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

Joel Robinson

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

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

WM Residences fills gap in Mordialloc townhouse market

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

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

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

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

NAB funds $1 billion Surfers Paradise apartment development, Palmera

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

First look: Aqualand joins St Leonards apartment party

Economy

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With the Australian currency at four-year lows of around US84.7c, there is little doubt that expatriates will be back holidaying here, with a keener eye for house purchasing.
A falling dollar makes local property less expensive for overseas buyers, especially opportune for expatriate Australians anticipating their return to Australia.
With the Australian dollar weaker, property is around 10% cheaper than the US94.9c it was just five months ago for those who are paid in foreign currencies.
The dollar is at the lowest levels since mid-2010. 
Purchasing has tended to peter out as the Aussie climbed higher and estate agents now expect overseas inquiries from expatriate Australians to increase.
But it doesn't necessarily mean higher prices.
In 2004 after plotting the correlation between house prices and US-Australian exchange rates since 1980, Rod Cornish from Macquarie Group concluded there was an interesting link between the rising dollar and house prices.
"Over the long term, house prices climb when the Australian dollar rises against the US dollar. The rate goes up when our economy is performing well, which means that inflation is held down so the Reserve Bank has less need to raise rates," Cornish said.
As a long-term trend, Cornish noted, a rising Australian dollar has almost the same effect on the economy as an interest rate rise.
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jchancellor-FAypfDUnLy

Expatriates to enjoy lower dollar house hunting over summer holidays

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GUEST OBSERVATION
<a href="https://www.treasury.gov.au/ConsultationsandReviews/Consultations/2014/ILRB-2014" target="_blank">Proposed laws</a> to reform the insolvency industry are long overdue. Under the changes, liquidators will require a licence and creditors will be able to remove poorly performing practitioners. The reforms aim to improve consumer confidence in an area that has been <a href="https://www.afr.com/p/business/companies/keeping_the_liquidators_honest_uohZ6UPQRtS9XIQAilJzDP" target="_blank">plagued with controversy</a>. However, they still fail to meet the need for transparency around corporate insolvencies.
The industry already has a chequered history when it comes to attempted reform. Proposed changes stalled last year. Regulation of the industry has been the subject of <a href="https://www.ntu.ac.uk/nls/research/insolvency_journal/previous_editions/index" target="_blank">eight major reviews and inquiries</a> over the last 25 years.
In 1998 the <a href="https://www.alrc.gov.au/report-45" target="_blank">Harmer Report</a> outlined the shortcomings of the regulatory system governing insolvency practitioners. It cited failures within the industry to respond quickly to complaints against practitioners. Other criticisms included a lack of established professional conduct standards and ethics.
Practitioners' remuneration levels were also not determined nor reviewed by an industry board. Rather the market was relied upon to set reasonable fees.
Although a professional code of conduct now exists 25 years later, the same criticisms can still be made today. Successive reviews have made <a href="https://www.ntu.ac.uk/nls/research/insolvency_journal/previous_editions/index" target="_blank">similar recommendations</a> to tackle these shortcomings. Most of them still have not been implemented. The result is the insolvency industry is open to criticism of over-servicing, excessive fees and self-interest.
The largest 13 insolvency firms <a href="https://www.bankruptcy.net.au/docs/Senate%20report%20September%202010.pdf" target="_blank">comprise 39% of the market</a>. They may be more deserving of, but better able to deal with, such criticisms than smaller individual practitioners, which represent 29% of the market.
<h3>The industry overhaul</h3>
The planned changes aim to remove unnecessary costs from the insolvency industry. This should result in around $55.4 million per year in compliance cost savings. Submissions on these changes are due in late December.
Under what has been dubbed as a “user pays” system, they require liquidators to be licensed and to undergo continuing education. The result is the government can reap big fees in exchange for licences.
Registration must be renewed every three years. For this to occur, written evidence of adequate professional indemnity insurance and compliance with continuing professional education conditions must be provided. The circumstances where registration may be cancelled or suspended have been widened. These include any offence conviction involving fraud or dishonesty.
There have been highly publicised accounts of poorly behaving liquidators. <a href="https://www.propertyobserver.com.au/https://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWSC/2009/829?stem=0&amp;synonyms=0&amp;query=Ariff" target="_blank">Stuart Ariff</a>, who is serving a six-year jail sentence, provides the most notorious example. However, the Ariff case is considered exceptional and not reflective of the majority of insolvency practitioners.
A lack of licensing within the industry has not led to an increase in the number of badly performing insolvency practitioners. Rather, its absence has meant the small number of dishonest practitioners remains undetected. Licensing will increase public confidence in the industry.
Where creditors are unhappy with the performance of a liquidator, they will be able to remove that practitioner and appoint another. To do so, the majority of creditors in number and value must pass a resolution at a creditors’ meeting. No particular grounds for removal are required.
However, the former administrator may apply to the court to be re-appointed. The court may re-appoint the administrator if it is satisfied the removal was improper.
<h3>Increasing consumer confidence</h3>
These changes finally act on the unanswered criticisms of the Harmer Report. The regulation of personal and corporate insolvency regimes will now be consistent.
This will cut compliance costs across the industry. A system of licensing will maintain educational standards and experience. So does the ability to cancel or suspend licences. These measures increase consumer confidence in the professionalism and competence of the industry.
Yet more can be done. More public education about a liquidator’s role and the nature of the work is needed.
The changes also fail to address a common theme in previous reviews: there is no adequate and publicly available corporate insolvency data. This information is needed for effective policy making, public debate, regulation implementation and ongoing review. It is imperative that such data be independently collected, maintained and available to the public free of charge.
<img src="https://counter.theconversation.edu.au/content/33888/count.gif" alt="The Conversation" width="1" height="1">Jennifer Dickfos is lecturer in business law and corporations law at <a href="https://www.griffith.edu.au/" target="_blank" style="line-height: 1.3em;">Griffith University</a>.
This article was originally published on <a href="https://theconversation.com" style="line-height: 1.3em;">The Conversation</a>.
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JenniferDickfos-EWaQAER27W

Chasing money: Why the insolvency industry needs reform

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GUEST OBSERVATION
Victorians will soon go to the polls to decide who will be responsible for the management of the state for the next four years. Voters are confronted with many issues on which they must pass judgement, with roads, railways and ports all prominent in the debate. But what are the key characteristics of the Victorian economy?
Economic modelling at Victoria University’s Centre of Policy Studies tells us about the types of jobs Victorians can expect to be doing over the next few years. The Victorian economy employs around 2.9 million people. In line with growth in both the population and the economy, this is set to increase by around 300,000 people by 2020.
<h3>Which industries are winning</h3>
In Victoria, as in Australia as a whole, the vast majority of jobs are in the service industries. This is a diverse group of industries including (but not limited to) retail trade, health and social assistance, professional and technical services, transport and warehousing and public administration and safety. The non-service industries – agriculture, mining, manufacturing, utilities and construction – comprise just below 23% of jobs in Victoria. For the remainder of this decade, the proportion of jobs in service industries will increase only slightly, to almost 78% of jobs by 2020.
At a more detailed level, greater change is revealed. As the construction phase of the mining boom draws to an end, employment in the construction industry will fall from its present level of 8.5% of jobs to just 7% of jobs in 2020. This partly reflects the transitory impact the mining boom has had on the construction sector. The “release” of many construction workers into the economy over the next couple of years could be a boon to major government-backed infrastructure projects.
Construction is the only sector in which employment is forecast to fall. Manufacturing, agriculture and transport and warehousing are forecast to expand, more than compensating for the fall in construction activity. These sectors have a similar skills profile to construction, employing relatively large proportions of workers with no post-school qualifications or Certificate I-IV level qualifications.
<h3>Manufacturing surprise</h3>
The positive forecast for manufacturing may seem surprising, given the high-profile announcements of closures of the last motor vehicle manufacturing plants in Victoria. Manufacturing in Victoria employs around 270,000 people, of which 10% work in the motor vehicle and parts sector.
On the whole, manufacturing is a very trade-exposed activity. Products are either exported (for example, processed food products, wine and pharmaceuticals) or they compete against imports in the domestic market (for example, textiles, pharmaceuticals, motor vehicles and various types of appliances). Because of this, movements in the exchange rate have a very significant impact on manufacturing. Throughout the “boom” years, with the exchange rate very high, manufacturing has been uncompetitive, a phenomenon known as “Dutch Disease”. Motor vehicle manufacturing has been a conspicuous casualty.
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/65351/area14mp/image-20141124-19612-16ii7uc.png"><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/65351/width668/image-20141124-19612-16ii7uc.png" alt=""></a>
As the boom unwinds, the effects of Dutch Disease will also unwind. A large fall in the Australian dollar will revive the competitiveness of manufacturing, more than compensating for the loss of the motor vehicle plants. Export-oriented sectors like agriculture and education will also benefit from a fall in the Australian dollar.
The professional and technical services sector is forecast to expand the most, gaining 44,000 jobs by 2020. This sector includes activities such as legal and accounting services, architectural, engineering and technical services, and computer services.
Almost half of all people working in professional and technical services hold a bachelor degree or higher qualification. By 2020, this is estimated to have grown to 53% of people working in the sector. In Victoria as a whole, 28% of people employed hold at least a bachelor degree.
Another significant source of employment growth is the health and social assistance sector. Although only <a href="https://theconversation.com/australias-g20-growth-challenge-protecting-our-standard-of-living-33837" target="_blank">weak growth is forecast for domestic incomes</a>, leading to weak growth in domestic demand, health and social assistance is a significant expenditure item for older Australians. While the average household spends just over 5% of their budget on medical care and health expenses, households where the reference person is aged over 65 spend almost 10%. Government spending on health care will also increase as the population ages.
This article continues on the next page. Please click below.
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<h3>State of the regions</h3>
Melbourne accounts for 75% of employment in Victoria. Two-thirds of growth in Melbourne will be concentrated in five sectors: professional and technical services, manufacturing, health and social assistance, transport and warehousing, and education and training.
Differences in the underlying structures of regional economies mean that overall performance is varied.
For example, in Barwon, an area including the regional city of Geelong, the manufacturing sector has a relatively large representation of motor vehicle manufacturing. As a result, Barwon’s manufacturing sector is forecast to grow more slowly than the state average, and Barwon is forecast to be the slowest-growing regional economy. However, for the reasons given above, growth is still positive in Barwon manufacturing.
Strong forecast growth in the agriculture sector is the main contributor to growth in several regional economies. In the Wimmera, Western Districts, the Mallee, Goulbourn, East Gippsland, Gippsland and Ovens-Murray, growth in agriculture will contribute between 20% and 50% of regional employment growth.
In the Wimmera, the Mallee and the Western Districts, the agriculture sector currently accounts for a fifth of jobs. However, the Wimmera and the Western Districts are the regions with the highest forecast growth rates, while the Mallee is one of the slowest. Although all agricultural economies, the nature of agriculture in these regions is quite different. The strongly growing agricultural activities sheep, beef, grains and dairy are well represented in the Wimmera and Western Districts. However, Mallee agriculture includes a sizable portion of fruit growing, an activity with a relatively low growth forecast.
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/65326/area14mp/image-20141124-19627-10m4ak0.png"><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/65326/width668/image-20141124-19627-10m4ak0.png" alt=""></a>
Agriculture is relatively less important in the economies of the Central Highlands (including Ballarat) and Loddon (including Bendigo). While agriculture will account for around 10% of employment growth in these regions, health, education and manufacturing are forecast to be of greater significance, accounting for around 40% of growth in employment.
<img src="https://counter.theconversation.edu.au/content/33831/count.gif" alt="The Conversation" width="1" height="1">Janine Dixon is senior research fellow at <a href="https://www.vu.edu.au/" target="_blank" style="line-height: 1.3em;">Victoria University</a>.
This article was originally published on <a href="https://theconversation.com">The Conversation</a>.
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JanineDixon-cHemc6fRVX

Victoria votes: Where will the growth and jobs of the future be?

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Are you a vertical or horizontal analysis type?
Most would answer that they are not sure given they apply a number of metrics whilst attempting to draw a conclusion on a particular subject. Real estate is a classic example; there are so many suggested formulas that can be applied to draw a conclusion, yet there is no stand-out determination process.
I was asked this week: What is the best method within the real estate industry to better understand what exactly what is going on? I was also asked: Do I look at the markets from a vertical or horizontal position? 
The answer to that would be both. On a weekly basis I look at the stock number movements and the <a href="https://www.rwm.com.au/news/" target="_blank" title="weekly sales activity.">weekly sales activity.</a> Unlike the share market which closely watches the market capitalisation from its All Ordinaries Index, the real estate market is an entirely different beast and offers no decisive measures or methodology.
The residential and commercial investor stampede has been unprecedented in 2013 and 2014 prompting many to call this a property ‘bubble’. One should ask the question, if the ‘bubble’ theorists were investing in real estate would they still refer to this as a ‘bubble’. Of course not because they are simply commentators, not participants and there is a striking difference between the two. 
The investors are looking at the markets overall from a vertical position (which also encompasses their entire investment portfolio) whilst the commentators have adopted a horizontal position concerned only at what’s immediately before them.
To put these theories into practice one must apply what I call the <a href="https://www.abc.net.au/science/features/whyisitso/" target="_blank">Professor Julius Sumner Miller</a> analogy – “Why is it so?” Firstly, are the Australian real estate markets weaker or stronger post global financial crisis (GFC)? The answer to that is that the markets overall were much stronger pre-GFC, although for some strange reason this point is entirely missed in the debate (thanks to the horizontal observation). We need to remember that prior to the GFC, the Australian economy was basking in an unprecedented 20 plus years of economic growth.
Next, in the “why is it so?” analogy, trying to understand why the household and the investment markets bear no resemblance to what is happening in the property markets. In particular the Reserve Bank, which is actually now quite blasé with its outlook, especially when commenting on the Australian real estate markets. Why aren’t households trading-up to take full advantage of the historical low cash rates?
Look no further than the latest <a href="https://www.rba.gov.au/publications/smp/2014/nov/pdf/dom-eco-cond.pdf" target="_blank" title="Quarterly Statement on Monetary Policy ">Quarterly Statement on Monetary Policy</a>: “The forecast for output had not materially changed. GDP growth was still expected to be below trend over 2014/15, before gradually picking up to an above trend pace towards the end of 2016.”
It’s all very well to borrow more and upgrade the family home given record low rates, so what’s stopping the markets from jumping-in?
Look no further than annual wage growth, which is presently at the slowest rate on record. It’s all very well to increase the debt ratios in the present environment (horizontal analysis) but when one applies the vertical analysis there are severe headwinds ahead when rates start to rise again, which looks like 2016/2017.
The Reserve Bank pointed out in another one of their papers recently: “Nominal labour income has grown at an average annual rate of 2.7% over the past two years, compared with a decade average of 6.2%. And the widespread expectation is that wage growth will remain subdued for a time.”
Another clue is the rising rate of household borrowers who have preferred to pay back their loans via the interest-only option, which is not a positive sign for when the cash rate starts heading back to that pre-GFC thingummy called ‘normality’.
So this might go part of the way into trying to explain this thing called a ‘bubble’ – I prefer to call it a burp (due mainly to a lot of external wind).
On that basis we can expect to see the cash rate coming down further in 2015, only to (hopefully) see it start increasing late in 2015 to early-2016, as a best case scenario.  Watch annual wage growth statistics as they become available given this is an obvious trigger for increased action in the housing markets. For those on the interest-only option, you still have the best part of 12 to 18 months to strategise your best options going forward, history tells us it is not simply a case of 'who dares wins'.
So to answer (or should that be update) my preferred options when analysing the real estate markets: I am a confirmed vertical observer.
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robertsimeon-hRNTwJyXkQ

What's the best method to understand the real estate market?

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Australia ranks 16th out of the G20 nations for debt as a proportion of total Gross Domestic Product (GDP).
Comparison website <a href="https://www.finder.com.au/" target="_blank">Finder</a> compiled a list of the 20 nations, comparing their total and national debt, proportion of debt to GDP and debt per person.
Australia, with the lowest population of any G20 nation, has $23,769 worth of debt per person. Among the G20 nations, our proportion of national debt to GDP is relatively low. Australia's total debt equals 32.6% of GDP, the fifth lowest result. Only India, Russia, Saudi Arabia and China have a lower level of debt to GDP.
On a per person basis, we rank ninth, with $23,769 of debt for each member of our 23.1 million strong population. Australia is the smallest of the G20 nations.
Japan has both the highest national debt per person and as a proportion of GDP. The country recorded $101,305 worth of debt for every person, with debt more than doubling GDP at 226.1%.
India, with a population of 1.3 billion, has the lowest per person debt, with just $783. However, its debt as a proportion of GDP ranks 10th on the list, recorded at 51.8%.
Unsurprisingly, the European Union has the highest total debt, with 28 member states contributing to the $16.8 trillion figure.
Click the infographic below to see how Australia's debt level compares, on a national and per person basis.
<a href="/images/2014/11/20/finpernation.jpg" target="_blank"><img src="/images/2014/11/20/finpernation.jpg" alt=""></a>
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jrichardson-uRX5hFdKfN

Infographic: How Australia’s debt compares to the other G20 nations

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According to the CoreLogic RP Data Home Value Index results in October 2014, combined capital city home values have increased by 8.9% over the past year. 
The rate of growth is now decelerating after reaching a peak annual growth rate of 11.5% in April 2014.  The two cities which have been the real driver of value growth, Sydney and Melbourne, are also now seeing the rate of value growth slowing.
The RBA has previously stated that as the economy transitions away from mining investment that it was specifically looking for a pick-up in residential property.  To date there has been a pick-up, in buyer demand, as well as home values and dwelling construction however, with value growth having peaked and dwelling approvals now -15% lower than their recent monthly peak will the pick-up in the residential segment of the economy be enough to offset mining?  It is beginning to look increasingly unlikely.
As we have showed, the residential housing sector is still quite strong but is slowing from its peak.  Although approvals have dropped there remains a strong pipeline of housing construction which should continue over the coming years however, the spike in construction could be somewhat short-lived overall.  If we look at the other sectors of the economy, economic data appears to be increasingly turning more negative than positive.
According to Westpac and the Melbourne Institute, consumer sentiment has been mired in higher levels of pessimism than optimism for the past nine months.  The last time pessimism had outweighed optimism for this long was in the middle of the financial crisis.
Last week we learned that wage growth remains benign.  According to the Australian Bureau of Statistics (ABS) the wage price index has increased by just 2.6% over the year to September 2014.  With inflation recorded at 2.3% there is very little real growth in wages at the moment.
With wage growth so low, we are also seeing the highest unemployment rate the country has seen in more than decade.  According to ABS data, the unemployment rate was recorded at 6.2% in October and sits at a level not seen since early 2003.  If employees can’t negotiate a decent pay rise it is not as if businesses are actively seeking employees.
Commodities, which were previously a key driver of the Australian economy have seen prices drop significantly over the past year.  According to the Reserve Bank’s (RBA) monthly index of commodity prices, Australian commodity prices are -16.9% lower over the past year and -38% lower than their July 2011 peak.
Earlier this year Australia had recorded international trade surpluses for three consecutive months.  The monthly trade surplus reached as much $1.4 trillion however, in September the trade deficit had sunk to $2.3 trillion.  This $2.3 trillion figure was the largest monthly trade deficit since November 2012.
According to the National Australia Bank, business conditions have improved sharply.  Their index of business conditions rose by an all-time high 12 points in October to reach its highest level since February 2008.  Although business conditions may be up, confidence across the business sector continues to fall.  In October business confidence fell by a point to its lowest level since August of last year.
Retail trade recorded a somewhat surprising bounce of 1.2% in September.  Although this was the strongest monthly increase since February last year it comes following relatively light increases of 0.7%, 0.4% and 0.1% over the previous three months.  One wonders if it is an outlier. 
In fact, Westpac and the Melbourne Institute asked respondents to their consumer sentiment survey about their spending intentions this Christmas.  The survey results indicated that 38% of respondents were going to spend less and 50% were going to spend the same.  Westpac reported that the net balance (more minus less) of -26% was the worst since 2008 in the middle of the financial crisis.
The latest read on population growth shows that population growth is slowing.  Although growth in the number of new Australians remains strong, population growth over the year to March 2014 was at its lowest level since the year to June 2012. 
Furthermore, the more up-to-date overseas arrivals and departures shows that net long-term and permanent arrivals over the 12 months to September 2014 were at their lowest level since the 12 months to October 2011.  This data would indicate a further slowing of net overseas migration, particularly within the mining states where the slowdown in both overseas and interstate migration has been the most substantial.
The strong rate of population growth has been a significant driver of gross domestic product.  Over the 12 months to June 2014, the Australian economy grew by a quite healthy 3.1%.  Although this headline figure is quite good, on a per capita basis the economy grew by a much lower 1.6%. With population growth slowing we would expect GDP per capital to also slow.
While there are a lot of negatives here, one of the positives recently has been the declining Australian dollar.  At the end of October 2014 the exchange rate with the $US was 88 cents which is much lower than it has been of late.  A lower Australian dollar should help our manufacturers, exporters and tourism however, that will take a while to flow through.
With the housing market and housing approvals seemingly topping out we need some other industries to help with the heavy lifting as commodity prices remain low and the pipeline of larger infrastructure projects related to the resources sector continue to taper away. 
We aren’t sure who or what these industries are but a further devaluation of the Australian dollar would certainly help some of the prime candidates such as tourism, manufacturing and education for overseas students. 
The Reserve Bank has stated that monetary policy has largely done all it can to assist and now it’s up to the government to manage fiscal policy in such a way that can assist the transitioning economy. 
In my mind this can’t come quick enough because the economy is softening and the housing market needs help to manage this transition.
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ckusher-ujnxiKuFQs

The economy needs more than a housing market recovery

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GUEST OBSERVATION
Banks borrow short and lend long. So if all of a bank’s depositors suddenly want their money, the bank would be unable to pay them. A bank may have made great loans but it can only unwind these loans slowly over time.
In most situations this doesn’t matter. Banks know their cash flows and play the probabilities, making sure they have a buffer of liquid assets to meet normal withdrawals.
However, a crisis can trigger a run on banks. Every depositor wants to get his or her money out of the bank before everyone else. The bank runs out of cash and closes its doors. It fails.
Bank regulation is at the heart of the current <a href="https://fsi.gov.au" target="_blank">Financial System Inquiry</a> chaired by David Murray. It will consider which regulations are important, which need to be strengthened and how <a href="https://www.bis.org/bcbs/index.htm" target="_blank">international banking rules</a> should apply in Australia.
Our recent <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2478496" target="_blank">research</a> compares some of the different rules that may be used to limit bank risk. We find that increased bank capital requirements are the most effective policy but must be applied across all institutions to stabilise the banking system.
The global financial crisis
The 2008 crisis resulted in plenty of traditional bank runs. In the United Kingdom, retail depositors lined the streets to take their money out of the failing Northern Rock.
We also saw a different type of bank run during this period. For example, a bank run led to the collapse of Lehman Brothers. Yet this didn’t involve retail depositors. It was institutions that stopped lending to Lehman Brothers on the wholesale market.
Australia’s banking system in 2008 was fundamentally sound. Our banks didn’t have abnormal levels of bad loans. Legal differences meant the default issues plaguing bank mortgages in California, Florida and elsewhere in the United States couldn’t occur in Australia.
Yet our banks were still exposed to the crisis through their reliance on imported wholesale funds. The Australian government responded to this risk of an “imported crisis”. In October 2008, it introduced explicit deposit insurance and guaranteed bank wholesale borrowing.
But why did Australia’s sound banking system come under pressure in 2008? Is there potential for Australia to import a banking crisis in the future? And what sort of banking regulations do we need to deal with this possibility?
Importing a banking crisis
Wholesale funds now provide a large part of the total funds available to banks in many countries. This has changed the nature of the risks they face.
<img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/63663/width668/sd32vc8q-1415143968.png" alt="">
 <a class="source" href="https://www.rba.gov.au/publications/rdp/2013/pdf/rdp2013-15.pdf" target="_blank" rel="nofollow">RBA Discussion Paper 2013-15 “Trends in the Funding and Lending Behaviour of Australian Banks“ Chris Stewart, Benn Robertson and Alexandra Heath</a>
Australian banks source much of their wholesale funding offshore. This inflow of capital allows Australia to undertake more investment, generating higher levels of growth and enhanced well-being.
Before the crisis, Australian banks were borrowing internationally an amount equal to 5% of our gross domestic product each year. In 2008, international funds flowing though the banks funded about one-fifth of Australia’s total investment.
The flow of international funds did not stop during the crisis. However, they became more expensive, transmitting the pain felt by European and US institutions to Australia.
Banks were not the only institutions affected by the sudden rise in the cost of foreign funds. Foreign direct investment, foreign portfolio investment, offshore capital raisings by Australian companies, and government borrowings were also impacted.
However, the impact on banks was more significant. Unlike other institutions, banks borrow money for relatively short periods but use the money to lend to companies and individuals for the long term. When they depend on short-term international funds, a sudden rise in the price of those funds exposes banks to higher costs and potential failure. Any failure can also have significant economic and political implications. The failure of one bank can lead to a run and the failure of other banks.
This means governments tend to intervene if bank failure is imminent. For example, Bankwest in 2008 was owned by flailing UK bank HBOS. It was facing failure and, following government intervention, was bought by the Commonwealth Bank.
The government’s move to insure bank deposits and wholesale funding stabilised the banking system during the crisis. Yet these were ad hoc policy responses. Australia still needs to develop long-term policies to deal with the next financial crisis.
Article continues on the next page. Please click below.
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Developing the right regulation
Our recent research compares some of the different rules that are used, or might be used, to try to limit bank risk from offshore funding. This research is unique as we consider the consequences of specific policies at times of crisis and also during usual operations.
A policy may be effective at preventing a crisis but if it means that borrowers pay more and depositors receive less most of the time, then the protection provided by the policy may be overwhelmed by the day-to-day cost to the Australian public.
We take it as given that ordinary retail depositors will have some form of implicit or explicit government protection, so our focus is on the risk of bank default on bondholders. A bank fails if an increase in the cost of wholesale funds cuts its cash flows so that it cannot meet its debt obligations.
Regulators can do many things to limit banks’ exposure to imported wholesale funds and maybe make them less exposed to importing a banking crisis.
Regulations may require that banks use limited or no imported wholesale funds at all. Banks would have to be fully funded by domestic savings. Some countries like China have policies like this.
This policy is unlikely to work in Australia because it would significantly limit investment during normal operations. There would be no risk of importing a crisis but there would also be less domestic investment as borrowers would face higher interest rates. India has adopted this type of policy for many years and it has adversely impacted growth.
Depositors may gain from being a source of scarce investment funds but there would also be other costs. The banking sector would contract due to the restriction on fund access resulting in less competition.
Another policy that would reduce the likelihood of importing a financial crisis is for the government to have an explicit or implicit policy of bailing out bondholders. This occurred in the UK and US during 2008.
This policy has undesirable implications. If banks know that taxpayers effectively insure their bondholders, they will reduce the amount of equity issued and increase their amount of bonds. This would result in an increase in new entrants to the market based on excessively risky funding models.
Having a larger number of banks adopting a fragile funding model increases the likelihood of bank failures. If banks know they will be bailed out if they fail, then banks are more likely to fail. A bail-out policy actually increases the likelihood of future crises.
The most effective policy for dealing with wholesale funding risk is to increase the amount of capital banks are required to hold. While regulators have asked banks to hold more equity capital as insurance against lending risks, this policy can also reduce funding risks.
If a wholesale funding squeeze means that a bank cannot pay its bondholders, then the bank fails. If the squeeze simply reduces the dividend to shareholders, then the bank continues to operate. So requiring banks to hold more capital and less debt directly reduces the risk of failure.
While our research suggests that uniform minimum capital requirements can stabilise our banking system, it has been suggested these requirements only apply to “big” banks. Such an asymmetric policy would be undesirable. If there are weak funding restrictions on small banks, this will encourage the entry of a greater number of smaller and potentially more fragile banks. The result is an increased risk of future crises.
An asymmetric policy of increasing the capital requirements on large banks but not on small banks could have a stabilising effect if the government resolved never to bail out the small banks. Small banks could enter and leave the industry as funding conditions allowed and act as a shock-absorber to the system.
Politically, however, this is unlikely to work. Bankwest was not allowed to fail but was folded into the Commonwealth Bank. Even a small credit union like the Fitzroy and Carlton Community Credit Co-operative was <a href="https://www.bankmecu.com.au/why-bank-with-us/news-media/media/bankmecu-and-fitzroy-carlton-community-credit-co-operative" target="_blank">folded into a larger bank</a> last year rather than being allowed to fail.
Any new regulations to deal with the possibility of a future crisis must also deal with political reality. Minimum capital requirements on all banks can stabilise the banking system. However, a policy that just targets the big banks is unlikely to succeed.
Rodney Maddock is Vice Chancellor's fellow at Victoria University and adjunct professor of economics at <a href="https://www.monash.edu.au/" target="_blank" style="line-height: 1.3em;">Monash University</a>.
Stephen King is professor, Department of Economics at <a href="https://www.monash.edu.au/" target="_blank" style="line-height: 1.3em;">Monash University</a>.
Stephen King and Rodney Maddock received funding from CIFR for this project.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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po-LsXgBTHBmX

Don’t just target the big banks: Why all banks need higher capital

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The ABS released its <a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6291.0.55.001Main+Features1Oct%202014?OpenDocument" target="_blank" style="line-height: 1.3em;">Detailed Labour Force</a> data last Friday and it revealed a concerning and widening disparity between the prosperity of capital city Australia and our struggling regional centres. 
There's a bit of analysis to rip through here, so let's dive straight in and take a look in three short parts, commencing with...
Part 1 - Capital Cities are Dominating Employment Growth
In the two largest states, aggregate employment growth is now being driven entirely by the capital cities, although even therein the trend has softened. Note that regional New South Wales has barely added any employment at all in aggregate (on a net basis) for more than six and a half years. Regional Victoria has fared little better with total employment lower today than it was in January 2011.
Moreover, the trend in the regional employment has now clearly been down over the past couple of years.
<img src="https://4.bp.blogspot.com/-t7muucmvYVU/VGSM2K8AEDI/AAAAAAAARMs/HH1PjiQctoo/s640/CITY1.jpg">
There has only been one shining light in terms of regional jobs growth over the past half decade, that being regional Queensland.
Alas with the mining construction boom now unwinding total employment is now declining in regional Queensland too. The coal industry in particular <a href="https://petewargent.blogspot.co.uk/2014/09/pain-ahead-for-coal-mining-regions" target="_blank">looks vulnerable</a>.
The size of the total workforce in South Australia has been shrinking, with regional employment falling significantly over the past five years and total employment in Adelaide now some 20,000 lower than it was around 18 months ago, with the fallout from the decline of the automobile manufacture industry probably yet to be felt in full. 
Not a pretty picture for SA.
<img src="https://3.bp.blogspot.com/-9WGp3259SWI/VGSM3UapvoI/AAAAAAAARM4/kobxSzJCDtE/s640/CITY2.jpg">
Employment Over the Long Run
Now sure, property "advisors" are virtually all vested interests of one sort or another, and of course anyone can torture the figures until they confess.
One of the latest favourites has been the "strongest property market performer of the month!" proclamation, which is appallingly misleading.
But through presenting the full data sets across a range of timelines as we shall now undertake below leaves far less wriggle room for blatantly making nonsense up.
Indeed this is a perennial problem in the real estate commentary space - as if by a force of nature few advisors will ever highlight risks facing regions they own property in themselves, which is understandable enough, but not very helpful for would-be investors.
Personally I own property in regional Victoria (and regional Britain) but I'm hardly going to recommend that it's likely a great idea right now from a macro perspective given what the graphic below tells us. Any credibility I have would quite rightly be shot to pieces!
Logically, from my perspective, property investment is likely to entail significantly more risk where employment is falling or flailing, so to my mind there is a good deal of more elevated risk facing parts of Adelaide and Canberra, as well regional New South Wales, regional Victoria, regional Queensland, regional South Australia and regional Tasmania.
Why? Because employment is falling.
<img src="https://2.bp.blogspot.com/-0-9LeUbBcJ0/VGSM3ap3yTI/AAAAAAAARM0/nWVhzUWfxUI/s640/CITY3.jpg">
It should - but probably doesn't - go without saying that we also continue to believe there to a very high level of risk associated with mining and resources towns and regions in the current climate, and indeed, going forward as the mining construction boom implodes.
There is always some risk involved in buying property, that's a given. Our recommendation is that if you're going to do it, minimise the risks to the extent that this is possible through detailed research at both the macro and the micro level.
This article continues on the next page . Please click below. 
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Part 2 - Unemployment Elevated and Rising in Regional Australia
As noted here previously, headline unemployment figures as reported by the ABS can be a relatively crude and volatile measure, failing to adequately capture discouraged workers or the underemployed, for example.
Nevertheless, it is worth a look at what is happening around the states, and the general picture is that unemployment is rising sharply in the regions. 
Sydney remains well placed with a headline unemployment rate of only 5.1% and a huge volume of dwelling and infrastructure construction in the pipeline, yet in regional New South Wales the unemployment rate trend has been up to now sit above 7%, which is much too high for comfort.
<img src="https://4.bp.blogspot.com/-PVbFLpPOLsA/VGSM5opf7qI/AAAAAAAARNU/tQn58uxZ65A/s640/UE1.jpg">
Below we have presented the three month moving average figures for Victoria, but we note that this month's ABS data is now beginning to record a sizeable disparity here too, with Melbourne's 6.3% unemployment rate now substantially lower than regional Victoria at 7.2%.
<img src="https://4.bp.blogspot.com/-8EdOMF2vFXg/VGSM57ZzaBI/AAAAAAAARNY/bkAeKyDCprI/s640/UE2.jpg">
The most concerning of all states, perhaps, is Queensland. While this is not yet fully reflected in the three month moving average figures, Brisbane's unemployment rate of 6.3% has diverged dramatically from regional unemployment which has leapt alarmingly to 7.7%. 
We have warned about parts of regional Queensland here repeatedly, particularly potential job losses in the coal mining sector.
<img src="https://1.bp.blogspot.com/-Hb7dG0tyP94/VGSM6W_bB4I/AAAAAAAARNg/2LUzTbuoiCw/s640/UE3.jpg">
With our chart pack on demographic statistics revealing a debilitating "brain drain" from South Australia in the form of net interstate migration, and the total size of the workforce having shrunk, it is perhaps unrealistic to expect elevated unemployment rates in the state's regions.
In fact the unemployment rate in regional South Australia has all but evaporated into thin air over the past month or two, but this is clearly not due to employment growth since there were more folk employed in regional South Australia way back in 2007 than there are today.
Adelaide's unemployment rate is too high for comfort at 6.9%.
<img src="https://2.bp.blogspot.com/-AIu_CkHVulk/VGSM7Dv8pxI/AAAAAAAARN0/3uO--Rc0QHA/s640/UE4.jpg">
Perth and WA still have the lowest headline unemployment rates respectively, although the trend in Perth has been steadily up since 2009 when the Western Australian capital city was effectively close to full employment.
<img src="https://3.bp.blogspot.com/-J906OHJ9T94/VGSM7Xs_5-I/AAAAAAAARNs/dhptShf1gaw/s640/UE5.jpg">
Finally the unemployment rate appears to have fallen in Hobart which is wonderful to see, but regional Tasmania has even managed to record a double digit unemployment rate reading in the past two months, which is less heartening.
<img src="https://1.bp.blogspot.com/-vY75mbXEkoY/VGSM7_Cf1TI/AAAAAAAARNw/uM_Lfx13d3U/s640/UE6.jpg">
Part 3 - The Casualisation of the Workforce
I think we are about done for today, but let's just acknowledge here the likely gradual casualisation of the workforce which must be a key consideration for property investors, particularly in the regional Australia where full-time employment in aggregate appears to be in an entrenched decline.
<img src="https://2.bp.blogspot.com/-nZ3BbpdoK-4/VGSM3y5_ieI/AAAAAAAARM8/wv4vlYYnme0/s640/FT1.jpg">
<img src="https://4.bp.blogspot.com/-tIM-PF6i-j4/VGSM41n1KyI/AAAAAAAARNI/-a1dGzz7Bp4/s640/FT2.jpg">
The Wrap
We've covered a lot of ground in a short space here, but the macro picture is that unemployment rates are trending up worryingly in regional Australia with jobs growth overwhelmingly focused in only the four largest capital cities.
You can visit <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) or Pete's <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blog</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

Employment gap between capital cities and regions becoming a gulf

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For those who don't have time to read Governor Glenn Stevens' full November statement or trawl through the latest figures from the Australian Bureau of Statistics, the Reserve Bank (RBA) has tweeted a visual update on Australia's economy.
<a href="https://www.propertyobserver.com.au/https://twitter.com/RBAInfo/status/529835809172492289" target="_blank"><img src="/images/2014/11/06/tweet-nov-6-one.jpg" alt=""></a>
The infographic also serves as a handy reminder of what the Reserve Bank takes into account when deciding the overnight cash rate, which this month remained at 2.5%.
At 2.3%, inflation continues to stay within the RBA's 2-3% target band, while it keeps an eye on the value of <a href="/expert-insights/investing/how-does-the-aussie-dollar-affect-commercial-property">the Australian dollar</a>.
With the average home now valued at $555,000, the RBA continues to flag increasing <a href="/expert-insights/finance/dwelling-prices-continue-to-climb-governor-glenn-stevens-november-statement">dwelling prices</a>.
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Tweet of the day: RBA's economic snapshot

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The RBA's Dilemma
The general consensus is that our dollar should ideally be trading at around US85 cents and that would provide a balance between encouraging non-resource export businesses, while not adding unwanted inflationary pressure.
The RBA could achieve this simply by lowering the official interest rate. However, that would then fuel even more local borrowing — especially within the residential property market.
Ideally, the RBA would like to raise interest rates. Yet, that will only encourage more overseas funds into the country chasing attractive higher returns. Without a lower dollar exchange rate, that would put even more pressure on our export industries.
However, with the Aussie dollar falling to around US90 cents recently (and slipping slightly below that since), maybe the RBA will have its wish fulfilled.
The Impact of a Permanently Lower Dollar
Immediately, this would discourage overseas funds chasing higher returns and temper the demand by investors for both residential and commercial property.
Furthermore, the banks would begin losing their source of cheap funds and therefore, have less money available to lend.
Both these events would help cool the present frenetic market— where funds are often merely "seeking a home", with scant regard to value fundamentals — be it for residential or commercial property.
Bottom line: Make sure you stick to the basics, when assessing commercial property.
Always set out to look for:
<ul>
<li>Well-designed, well-located properties;</li>
<li>Solid tenants on a good leases; and</li>
<li>The ability to "add value", where possible.</li>
</ul>
Make sure you remain an investor in quality, not merely an accumulator of commercial property.
If you cannot find exactly what you want on realistic terms, perhaps you need to wait for the dust to settle and simply let these over-eager "amateurs" discover the importance of basing decisions upon underlying value.
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