egan_Soos_01.png" alt="">
In the BIS dataset comprising 34 nations, Australia has the unenviable status of ranking fourth-highest, only below that of Denmark, Switzerland and the Netherlands. Ironically, the pathology of financial capitalism drove the world’s leading social democratic state into accumulating the largest household debt ratio, peaking at close to 140% in Q2 2009.
A range of factors may have boosted the income flows of Danish households and enabled such accumulation: a low unemployment rate relative to the Eurozone nations, very low income inequality, the world’s highest minimum wage, and a generous social welfare system.
As of Q2 2014 (the latest available BIS data), the Netherlands is just 0.3% higher than Australia. As the former deleverages, Australia should rank third-highest by the next quarter. The ratios have remained stubbornly high in both Denmark and the Netherlands despite deleveraging, as their weak economies have resulted in falling nominal GDP (the denominator).
<img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/Egan_Soos_02.png" alt="">
Australia’s total debt to GDP ratio peaked at 190% in Q2 2009, before falling slightly as the non-financial business debt ratio fell. As of Q2 2014, the total debt ratio was 189%, and is expected to set a new peak in the next quarter or so.
<img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/Egan_Soos_03.png" alt="">
The following table lists the debt ratios for the OECD and BRIC nations. For some nations, household and non-financial business sector debts are not available, but total debt data are available for all. The non-financial business sector debt ratios are on the high end for Ireland, Luxembourg and the Netherlands, likely reflecting their generous international business taxation policies.
<img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/Egan_Soos_04.png" alt="">
The BIS has done a commendable job in gathering long-term unconsolidated data from the OECD and BRIC nations and making it publicly available. It would be helpful if the data was further classified into categories of personal, mortgage and non-banking financial sector debt, as the latter is important when analysing banking and financial cycles.
As household debt has boomed exponentially over the last two decades, the savings of the household sector has plunged. According to the official household savings ratio provided by the ABS, it briefly became negative during the early 2000s, and then rebounded as the GFC shocked households into saving more. <img src="https://www.macrobusiness.com.au/wp-content/uploads/2015/01/EganSoos5.png" alt="">
In 2013, <a href="https://www.macrobusiness.com.au/2013/11/is-australias-high-household-savings-rate-an-illusion/" target="_blank">analysis</a> by Credit Suisse revealed that the official ratio included superannuation contributions and extra principal repayments, which arguably should not be counted as disposable savings. After controlling for these two artefacts, the ratio falls significantly, exhibiting a persistently negative trend since 1997.
The household sector’s savings situation is dire, as reported by <a href="https://www.mebank.com.au/media/1518946/213737-HFCR_FINAL-iPAD.pdf" target="_blank">ME Bank</a> in a 2014 report:
<ul>
<li>Only 46% of households reported the ability to save each month;</li>
<li>Only 32% would easily be able to raise $3,000 in an emergency;</li>
<li>50% aren’t confident they have enough savings to last if unemployed for three months;</li>
<li>35% reported having less than $1,000 cash on hand;</li>
<li>17% have less than $100 in savings;</li>
<li>60% have less than $10,000 in savings; and</li>
<li>In 2009, Australians were saving a median $300 per year (<a href="https://www.melbourneinstitute.com/downloads/hilda/Bibliography/Other_Publications/pre2010/AMP.NATSEM_Saving_Tomorrow_Report.pdf" target="_blank">AMP/NATSEM</a>).</li>
</ul>
Australia’s private sector is grossly over-indebted, especially the household sector. The hysteria surrounding Australia’s non-existent public budget ‘emergency’ is a smokescreen cloaking the critical household budget crisis. The fictional narrative concerning public debt arises from an unshakeable adherence to <a href="https://www.propertyobserver.com.au/https://www.amazon.com/Debunking-Economics-Revised-Expanded-Dethroned/dp/1848139926" target="_blank">pseudo-scientific economic theory</a> and class war, such as ‘justified’ public austerity policies which target the poor and marginalised.
Meanwhile, the public is distracted from the true threat: the unrestrained private spending spree that further enhance the power, profit and authority of the horde of private monopolists, usurers, speculators, rent seekers, free riders, financial robber barons, control frauds and indolent rich.
The current dynamics of the political and economic system means private debts will continue to spiral out of control, until the catastrophically-inefficient FIRE sector inevitably implodes. Nevertheless, the current housing booms in Melbourne and Sydney show no sign of abating in the short-term, with 2012 an opportune time to purchase according to the ‘<a href="https://www.macrobusiness.com.au/2014/12/property-speculation-to-boom-in-2015/" target="_blank">Speculative Index</a>’, which measures the irrational exuberance embedded in prices.
If the real estate fever gripping the nation does not break soon, Australia may well secure the top OECD ranking for the most over-indebted household sector. A financial crisis beckons, for history documents that extraordinary over-lending routinely precipitates chaos; falsifying expert claims that ‘this time is different’.
Paul D. Egan was previously employed as a supervisor and policy officer at the state government level. He holds a BSc Hons (Class I) and co-authored, with Philip Soos, Bubble Economics: Australian Land Speculation 1830 – 2013. He may be contacted at <a href="https://www.macrobusiness.com.au/2014/11/victorian-politicians-136-million-property-holdings/paul.egan@openmailbox.org" target="_blank">paul.egan@openmailbox.org</a>
Philip Soos is a postgraduate candidate at Deakin University, and holds IT and MBA degrees from Swinburne and RMIT Universities. His website is<a href="https://www.macrobusiness.com.au/2014/11/victorian-politicians-136-million-property-holdings/www.philipsoos.com" target="_blank"> https://www.philipsoos.com/</a> and can be contacted at <a href="https://www.macrobusiness.com.au/2014/11/victorian-politicians-136-million-property-holdings/psoos@deakin.edu.au" target="_blank">psoos@deakin.edu.au</a>
This article first appeared on <a href="https://www.macrobusiness.com.au/" target="_blank">MacroBusiness</a>.
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Australian private debt points to a potential financial crisis

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The latest ABS housing approval statistics indicated a record high, but the results have been varied from state to state.
New South Wales approvals actually dropped over the November period, explains Urban Taskforce chief executive Chris Johnson.
“The big drop is in apartment approvals which only reached 1,968 approvals in November 2014 compared to 2,668 approvals in November 2013,” he said. The month recorded a 1.4% drop for New South Wales, largely due to a 3.0% drop in approvals for detached houses. Multi-unit approvals were actually up by 0.1%.
“Victoria is leading the country with 5,009 home approvals in November compared to 3,958 for NSW which is a significantly larger state,” he explained.
Meanwhile, the Housing Industry Association NSW’s executive director David Bare said that despite the modest decline, the overall activity remains healthy and does point to a strong industry.
“Late in 2014 we saw fewer approvals of multi-unit dwellings compared with the record highs achieved in 2013. However there is a strong pipeline and monthly figures can be quite volatile,” said Bare.
“It is also pleasing to see the recovery in detached housing that took place throughout 2012 and 2013 has been maintained right throughout 2014,” he said.
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How did New South Wales building approvals fare?

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The Reserve Bank's Chart Pack is always worth a gander, being consistently and independently produced... and free from spin.
You can view the full chart pack <a href="https://www.rba.gov.au/chart-pack/index" target="_blank">here</a>.
Let's run through what the Reserve Bank of Australia (RBA) has found this month for households and the housing market.
Part 1: Households and finances
Retail sales growth is humming along both in terms of values and volumes, largely driven by Sydney retail.
<img src="/images/2015/01/8/graph%201.gif" alt="">
Savings ratios have been elevated since the financial crisis as households shored up their finances, but the ratio now appears to be gradually declining again as low interest rates encourage investment in growth assets.
<img src="/images/2015/01/8/graph%202.gif" alt="">
Consumer sentiment has been knocked around a little by budgets and other adverse news, but remain fairly close to where it has been averaging for the last 34 years.
<img src="/images/2015/01/8/graph%203.gif" alt="">
Household wealth in Australia is now at record highs in absolute terms. In terms of net worth as a percentage of annual household disposable income, asset values are growing nicely, and liabilities are holding steady.
<img src="/images/2015/01/8/graph%204.gif" alt="">
Interest paid as a percentage of household disposable income has declined in tandem with mortgage rates . Indeed, mortgage serviceability is at its best level in more than a decade.
<img src="/images/2015/01/8/graph%205.gif" alt="">
Part 2: The housing market
Stimulated by rising dwelling prices, building approvals brushed record highs, but have now seemingly passed their peak. We will see an oversupply of dwellings <a href="https://petewargent.blogspot.co.uk/2014/12/melbourne-continues-to-hammer-high-rise" target="_blank">in a few regions</a> – one would be wise to steer clear of these, of course.
<img src="/images/2015/01/8/graph%206.gif" alt="">
Housing loan approvals rise to record highs, largely driven by investors in this cycle, the direct result of low borrowing rates.
<img src="/images/2015/01/8/graph%207.gif" alt="">
And finally, to housing prices. As we expected some years ago, due to an inherent undersupply of dwelling stock and infrastructure, Sydney prices are soaring towards $1 million.
With both the M2 and the M7 closed again earlier this week, and barely a day passing without news of diabolical traffic woes, expect there to be a continuing surge of demand for properties located close to key transport hubs such as rail or light rail links.
<img src="/images/2015/01/8/graph%208.gif" alt="">
Elsewhere, Melbourne has been looking peaky for months but has held up reasonably well to date.
Perth's market is trending slightly up but only moderately, while Canberra is now all set for a downturn. The Adelaide market – and particularly its economy – remains unconvicing,
Counter-cyclical investors should be scoping out opportunities in Brisbane, where housing finance is gathering momentum – as reconfirmed this week by <a href="https://www.afgonline.com.au/mortgage-index-january-2015/" target="_blank">AFG's December Mortgage Index data</a>.
 
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