Apartment buyers in New South Wales are set to gain a decade of insurance-backed protection against major building defects, after the NSW Parliament passed the Fair Trading and Building Legislation Amendment Bill 2026.&nbsp;

The Bill establishes decennial defect insurance, known in the market as Latent Defects Insurance (LDI), as an alternative to the existing two-year strata building bond. It cleared the Legislative Council with amendments on Tuesday evening (August 4, 2026), with the Legislative Assembly agreeing to those amendments shortly after.

Under the reform, eligible developers can satisfy their statutory bond obligation by taking out an approved decennial-style policy that gives owners 10 years of cover for major structural defects from completion, claimable directly, without first having to pursue developers or builders through costly legal action.&nbsp;

The change forms the final tranche of amendments arising from the 2021 statutory review of the Strata Schemes Management Act 2015 and related legislation.

Resilience Insurance, which originated the cover in Australia and has delivered it in NSW since 2022, welcomed the passage and credited the NSW Government for delivering it.

“This is protection apartment buyers have needed for a long time, and the credit for delivering it belongs to the NSW Government,”&nbsp;said Corey Nugent, CEO of Resilience Insurance.

“Minister Chanthivong and his team have shown real leadership in replacing an outdated two-year bond with cover that matches the lifespan of the buildings people are buying into. Reform like this is what good, evidence-based regulation looks like.”

Resilience has delivered LDI in NSW since 2022, protecting thousands of apartments, giving the State, and now the country, real-world evidence of how decade-long, no-fault protection works in practice.

The reform also places NSW within a wider national shift.

NSW is the third jurisdiction to put decennial cover into law. The ACT legislated for it in 2024, with the scheme taking effect in late 2025, and Victoria passed its own framework on 17 June. Between them, the three cover the majority of Australia's apartment market.

The reform commences once the legislation is proclaimed, which is expected in the coming weeks. From that point, developers of Class 2 residential apartment buildings can meet their statutory obligation with an approved decennial policy in place of the bond.

Buyers who purchased into projects that took out the cover early are among the first in the country to take keys to apartments carrying decade-long structural protection.

“With the legislation passed, the focus now turns to making it work for buyers,”&nbsp;Nugent said.

“There are already thousands of apartments in NSW covered by this insurance, bought by developers who moved early. The question every buyer should be asking in a display suite is a simple one: does this building come with 10-year defect cover, and who stands behind it?&nbsp;

“We look forward to working with the Government and the Building Commission in coming weeks as the framework moves to implementation, and to sharing what we have learned over the past four years so the protection reaches owners as smoothly and quickly as possible.”

Other states are working through their own reform programs. Western Australia has indicated that decennial cover is within consideration a later stage of its reform sequence, and Queensland has been examining the settings as it looks at the development pipeline ahead of the 2032 Olympics.

Resilience Insurance acknowledges the NSW Government’s continued focus on strengthening consumer protection while supporting housing delivery across the State.

Fast Facts: What the reform means

<ul style="color:#222222; font-family:Arial, Helvetica, sans-serif; font-size:small; font-style:normal; font-variant-ligatures:normal; font-weight:400; text-align:start; white-space:normal; background-color:#ffffff; text-decoration-thickness:initial; text-decoration-style:initial; text-decoration-color:initial">
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Proven at scale:&nbsp;Decennial cover has operated in NSW since 2022, protecting thousand of apartments.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">10 years of cover:&nbsp;Protection for major structural defects runs for a decade from completion, claimable directly and with no legal action required.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">An alternative to the bond:&nbsp;Eligible developers can meet their statutory obligation with an approved decennial-style policy in place of the 2% strata building bond.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Part of a national shift:&nbsp;The ACT has had decennial provisions in force since 2025 and Victoria passed its framework in June. NSW now joins them.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">No-fault, first resort:&nbsp;Owners corporations claim directly from the insurer without first having to establish who is liable for the defect.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Cost-competitive:&nbsp;At approximately 1.8% of build cost, LDI is typically priced below the 2% bond while offering broader, longer protection.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Market position:&nbsp;Resilience originated LDI in Australia and has delivered it in NSW since 2022.</li>
</ul>

Fast Facts: What is Resilience LDI?

<ul style="color:#222222; font-family:Arial, Helvetica, sans-serif; font-size:small; font-style:normal; font-variant-ligatures:normal; font-weight:400; text-align:start; white-space:normal; background-color:#ffffff; text-decoration-thickness:initial; text-decoration-style:initial; text-decoration-color:initial">
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Resilience Latent Defects Insurance (LDI):&nbsp;Covers major structural defects for 10 years from completion.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Consumer-first:&nbsp;Direct claim access, no need for lengthy legal action.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Cost advantage:&nbsp;At approximately 1.8% of build cost, LDI is typically priced below the traditional 2% Strata Bond while offering broader protection.</li>
	<li style="margin-left:15px; font-family:Aptos, Arial, Helvetica, sans-serif; font-size:12pt; color:#000000">Market leader:&nbsp;&nbsp;Resilience Insurance originated LDI in Australia and is the national market leader.</li>
</ul>

Joel Robinson

NSW parliament passes 10-year defect insurance laws for new apartment buyers

Builder-developer <a href="https://www.apartments.com.au/developers/mcnab-developments">McNab</a> has wasted little time reshaping one of South Brisbane's most significant undeveloped apartment sites after acquiring the property earlier this year.&nbsp;

McNab has lodged plans to scrap an existing approval for two 30-storey towers and instead deliver a single 28-storey residential building, preserving part of the site for a future development opportunity.

The proposal, lodged over <a href="https://www.apartments.com.au/new-apartments/64-peel-street-south-brisbane-qld-4101">64 Peel Street and 9 Cordelia Street</a>, is for a residential-led mixed-use development comprising 124 apartments above a landscaped podium, alongside a boundary realignment that preserves part of the land for a future residential project.

<img alt="First look: McNab resets decade-old South Brisbane approval with 124-apartment tower" data-entity-type="file" data-entity-uuid="743bf564-3f8f-45fc-b8d3-bbf18f5b628f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/mcnab%20Peel%20st%20podium.png?VersionId=EhCxGrVn_VFH3qTbKnI4WppGwaMnOn0t" />

Designed by <a href="https://www.apartments.com.au/architects/hayball">Hayball</a>, the development will deliver 119 two-bedroom and five three-bedroom apartments across 23 residential levels. A five-level podium will accommodate 135 car spaces, while the ground floor will include a 66 sqm commercial tenancy, an activated residential lobby with work-from-home spaces, and a publicly accessible landscaped plaza linking Cordelia and Peel streets.&nbsp;

Communal amenities will span Level 6 and the rooftop, including indoor and outdoor recreation spaces, a swimming pool, barbecue facilities, kitchen and dining areas, lawn space, sauna, steam room and yoga facilities.

The application also proposes a boundary realignment to create a standalone 1,290 sqm development lot while retaining an adjacent parcel for future redevelopment, allowing the balance of the site to contribute additional housing over time.

Hayball said the architecture has been shaped by the site's elevated corner position at the intersection of Peel and Cordelia streets and Brisbane's subtropical climate.

The design incorporates generous landscaped setbacks, a masonry podium wrapped with planting, large north-facing balconies, and a slender tower profile intended to maximise natural light, cross ventilation and long-range views. The rooftop has been conceived as a wellness-focused retreat overlooking Brisbane, with amenities positioned to capture views towards Mount Coot-tha and the CBD.

<img alt="First look: McNab resets decade-old South Brisbane approval with 124-apartment tower" data-entity-type="file" data-entity-uuid="c5f99e84-6ad8-4a87-82d1-869685b754d2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/mcnab%20tower%20perspective.png?VersionId=Gw0IuJaSAlk.tvGBxInhZOcQAdIB..2b" />

The planning submission positions the proposal as a response to both changing market conditions and Brisbane's Kurilpa Sustainable Growth Precinct planning reforms.

McNab acquired the site after the previous approval was granted, with the existing scheme no longer reflecting current residential market demands, economic conditions, construction challenges, construction efficiencies or the quality of development outcome now being pursued, the planning report noted.

McNab continues to expand its residential development pipeline across Brisbane and the Gold Coast. The developer recently launched The Tannery in West End, securing more than 60 per cent of apartments before the project's public release. It is also delivering Elements Budds Beach in Surfers Paradise and Lucia Highgate Hill, an eight-apartment boutique development overlooking the Brisbane River.

McNab resets decade-old South Brisbane approval with 124-apartment tower

A steeply sloping Bellevue Hill site is set to accommodate a new mid-rise apartment development, with plans lodged for 20 homes that respond to the site's dramatic topography.

The proposal for the consolidated land at <a href="https://www.apartments.com.au/new-apartments/138a-140-bellevue-road-bellevue-hill-nsw-2023">138A-140 Bellevue Road</a> has been designed by Sydney architecture practice Common Office, which has used the site’s substantial fall to distribute the building’s scale and unlock 20 apartments without presenting the full height to the street.&nbsp;

“The unique design strategy leverages the site’s substantial topographical fall to facilitate increased density, presenting a seven-storey profile to Bellevue Road while rising to 10 storeys at the rear,” Common Office said in its architectural design report.

The apartment mix spans one, two, three- and four-bedroom residences. Four two-bedroom apartments are designated as affordable housing, while the plans also include two adaptable dwellings. The mix is majority three-beds, with the typical three-bed apartment offering around 144 sqm internally, with balconies of around 15 sqm.

The affordable housing component represents 15 per cent of the residential floor area and allows the project to access additional height and floor space under the NSW Government’s in-fill affordable housing provisions. The site also falls within the inner area of the Low and Mid-Rise Housing Policy because it is within 400 metres walking distance of Double Bay Town Centre.

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="b1230d0f-3bfa-4a11-abaf-0928c66ef345" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20da.png?VersionId=dZeMK3P.OutGjN8ycjsxm8uNsj_QFWQv" />

Common Office has arranged the building around a masonry podium and a lighter upper volume, drawing on two recurring elements of Bellevue Hill’s established architecture: sandstone bases and the vertical proportions of local Inter-war Art Deco apartment buildings.

“The proposal is governed by a holistic design language that reconciles the solid horizontal masonry of the neighbourhood’s podiums with the elegant verticality of its Art Deco heritage,” the architect said.

“The building maintains a consistent rhythmic logic utilising deep recesses and a sophisticated material transition to break down the 10-storey scale into a series of articulated, human-scale volumes.”

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="0147f503-1af1-4d51-97fb-c2f1cba63a9d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20bldg.png?VersionId=GoW7q3NlK67OpnePXhk7zvklrlKb72Qc" />

Large-format sandstone tiles will define the lower levels, establishing a robust base that negotiates the change in elevation from Bellevue Road. Above, red-tinted precast concrete frames, recessed balconies, anodised aluminium screens and expanded metal details will create a more vertically expressed façade. Integrated planter beds will introduce greenery across balcony edges and recessed sections of the building.

The elongated northern façade has been divided into three recessed vertical masses to reduce its perceived length. Triangular window elements and metal privacy screens reference the geometry of nearby Art Deco buildings while controlling overlooking toward surrounding homes. The southern elevation will incorporate further privacy screening, landscaped edges and deep balconies to maintain light and ventilation.

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="e8679cf1-18bc-4447-8a0f-0052b94ab83c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20da%20rooftop.png?VersionId=5SQqQqRFf76rvE2p1TbxJSweMN70AIbc" />

Private and communal landscaping is distributed throughout the development. A landscaped garden apartment is positioned within the lower portion of the site, while a communal terrace on Level 5 will include a central timber deck, barbecue facilities, resident planting plots and areas for outdoor dining and informal gatherings.

Common Office described the terrace as an elevated sanctuary designed to capture district views and sunlight. Its planting strategy incorporates endemic species associated with the Eastern Suburbs Banksia Scrub, extending the landscape vertically through the building and providing habitat for local flora and fauna.

A second communal outdoor area is proposed at roof level, with built-in seating, paved gathering areas and perimeter planting.

Bellevue Hill is enjoying renewed momentum in the new apartment market, with several boutique developments recently launched and currently under construction. Positive Investment Enterprise is delivering the 16-apartment Kew Palm House on Birriga Road, while Chanine Developments is also under construction at Florian, a 36-apartment project on Banksia Road.

&nbsp;

Bellevue Hill is enjoying renewed momentum in the new apartment market, with several boutique developments recently launched and currently under construction.

First Look: Apartment development pitched for Bellevue Hill, Double Bay fringe

South Brisbane's apartment pipeline continues to build momentum, with <a href="https://www.apartments.com.au/developers/trk-property-group">TRK Property Group</a> lodging plans for a 161-apartment tower on Montague Road as developers accelerate investment across the Kurilpa Sustainable Growth Precinct.

The proposal for 176–186 Montague Road would replace an existing office building with a 20-storey residential tower designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, adding to a growing pipeline of high-density projects reshaping one of Brisbane's fastest-evolving inner-city precincts.

The project has been conceived as a "living building", featuring a flowing tower form, extensive vertical landscaping, and generous communal spaces that respond to the evolving Kurilpa Sustainable Growth Precinct.

TRK Property Group Development Director Matt Kan said the project reflected the confidence developers have in South Brisbane's long-term future.

"South Brisbane is entering an incredibly exciting period, and we see Montague Road sitting right at the heart of that evolution," Kan said.

"With the former Visy site directly opposite us and significant investment planned throughout the broader Kurilpa precinct, there is a real sense of momentum around this part of the city and what it will become over the coming years.

"For TRK, this is an opportunity to be part of that next chapter and deliver a project that responds to where the precinct is heading, while contributing to the continued evolution of Brisbane's river edge."

<img alt="First look: TRK Property joins South Brisbane apartment surge with Montague Road tower plans" data-entity-type="file" data-entity-uuid="590fe1ad-f892-4446-a679-80e33a16d029" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/TRK%20tower%20facade.png?VersionId=uOJStrcKpyHFcPE1w6_9SMAFzVMCcZll" />

The scheme includes a mix of one, two, three and four-bedroom apartments, incorporating multi-purpose rooms in selected residences to provide additional flexibility for home offices or expanded living areas. The proposed mix comprises 15 one-bedroom, 13 one-bedroom plus MPR, 73 two-bedroom, 26 two-bedroom plus MPR, 30 three-bedroom, and four four-bedroom apartments.

Rather than adopting a conventional rectilinear tower, COX Architecture has developed a sculpted form inspired by the movement of the Brisbane River.

"The proposal has been designed by COX Architecture as a 'living building' that responds to the site's riverine setting, floodplain history and evolving urban context within the Kurilpa Sustainable Growth Precinct," the planning report states.

"The architectural form draws from the fluid nature of the Brisbane River, with a curved and undulating tower form that creates a varied architectural edge and avoids a conventional rectilinear tower expression."

The podium has also been designed as an architectural feature rather than a conventional parking structure, with cascading planting, screening and natural-toned materials softening its appearance. Resident parking is elevated above ground level to address the site's flood constraints, while habitable apartments sit above flood planning levels. Upper-level communal facilities are designed to accommodate shelter-in-place arrangements during major flood events.

<img alt="First look: TRK Property joins South Brisbane apartment surge with Montague Road tower plans" data-entity-type="file" data-entity-uuid="01fa15d0-90df-46c7-9555-7941fc45373c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/TRK%20podium.png?VersionId=mHyua.w1pHGBt9qEdWzrlsv.leztUCwO" />

Communal amenity is a major focus of the proposal. Around 1,815 sqm of shared resident space is proposed across the ground floor, level 19 and the rooftop, including co-working areas, indoor and outdoor recreation spaces, wellness facilities, dining and gathering areas, lawn spaces, a rooftop pool and spa, and extensive landscaping. At street level, a landscaped forecourt and approximately 345 sqm of publicly accessible open space along Montague Road are intended to improve the pedestrian experience while activating the building's frontage.

The development will provide 163 car spaces, including 152 resident bays and 11 visitor spaces, together with 144 bicycle spaces incorporating resident storage, visitor parking, bicycle maintenance facilities and e-mobility charging infrastructure.

The site sits within one of Brisbane's fastest-changing inner-city precincts, less than two kilometres from the CBD and within easy reach of South Bank, West End, the Queensland Cultural Centre and extensive public transport connections. The Kurilpa Sustainable Growth Precinct planning framework is encouraging higher-density residential development to help meet Brisbane's housing supply targets while supporting walkable, transit-oriented neighbourhoods.

TRK Property joins South Brisbane apartment surge with Montague Road tower plans

Article summary

<ul data-end="785" data-start="311">
	<li data-end="459" data-section-id="5hbcyr" data-start="311">Pikos Group has released the five-penthouse collection at Skye Kangaroo Point, headlined by a two-storey sky home spanning more than 1,000 sqm.</li>
	<li data-end="561" data-section-id="1p7lq8n" data-start="460">Early buyer interest suggests the residences could set a new Queensland apartment price record.</li>
	<li data-end="667" data-section-id="1y70z0l" data-start="562">The collection includes four move-in ready penthouses and the highly customised Skye One residence.</li>
	<li data-end="785" data-section-id="yvm0y1" data-start="668">The release caps one of Bri​sbane's most ambitious luxury apartment developments overlooking the Brisbane River.</li>
</ul>

<hr data-end="790" data-start="787" />
Pikos Group has released the five-penthouse collection at its <a href="https://www.apartments.com.au/buildings/skye-residences-by-pikos-kangaroo-point-8-river-terrace-kangaroo-point-qld-4169">Skye by Pikos</a> development in Kangaroo Point, with early buyer interest indicating the flagship residences could eclipse every apartment sale previously recorded in Queensland.

The collection crowns the luxury riverfront development with five residences, including four completed penthouses and Skye One, a two-level sky home spanning more than 1,000 sqm that will be tailored to its eventual owner.

[smartcode_project:default project_id=90059 project_image_fid=374075]

Wanting to offer a fully customisable home, Pikos is offering Skye One as a blank canvas, allowing the buyer to work alongside the developer's design team to customise the home's layout, finishes and internal spaces.

The residence will feature a 247 sqm private rooftop terrace with its own swimming pool, sauna, steam room, outdoor kitchen and multiple entertaining areas overlooking the Brisbane River and CBD skyline.

The remaining four penthouses have been completed and are ready for immediate occupation, each offering four bedrooms, expansive open-plan living areas, soaring ceilings and private lift access.

[smartcode_project:default project_id=90059 project_image_fid=374059]

One of the defining features throughout the project is its use of Roman Classic Travertine, with more than 20,000 sqm of the natural stone imported from Italy after being personally selected by Pikos Group Founder and Executive Director Pedro Pikos, interior designer Julie Williamson and third-generation stone specialist Mario Caucci.

Pikos said the penthouse collection represented the culmination of the company's long-term vision for Skye.

"True legacy isn't measured by what we build today, but by what endures tomorrow," Pikos said.

"Our ambition is to create places that become more valuable with time, enrich the lives of generations, and stand as timeless landmarks long after we've stepped away."

[smartcode_project:default project_id=90059 project_image_fid=374060]

Williamson said the interiors were inspired by the natural character of Kangaroo Point and the Brisbane River rather than international design trends.

"Materiality tells the story of a place," Williamson said.

"We looked to the movement of the Brisbane River, the texture of the cliff face and the warmth of the surrounding landscape to create interiors that feel understated, enduring and unmistakably Brisbane."

Positioned above the Kangaroo Point cliffs, Skye places residents within walking distance of Howard Smith Wharves, South Bank and James Street while offering uninterrupted river and city views.

[smartcode_project_cta:default project_id=90059]

Brisbane's next apartment price record? Pikos unveils Skye's exclusive penthouse collection

Eliza Owen

<html><body>
Low mortgage rates, a swift economic recovery, which has spurred consumer sentiment, and low listing volumes have catapulted national housing values to new record highs. At the end of March, the CoreLogic national home value index increased a further 2.8%, placing values 5.6% above the previous market peak in October 2017. The combined value of Australian dwellings hit $7.9 trillion dollars over the month, according to CoreLogic. This cements residential property as an extremely large and important asset class.

Comparing current capital city values with previous peaks adds some perspective to the current upswing – particularly in Perth and Darwin, where values remain substantially below their record highs from 2014. It also highlights the very different dynamics across capital cities – such as in the ACT, where dwelling values have hit a new record high every month for 19 months.

The following charts plot the change in capital city dwelling values from previous peaks, and the number of months it has taken for values to surpass the previous peak. The subsequent downturn and recovery trends vary, and are unpacked below.  
 

 

<div class="infogram-embed" data-id="584c3a02-1d58-4092-befa-6afcff697778" data-title="Change in value from previous peak" data-type="interactive"> </div>
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<h2>Sydney</h2>

Sydney dwelling values took 44 months to reach a new record high value. While values have lifted a relatively high 8.1% since the COVID-induced decline (which bottomed out in September 2020), the total value of the dwelling market is actually only 2.6% higher than the previous peak, which was in July of 2017. 

In 2017, a property price downturn was likely catalysed by changes to lending conditions. Cash rate reductions, along with a relaxation in borrower serviceability assessment rules, spurred the start of a recovery trend through 2019. COVID-19 interrupted this upswing, but a recovery in economic conditions, and increased consumer confidence, has pushed values above the previous peak.  
 

<h2>Melbourne</h2>

Melbourne dwelling values reached a peak in March 2020, after staging a recovery from the earlier 11.1% drop in values between late 2017 and mid-2019. However, the Melbourne housing market was the most impacted of any capital city by COVID-19, due to extended social distancing restrictions through 2020, and a particularly high exposure to overseas migration as a source of housing demand.  Closed borders created a negative shock, with a more significant and direct impact on inner city rental demand. Since bottoming out in October 2020, as stage 4 lockdowns began to ease, Melbourne dwelling values have climbed 0.7% above the pre-COVID high. 

As the value of Melbourne housing nudges over its previous peak, it is worth noting the market has not recovered evenly. House values remain -1.8% below the previous November 2017 high due to a larger correction through the recent downturns. Within different price segments, there is also variation. As of March, the ‘high’ end of the market (measured as the top 25% of values in Melbourne) was still -4.0% below its record high, which was in October 2017. Meanwhile, low and middle tier values have increased beyond their pre-COVID highs by 4.9% and 2.2% respectively, reflecting a smaller decline turn recent downturns, as well as strong demand from first home buyers who typically target properties around the middle-to-lower end of the market.  
 

<h2>Brisbane</h2>

Brisbane dwelling values are sitting 6.5% above the previous peak, which was in April 2020. Market values saw a peak-to-trough decline of -0.9% through COVID-19. The decline lasted just 4 months, before Brisbane dwelling values recovered to a new record high by October 2020.

As with Melbourne, the recovery in the Brisbane market has been varied. While house values climbed 7.6% above the previous peak through March, which was reached in May of 2020, unit values remain -9.4% below the record high value, which was in March 2010.  Brisbane unit values are currently at similar levels as October 2007, reflecting a very affordable entry point to the market.

The weaker conditions across the unit sector are likely due to previously high levels of unit completions keeping values subdued, particularly in the later part of the 2010s. ABS dwelling completion data saw unit completions across Queensland rise 50.4% in the 5 years to September 2020, compared with a 17.4% uplift in house completions. However, strong internal migration flows to south-east Queensland, as well as other tailwinds for housing demand more broadly, has supported 5 consecutive months of growth in Brisbane unit values since November 2020. 
 

<h2>Adelaide</h2>

The Adelaide dwelling market was one of the least affected through COVID-19 in terms of values. Following a -0.2% dip from the previous high in May 2020, values had surpassed the previous peak by September last year. The rate of change in dwelling values jumped to a monthly increase of 1.5% over March 2021, which is the highest monthly growth rate seen across the city since December 2007. Both house and unit values across Adelaide are currently sitting at a record high. Although housing values are reaching new highs each month, relative to the larger capital cities, Adelaide housing values remain low. 
 

<h2>Perth</h2>

The CoreLogic home value index for Perth shows values -15.9% below the record high, which was in June 2014. The peak-to-trough decline, which was induced by the rapid withdrawal of mining investment, employment opportunity and migration, lasted around 67 months. As the market started to recover in mid-2019, COVID-19 created an additional, negative shock, which pushed values down a further -2.2% between April and July of 2020. However, the Perth dwelling market has seen consecutive increases in value for the past 8 months. For the past 5 months, value increases have exceeded 1% a month, which is a strong growth rate and signals the start of what may be a sustained and rapid recovery. This coincides with rising interstate migration levels to Western Australia, and projected increases in already rising mining investment. Hobart

Hobart has seen the second-highest uplift in housing values from the previous peak, at 12.3%. The previous peak in dwelling values was at February 2020, before a brief, COVID-induced decline in total dwelling values of just -0.3%. Hobart dwelling values have seen extraordinarily strong growth, with the annualised capital growth return sitting at 9.4% for a 5 year period (+56.3% over the past five years). ABS building activity data suggests house commencements were 32.8% above the decade average through the September 2020 quarter in Tasmania. Combined with affordability constraints, additional stock should work to ease growth rates across the region in the coming months.  
 

<h2>Darwin</h2>

Darwin dwelling values are the furthest from the previous peak of the capital city markets. A record high was reached across Darwin dwellings in May 2014. Similar to Perth, a decline in the resources related infrastructure sector saw a substantial decline in housing values, with the peak-to-trough fall extending to February 2020, at -32.7%. Since February 2020 however, Darwin dwelling values have increased 16.5% through to March 2021 which is the fastest growth rate amongst the capitals. This leaves values -21.6% below the record high, and shows the Darwin dwelling market firmly in a recovery trend.   
 

<h2>ACT</h2>

ACT dwelling values at the end of March were 16.9% higher than the previous peak, which was in April 2019. Following a -1.5% peak-to-trough decline, ACT dwelling values had recovered by September 2019, and have hit a new record high each month since. Rapid dwelling value growth across the capital has largely been driven by house values, which are 19.7% above the previous high in April 2019, compared with a 7.2% uplift in unit values since the previous high. Part of the strength in ACT dwelling value returns have been due to relatively high incomes across the Territory, along with resilient labour market performance through COVID-19. However, the fact that dwelling values have surged almost 17% in less than two years, highlights an increasing barrier to ownership for future first home buyer cohorts. 

 

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See more: Properties ideal for investors

[smartcode_project:default project_id=3494]

[smartcode_project:default project_id=90553]

[smartcode_project:default project_id=6201]

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The combined value of Australian dwellings hit $7.9 trillion dollars over the month, according to CoreLogic, cementing residential property as an extremely important asset class

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How do dwelling values compare with previous highs? Eliza Owen

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EXPERT OBSERVER

In the year to January, CoreLogic estimates that there were 459,308 properties transacted across Australia. Most of these sales were houses, rather than units.

It is not unusual for house sales to make up the majority of transactions, with houses making up an average 70.2% of annual sales volumes over the past decade. However, the share of houses as a portion of sales increased to 74.2% in the year to January 2021, up from 73.2% a year ago and 66.7% five years ago. Another way of thinking about it, is that for every 1 unit sold over the year, there were 2.9 house sales.

The table below shows the portion of sales over the year that were houses, compared with the decade average, for various regions. Most capital city and rest of state regions saw the portion of house sales elevated in the year to January, compared with the decade average. The general uplift in the share of sales that were houses through the year to January may be attributed to a few of factors.

<img alt="" height="959" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/house_portions_sales_.jpg" width="1600">

The introduction of HomeBuilder may have skewed demand toward houses. Since the announcement of HomeBuilder in June, new home sales have increased significantly. According to the HIA, new home sales in the December 2020 quarter were almost 100% higher than in December 2019.

However, the design of the scheme largely lent itself to new houses, as opposed to units. An example of this was the tight timelines for eligibility, where the commencement of a new property initially had to take place within three months of the contract date.

This meant the take up of the scheme was largely utilised for detached houses, rather than off the plan unit sales, with the latter requiring a number of purchaser commitments before the project commences.

This trend was reaffirmed in ABS dwelling approval data, where approvals for house builds were up 13.9% in the year to December 2020, compared with an -8.6% decline in units approvals. CoreLogic sales volumes only count new properties as sold upon settlement, so the portion of new home sales over 2020 may continue to trend even higher once new house builds are completed.

Eliza Owen is CoreLogic’s Head of Research Australia
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It is not unusual for house sales to make up the majority of transactions, with houses making up an average 70.2% of annual sales volumes over the past decade

The house always wins: why house sales vastly outstripped unit sales over the year

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Coronavirus-impacted “pockets” of Sydney’s north-west and inner-south-west have seen falling median values create opportunities for first home buyers, according to CoreLogic head of research, Eliza Owen.

Although Australia’s residential property market has shown resilience, despite the shock of the pandemic, recent value falls may have created an opportunity for first home buyers who want to take advantage of the first home loan deposit scheme (FHLDS).

On February 3, minister for housing Michael Sukkar announced the reissue of around 1,800 FHLDS places, creating opportunity in suburbs where unit medians have slipped below the Sydney threshold of $700,000.

As of January 2021, there was an average of 107 suburbs observed in the capital cities with a median value at or below the qualifying threshold for the FHLDS, assuming the application is for an established property.

In Sydney, where international border closures have created a particular demand shock, median unit values have declined up to -$88,146 between March 2020 and January 2021.

<a href="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/corelogic_0.png"><img alt="" height="860" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/corelogic_0.png" width="1446"></a>

<a href="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/corelogic_0.png" target="_blank">Click here</a> to enlarge image.

As evident in CoreLogic’s data, Rouse Hill had a pre-pandemic median value at $726,900, which has fallen to just $638,755. While other suburbs like Arncliffe and Hurstville have seen changes in median value at -$31,185 and -$65,019, respectively.  

“As more of the housing market is caught in a broad-based upswing, first home buyers could face more challenges getting into the market in the year ahead”, Owen said. 
 

<h2>Sydney units listed at or below the qualifying threshold for the FHLDS 
</h2>

1. Beyond, Hurstville 
Address: 93 Forest Road, Hurstville NSW 2220 
One-bedroom apartments (with study) from $685,000

[smartcode_project:default project_id=6798]

Developed by Fridcorp, Beyond’s one-bedroom apartments are listed below the $700,000 qualifying threshold for the first home loan deposit scheme.  

The Woods Bagot and DKO Architecture-designed project features sculptural architecture, multi-sensory living, oversized balconies and a 4,500sqm retail precinct anchored by Woolworths. 
 

2. Bloom Arncliffe 
Address: 213 Princes Highway, Arncliffe NSW 2205 
One-bedroom apartments from $595,000

[smartcode_project:default project_id=6201]

The recently completed residential precinct, Bloom Arncliffe, offers 318 apartments across seven buildings, starting from $595,000 – well below the deposit scheme’s price cap.

Delivered by Wingate and designed by Stephen Bowers Architects, the development includes 37 commercial spaces, a youth centre, gym and support facilities.
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Recent value falls may have created an opportunity for first home buyers who want to take advantage of the first home loan deposit scheme

The Sydney suburbs now qualifying for First Home Loan Deposit Scheme after price falls

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EXPERT OBSERVER

Housing market data has shown a fairly strong post-COVID recovery trend following a short, sharp slowdown in activity through the middle of 2020. Australian housing values rose 2.3% in the final quarter of the year, trending higher from a recent low in September 2020, to be just 0.1% below the previous record high value in October 2017.

Data from CoreLogic reveals which housing markets have seen the highest value increases relative to their value at March 2020.

March 2020 is a good yardstick for measuring the impact of COVID on housing markets. That is because it encompasses the ‘start’ of COVID in Australia, when the country reached the milestone of 100 cases diagnosed, and subsequently stage 2 restrictions rolled out nationally.

At the capital city level, Melbourne, Sydney, Perth, Brisbane and Hobart saw some level of value falls close to the onset of COVID. By December however, Perth, Brisbane and Hobart housing values had surpassed their March 2020 highs. Home values across Darwin, the ACT and Adelaide have continually increased since March, with Darwin values up 8.3% since the onset of the pandemic.

<img alt="" height="716" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/corelogic_dwelling_value_changes.jpg" width="1200">

Of the 116 LGA markets analysed, 95 saw some level of decline in values since the onset of COVID. Of those 95 markets, 37 have recovered to value levels above March.

Some of the strongest value increases since March are located in areas that did see a COVID-induced decline including Kwinana in Perth( up8.7%), Burnside in Adelaide( up 7.0%),and Scenic Rim in Brisbane (up 6.5%). Most of the markets with a strong recovery had seen relatively mild downturns to begin with.

A good example of this is Sydney’s Central Coast, where values declined just -0.1% over April. The Central Coast has been a resilient and popular market through much of 2020 due to the relatively affordable and low density stock across the region, as well as the coastal appeal. Since March, dwelling values on the central coast have increased 6.5% through to December.

Of the 10 council regions where values have been most impacted since the onset of the pandemic, eight were located across Melbourne, and two were in Sydney. It is unsurprising to see Melbourne dwelling markets have a long way to go before recovering value. Housing demand in this historically global city has been hampered by extended international border restrictions, as well as domestic social distancing policies through the September quarter.

Highlighting the depth of decline, or value increases, at a LGA level has important implications for real estate, banking and finance. The data shows inner-Melbourne council areas may be at greater risk of negative equity for recently purchased homes. For first home buyers or first time investors, the data also demonstrates where values are relatively discounted due to COVID-19. However, it is worth noting that in 2021, more markets are likely to move into recovery mode. This is expected as long as economic conditions continue to recover, and mortgage rates remain at record lows.

Eliza Owen is CoreLogic's head of research.
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Data from CoreLogic reveals which housing markets have seen the highest value increases relative to their value at March 2020.

Which housing markets are back above pre-COVID values?

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EXPERT OBSERVATION
Both the new project space and projects moving into construction saw a strong surge in the month of April.
There were 1,827 new projects captured by CoreLogic in April, up 7% from the previous month.
The combined value of these new projects were $14.8 billion, up 14% from the previous month.
Unlike the trend towards civil engineering that has played out in the previous 12 months, the increased value of development applications was largely due to strong increases in mining and industrial real estate.
The highest value application captured over April was the $3 billion Northern Gas Pipeline expansion in Western Australia.
<a href="https://www.propertyobserver.com.au/images/2018/5/22/1%20.jpg" target="_blank">Click here </a>to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/22/1%20.jpg" alt="">
 
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Moving into construction - Australia
There was a strong rebound in the number of projects moving into construction, which has been relatively subdued over the irst quarter of 2017. There were 1,090 projects moving into construction over April, representing an 83% increase on the previous month. There was a 64% increase in the value of projects moving into construction over the month, as $7.2 billion worth of work commenced in April.
<a href="https://www.propertyobserver.com.au/images/2018/5/22/3.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/22/3.jpg" alt="">
 
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NSW
Nationally, April saw a pivot in the nature of construction across Australia, with a higher emphasis on industrial and mining applications. Meanwhile, New South Wales, in particular Sydney, continues to see a buzz of residential and accommodation activity. Major site activity includes the following:
• A site at Sarah Street in Mascot, close to Sydney Airport and with approval for hotel, has been purchased by a private hotel developer and operator. The site approval was for a hotel up to 9 stories, and 169 rooms. It currently supports two adjoining oice/warehouse buildings.
• Chinese-backed Adelaide-based developer Greaton has snapped up a site in Sydney’s Haymarket with the likelihood of constructing an apartment tower. The site is close to Greaton’s ‘The Ribbon’ hotel development at Darling Harbour, which is due for completion in 2020.
• Desane Group Holdings has purchased a 50-apartment, masterplan-approved site in Leichhardt. The original masterplan was approved together with adjacent Chinese developer Changfa’s 139-unit Epicure Collection project.
The Premier has given the inal sign-of for the relocation of the Powerhouse Museum from Sydney to Parramatta through the state cabinet. The site was identiied on the banks of the Parramatta River at the former David Jones Car Park site.
Newcastle’s iconic The Store site in Hunter Street will be redeveloped by Doma Group. The $200 million proposal comprises construction of a 13,000 sqm oice tower and two residential towers. The oice tower will be anchored by Government Property (9,000 sqm) for multiple NSW agencies. The oice tower will be built together with a bus interchange and car park. The residential towers will have 1,000 sqm podium retail space.
ACT
The Barr government has postponed a 2016 election pledge for a new community-driven master plan for the Manuka Oval precinct until at least the start of next year. Concerns have grown about a potential major development next to the oval. In the lead up to the 2016 election, the Barr Government claimed it would establish a panel made up of community representatives to help guide development in the area, following a failed bid by GWS and Grocon. However, the government has since shelved the plans, to be revisited once its planned multimillion-dollar media centre is built, which is not expected to be complete until January 2019.
A development application has been submitted for the irst stage Art Group’s SOHO project which will replace public housing in Northbourne Avenue, Dickson. The $92 million irst stage will comprise 409 apartments across six buildings of 7-9 storeys. The site was previously home to the Dickson Towers and Karuah public housing blocks. The overall development will comprise around 1,000 apartments in ive stages.
VIC
The Victorian Government handed down the state budget on the 1st of May. Education was the centre of the budget, with $1.25 billion committed to school upgrades over the coming inancial year, on top of $2 billion proposed in the year just gone. Transport spending in the budget includes over $3 billion on road upgrades, most of which is allocated to the metropolitan.
$31.6 million was allocated in the budget for the redevelopment of Melbourne’s Australian Centre for Moving Image. The project is valued at $40 million overall, and will see the ACMI’s permanent exhibition upgraded as well as an expansion of the learning centre.
$461 million has been allocated through the budget for the redevelopment of Ballarat Base Hospital. The rebuild and refurbishment will create a new emergency department, modernized acute mental health facility, an intensive care unit, a women’s and children hub, an expanded critical care ‘hot loor’ and at least an extra 100 in-patient beds. The facility will see at least 18,000 more emergency patients and an extra 14,500 in-patients each year following the upgrade.
Also in the Central Coast area, Paul Lederer has withdrawn the development application for the multi-million Gosford Alive project. The Conybeare Morrison-designed project, comprised of 1,414 apartments and townhouses, was pulled due to planning delays. The delays were partly attributed to the merger of the former Gosford and Wyong councils into a consolidated Central Coast Council, and a State Government planning review for the Gosford CBD. However, the developer hopes to re-start the project at a later date.
Tenders have been invited for the $180 million West End lifestyle and retail precinct in West Melbourne. The proposal outlines 377 residential apartments over 4 buildings, each ranging from 7 to 14 levels. It will also include a 7 storey hotel, with 92 serviced apartments and ground loor retail spaces. Each building has had its own interior designer working with Chief Architectural irm CHT Architects. The buildings and designers for each are:
• The Adderley by Carr Design • Mail House by Mim Design, • The Foundry by Six Degrees • The Spencer by Hecker Guthrie
Pound Road West, in Dandenong South, will see major upgrades to reduce congestion and travel time for commuters. This is a part of the Suburban Roads Upgrade package that aims to improve 22 key suburban arterials. 2 km of Pound Road West and Remington Drive will be duplicated, creating two extra lanes between Abbotts Road and South Gippsland Highway. A new bridge will also be constructed over the Cranbourne Rail Line. The project will include traic lights and safety upgrades.
QLD
Development approval has been granted for the Midtown Centre, a multi-million proposal in Brisbane’s CBD. The project involves redevelopment of two former government buildings into a single 26 storey oice tower with podium levels to accommodate cafes, restaurants and bars. Ashe Morgan and DMann Corporation will transform the two buildings with expansive campus-style loorplates with opportunities for large format tenants to occupy. The centre is expected to be completed by mid-2020.
Developer R&amp;F has unveiled plans to develop an amended proposal for a multi-million dollar mixed use precinct in Brisbane’s West End, which has previous masterplan approval for seven buildings and a total of 981 apartments. The project, to be staged over six years, will transform the former industrial riverside sites into an integrated urban precinct with publicly accessible open spaces, leading down to a riverside walkway.
PDS Group has submitted a development application for a 715 unit, 13 stage development in Mango Hill, designed by Ellivo Architects. The project will comprise 13, six-storey towers with extensive open space. The development will include exercise areas, a dog friendly zone and surrounding spaces for passive recreation, formal park area and seating areas with playground and barbecue facilities.
Gold Coast City Council has granted approval for EG Fund Management’s 55 and 71 storey, twin tower Wanderlust development in Surfers Paradise. The Elenburg Fraser designed towers will contain 500 residential units, 270 serviced apartments and 400 hotel rooms. The development will be located in the heart of the nightclub and entertainment district, billed as an ‘entertainment hub for south-east Asia’. Facilities will include a 4,733 sqm pool club with two main pools, 2,727 sqm of restaurants, and recreation areas such as rock climbing facilities and an outdoor cinema.
Approval has been granted by Brisbane City Council for Morris Property Group’s A grade, 28 storey commercial tower in Spring Hill. The commercial option was submitted following a previous proposal for a 30 storey, 197-apartment tower, owing to a perceived shift in Brisbane's property market favouring commercial over residential. Designed by Nra-Co-Lab, the design incorporates LED vertical strip lighting over entire length of building facade.
NT
Acting Minister for Tourism and Culture, Eva Lawler, has now opened an Expression of Interest process for a nationally representative Reference Group. The group will help guide the delivery of the National Aboriginal Art Gallery in Alice Springs. The role of the Reference Group will be to promote and inform the project.
Local company Sitzler has been awarded the contract for the new $30 million, 24-hour Palmerston Police Station and Watch House with construction to commence next month and completion expected by mid-2019.
The Northern Territory Government has committed to improving housing in remote communities with the 10 year, $1.1 billion Remote Housing Program. This investment has a focus on local decision making, engagement and planning with communities to identify their housing needs. The project would ideally help to create sustainable, local employment and training, help develop Aboriginal businesses and encourage economic development. The investment is funded through four programs: Homebuild NT; Room to Breathe; Repairs and Maintenance; and Government Employee Housing.
SA
Work is expected to commence on the Gawler Electriication project from Adelaide to Salisbury in the third quarter of 2018. Lendlease was appointed as contractor for design and construct in January this year, and design works have commenced.
The federal government’s Naval Shipbuilding College is now set to go ahead, following the appointment of a joint venture between KBR and Huntington Ingalls Industries (HII). The joint venture, known as the Naval Shipbuilding Institute (NSI) beat a bid from Babcock. Based in Osborne, NSI will establish and manage the college, partnering with ten educational organisations including TAFE SA, with Lendlease as managing contractor. It will operate under a "hub-and-spoke" model, with the college referring potential trainees to various universities or training colleges throughout Australia.
Community consultation is underway for redevelopment of Adelaide’s old Le Cornu site at 88 O’Connell Street, which has been vacant for decades. The City of Adelaide has oicially purchased the land and invited the public onto the site earlier this month for a community block party following inal removal of the fence.
Lyon Group's Riverland Solar Storage project has gained development approval. The 330 MW solar farm will comprise solar tracking arrays of photo-voltaic panels, mounted on steel frames. 400 MW of battery storage (ie 100 MW x 4 hours) is also included in the development, comprising lithium-ion polymer batteries, housed in a secure and climate controlled building.
TAS
Biomar Australia has submitted a development application for a $56 million state-of-the-art aqua feed production facility at Wesley Vale in Tasmania’s north. The former particle board manufacturing site will be converted into an aquaculture feed mill facility to include administration/ plant oices/lab &amp; amenities, bio ilter, dosing silos, mixing/ intake building, processing building, packing area and workshop/store. The processing facility will have a capacity of 110,000 tonnes per annum of inished product.
Meanwhile in Westbury, Wiley &amp; Co has started construction on Ridley Corporation’s $50 million aqua feed mill facility. The mill will produce around 50,000 tonnes of feed per year and will utilise the input of 250 local contractors during construction and when complete will source many local agricultural products.
Early works have started on Goldwind Australia’s 144MW Cattle Hill Wind Farm, with Hazell Bros engaged to undertake the site access construction. The wind farm will comprise approximately 48 turbines and is expected to be completed by the end of 2019.
WA
Documentation is in progress with Aerodrome Management Services for the expansion of Jandakot Airport. The project will see the construction of taxi-ways, and the extension of runways through the clearing of 41 hectares of vegetation.
Selected tenders have been invited for Parallel Riverfront in Rivervale. Laudis Developments are proposing the $40 million project, with construction of a 13-storey residential development within The Springs Special Development Area. The proposal outlines 123 dwellings and four levels of basement car parking. Designed by Hillam Architects, the building will see features such as dramatic zig-zag cantilevers around each balcony, a podium base with pool deck, a tower section and a café on the ground loor. Tenders close mid may for the appointment of a builder.
A structure plan has been completed for the expansion of Armadale City Centre with approvals to follow late 2018 or early 2019. Works proposed include:
• Extending the Armadale to Byford passenger rail line as a part of the State Government’s Metronet program;
• Grade-separation of the railway line to facilitate Church Avenue;
• To move the Armadale Train Station underground; and,
• To create a City Centre plaza linking Jull Street Mall to the West of Rail Precinct.
A second stage of works to follow will include the Civic Precinct redevelopment, including high quality oice space to accommodate Government services and private business. The development will also include creation of a green and high quality public realm. Developments on the City Centre are expected to commence by 2020.
Construction has commenced on Rottnest Island for Pinky’s Eco Retreat &amp; Beach Club. Builders appointed, in joint venture, are Discovery Holiday Parks and Baileys Marine Fuels Australia. The $20 million project will consist of 83 eco-tents with ensuite pods. The tents will be connected via elevated walkways to Pinky’s Beach Club complex. The complex will be complete with a swimming pool, an alfresco bar and dining areas. Construction is expected to be completed by the end of 2018.
Mining
Construction has commenced on Iluka Resources’ $250 million Cataby mineral sand mine located in Cataby, Western Australia. The project will consist of 13 open pits over approximately 25 km, and will produce approximately 460 to 780 kilo-tonnes of heavy mineral concentrat per annum when completed. Production is expected to commence in the second quarter of 2019.
GR Engineering has been selected as the preferred contractor to design and construct a $90 million processing plant for Capricorn Metal’s Karlawinda gold project, to be located 65 km south-east of Newman. The scope of the contract will involve engineering, procurement and construction of a 3 million tonne-per-annum processing plant, and associated processing infrastructure at the proposed mine site.
Eliza Owen is Commerical Property Research Analyst at ‎CoreLogic.
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Nature of construction pivots across Australia: CoreLogic's Eliza Owen

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In Victoria, the cost of constructing a house accelerated by 5% in 2017 according to the CoreLogic CHIP index December quarter results. According to the measure, this is now higher than the national pace of 4% across Australia, and the highest growth rate of all of the states for the year.
Several factors have contributed to this rapid increase in construction costs in the state. Namely, Victoria’s strong housing growth in the last few years which has delivered increased demand for housing construction materials and labour as developers seek to capitalise on high capital growth rates.
Along with increases in building input values and labour, CoreLogic development data indicates that 11.1% of residential subdivision commencements across Victoria were located in the state’s regional areas. Furthermore, 48.6% of residential subdivisions commenced on the fringes of the Melbourne metropolitan area and included Hume, Whittlesea and Wyndham. As a result, higher freight costs are likely to be built into the delivery of materials to regional sites.
Note: The CoreLogic CHIP index uses a standard house model over time to isolate changes in the cost of building materials and labour that go into constructing a house. CoreLogic tracks a separate index for Australia, New South Wales, Victoria, Queensland, South Australia and Western Australia. The National CHIP index rose 4% over 2017 and has diverged significantly from growth in CPI since around 2003. Since this time, inflation has averaged 0.62%, while quarterly nominal growth in the building price index has averaged 1.1%. Furthermore, as subdued wages have maintained a low inflationary environment in Australia, the gap between building costs and general living costs have increasingly diverged. Eliza Owen said, “This suggests that inflation accounts less and less for the growth in the CHIP index.”
CoreLogic’s construction and development data has been powered by the acquisition of Cordell in 2015. The CHIP index began in 1990. The Queensland CHIP index has grown the highest of the states since 1990, at 190%. Particular divergence occurred between Queensland and the rest of Australia from the time of the 2011 Queensland floods, when rebuilding accelerated building costs in the state, as well as inflation generally. Find the full CHIP index report for Q4 here.
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<div class="field_text">
Eliza Owen is Commerical Property Research Analyst with ‎CoreLogic and can be contacted <a href="https://www.corelogic.com.au/" target="_blank">here</a>.
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j.ballantyne1990-6AQqhLzZaK

House construction cost in Victoria rise five percent in 2017: Eliza Owen

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Melbourne has narrowly pipped Sydney in 10 year growth for house prices, according to the latest Residex data.
But Sydney comes out on top over the decade for apartment price growth.
In the year to November 2016, Australian dwelling values saw an increase of 4.49%.
"This is above the 3.77% annual growth average since 2009, when Australia felt the effects of the 2008 GFC," said Eliza Owen, the market analyst for Onthehouse.com.au.
However she noted the growth was below the November 2015 figure of 6.63%.
<a href="https://www.propertyobserver.com.au/images/2016/12/23/Table%201.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2016/12/23/Table%201.jpg" alt="">
The Residex data indicated the highest growth for the November quarter was in Hobart houses, where the median repeat sale value increased 2.39% in the last 3 months.
Hobart houses also had the strongest growth of the major aggregate markets in 2016, with a 6.01% increase in the year to November.
"While these figures are low relative to the double digit growth seen in 2014-15 (for example Sydney houses increased 15.71% in the year to November 2015), major Australian housing markets are likely to return to norms of single digit dwelling growth as softening economic conditions catch up with dwelling demand," Owen advised.
ACT houses increased in value over the quarter, and displayed a healthy return of 3.32% over the year.
Major Queensland and South Australia markets remained flat over the quarter, though some markets outside of the capital cities pushed up regional growth figures.
Hobart dwelling values were expected to increase over 2016 as those priced out of the Sydney and Melbourne markets looked elsewhere for affordable capital growth strategies.
The latest Residex State Market Report highlighted it was important to keep in mind that Tasmania still has geographical challenges with freight costs and labour force limitations.
"However, interstate migration to the area may increase due to the aforementioned growth factors, which would also bring new skills and services the area.
"Furthermore, as Hobart becomes more expensive due to higher interstate investment, and assuming that demand remains strong in 2017 (which it may not, given recent GDP indicators), spill-over of growth may occur in other parts of the island, such as the second largest city in Tasmania after Hobart - Launceston.
"Launceston has some solid growth fundamentals, including tertiary education institutions, shopping outlets and beautiful historical buildings which promote tourism and dwelling demand for sought-after aesthetics."
Already, 2016 has seen a 4.65% increase in Launceston house values and a 1.68% rise in unit values.
Graph 1 shows the similarity in growth cycles across the two cities, though there was a slight growth divergence between the cities toward the end of 2013.
<a href="https://www.propertyobserver.com.au/images/2016/12/23/Graph%201.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2016/12/23/Graph%201.jpg" alt="">
The report noted Melbourne houses and units were also strong performers in the November quarter, with quarterly growth of 2.18% and 1.57% respectively.
Despite persistently high prices, Sydney houses and units were not far behind, increasing 2.18% and 1.30%.
Sydney and Melbourne continued to be popular with investors as well as overseas and interstate migrants over 2016.
According to ABS lending data from October this year, approximately 49% of new loans (excluding those for re-financing) were comprised of investors.
Part of the resurgence in investor activity may be explained by expansionary monetary policy.
In September, Sydney dwellings experienced an uplift in annual capital growth - following the August rate cut decision - while Melbourne growth continued to ease.
However, as the rate of capital gain across Melbourne has typically shown a slight lag on Sydney, Melbourne could also see growth rates pushed up in Q1 2017.
These movements are displayed in Graph 2.
<a href="https://www.propertyobserver.com.au/images/2016/12/23/Graph%202.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2016/12/23/Graph%202.jpg" alt="">
 
Given the fragility of the Australian economy in labour and growth figures, a steady cash rate target may be expected over the first quarter of 2017, Eliza Owen tipped.
"Despite low interest rates potentially slowing the downswing in Sydney and Melbourne, a decline in government expenditure and increased mortgage rates for investors from major banks may see a steady reduction in the rate of capital gain in these markets during 2017," she added.
 
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Eliza Owen

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