<a href="https://www.apartments.com.au/developments/broadbeach-qld-4218">Broadbeach</a> offers plenty of reasons to live vertically, but moving from a substantial family home into an apartment can expose the compromises of high-density living. Privacy, room for guests and usable living space tend to matter more when an apartment is intended as a permanent home rather than an occasional coastal base.

A typical residential floor at <a href="https://www.apartments.com.au/new-apartments/the-eveleigh-broadbeach-7-9-surf-parade-broadbeach-qld-4218">The Eveleigh</a>, on Surf Parade,&nbsp;contains just four apartments. The 94-residence development by <a href="https://www.apartments.com.au/developers/hirsch-faigen">Hirsch &amp; Faigen</a> is predominantly made up of expansive three-bedroom homes, with a limited collection of half-floor penthouses above.

Across the apartment floors, <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> has used the relatively limited number of residences to give each home greater access to natural light and outlook. Living spaces extend towards full-height glazing, while a series of bay windows frame selected views across the Pacific Ocean, city and hinterland rather than treating the building edge as a continuous wall of glass.

&nbsp;

[smartcode_project:default project_id=149670 project_image_fid=360965]

“The apartment floors deliver a collection of homes that embrace controlled outlook via a series of bay windows deliberately framing moments of view,” Rothelowman Director Kim Lowman said.

From outside, those projecting forms contribute to the tower’s faceted profile. Strong horizontal and vertical elements establish its proportions, while the changing position of the sun alters the light, shadow and reflection across the façade throughout the day.

The same attention moves inside the apartments, where the material palette combines warm timber, natural stone, metallic detailing and softer curved forms. Kitchens sit within the main living zone, with stone island benches, integrated joinery and European appliances, before the living areas extend towards the glazing and the outlook.

&nbsp;

[smartcode_project:default project_id=149670 project_image_fid=360981]

Three genuine bedrooms provide room to accommodate family and guests, while two secure car spaces and storage address some of the practical considerations that can become more noticeable when moving from a larger home. Feedback from the display suite has centred on the warmth and restraint of the interiors, with buyers commenting that the residences feel like homes rather than conventional coastal apartments.

A limited collection of half-floor penthouses occupies the upper levels, increasing the scale of the living spaces and adding private balconies and elevated finishes. From this position, the outlook extends between the ocean and hinterland.

Outside the private residences, The Eveleigh separates its shared spaces between the podium and rooftop. The podium is centred on wellness, with subtropical landscaping surrounding a swimming pool and pool terrace, yoga garden, private gymnasium, sauna and hot and cold plunge facilities. Landscaped retreats and pavilions provide additional places to sit away from the main recreation areas.

&nbsp;

[smartcode_project:default project_id=149670 project_image_fid=360966]

Higher in the building, a rooftop pavilion and private dining suite sit alongside resident lounge, barbecue and outdoor dining areas, opening towards panoramic views across the ocean, city and hinterland.

“Buyers are no longer just looking for an apartment, but a lifestyle where they can relax, reset, and enjoy a balanced way of living,” Hirsch &amp; Faigen Director of Sales Matt George said.

Interest to date has come from established owner-occupiers and interstate lifestyle purchasers, including buyers planning a future move to the Gold Coast. Many are coming from larger homes and want to reduce ongoing maintenance without giving up space for family and guests, privacy, two car spaces or the ability to entertain at home.

&nbsp;

[smartcode_project:default project_id=149670 project_image_fid=360969]

Much of that daily life can also take place beyond the building without requiring a drive. Kurrawa Beach and Pratten Park are an easy walk from Surf Parade, while Pacific Fair, Oracle Boulevard, The Oasis, restaurants, cafés, entertainment and public transport are also within walking distance.

The Eveleigh is Hirsch &amp; Faigen's fourth Gold Coast development since entering the market in 2021, following The Hemingway at Palm Beach, The Emerson at Kirra and Yves at Mermaid Beach. Each of the preceding projects sold out before completion.

“Broadbeach had been on our radar throughout our time operating on the Gold Coast,” the developer said. “Following our projects in Palm Beach, Kirra and Mermaid Beach, Broadbeach represented the natural next step for the business.”

The Surf Parade site brought together proximity to the beach, protected coastal outlooks and walkability to dining, shopping and recreation. Hirsch &amp; Faigen also identified the street as an emerging premium residential address, with enough separation from Broadbeach's busier destinations to retain a quieter environment at home.

The Eveleigh is now under construction by Maxcon, with completion forecast for mid-2028. Three-bedroom residences are currently available from $2.87 million.

[smartcode_project_cta:default project_id=149670]

Joel Robinson

The Eveleigh brings house-like apartments to Broadbeach

A long-stalled Campbelltown development site is back in play, with new plans for 139 apartments set to supersede a mixed-use scheme approved almost a decade ago but never built.

The new proposal for 28 Cordeaux Street would deliver 116 market and 23 affordable apartments in a part 14-storey building, bringing a substantial new project into a Campbelltown market where new apartment supply remains limited.

Plans have been filed over the 3,092 sqm corner site at Moore-Oxley Street, around 600 metres from Campbelltown Railway Station and the city-centre retail core.

The site already carries a mixed-use residential approval dating to 2016. Doroch Architects has now been engaged on a larger replacement scheme, which is progressing as a State Significant Development Application following a Housing Delivery Authority determination in August 2025.

The apartment mix comprises 39 one-bedroom, 72 two-bedroom and 28 three-bedroom residences. Two-bedroom apartments make up just over half of the project, while three-bedroom homes account for 20 per cent.

<img alt="First look: New 139-apartment plans revive long-stalled Campbelltown city centre site" data-entity-type="file" data-entity-uuid="136dd5b9-3791-4da6-9e31-76f533f5b4de" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Campbelltown%20da2.png?VersionId=LgOSy9nwf5u.MGswBBwaGGxuX8QpHSl_" />

Of the 139 apartments, 23 will be delivered as affordable housing under the in-fill affordable housing provisions of the Housing SEPP. The affordable component represents 15 per cent of the residential gross floor area and will be managed by a registered Community Housing Provider.

Doroch has sought to break the scale of the building into two distinct elements, with a masonry podium of around four storeys establishing the street edge before the residential tower steps back above.

The corner position has shaped that approach. Cordeaux Street faces toward the commercial and civic centre, while Moore-Oxley Street leads into the lower-scale residential neighbourhood to the south, and the design verification report describes the site as "bridging the commercial core to the north and established residential areas to the south."

The podium will be expressed predominantly in face brick, while the upper levels shift to brushed and grooved concrete cladding with darker metal detailing. Recessed sections, deep balcony edges and landscaping break down the upper form, with an approximately 11.8-metre setback to the northern boundary addressing the adjoining St Peters Anglican School.

<img alt="First look: New 139-apartment plans revive long-stalled Campbelltown city centre site" data-entity-type="file" data-entity-uuid="c8b3d2d3-c561-4bfc-a5d9-a68c0c10dac1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Campbelltown%20da1.png?VersionId=AeAEyJU02Gk2k5noUj2StziCvdQ7fW4B" />

Campbelltown has been starved of new residential developments in the last decade.

The only other notable development set to come to market this year is ALAND's Queen Square, a mixed-use precinct on over two hectares that will comprise apartments above a vibrant ground-level retail and hospitality dining precinct.

First look: New 139-apartment plans revive long-stalled Campbelltown city centre site

First Look: Sherlock Construction pitches apartments for low-rise Deception Bay

Queensland builder-developer MAYD has revealed the first look at its major North Kirra beachfront development, lodging amended plans that reduce the number of apartments and increase the proportion of larger residences.

The project is planned across a substantial 4,742 sqm amalgamated site spanning seven lots at <a href="https://www.apartments.com.au/new-apartments/2-6-pacific-parade-bilinga-qld-4225">2-6 Pacific Parade</a> and 27-33 Golden Four Drive in Bilin​ga, directly opposite Nor​th Kirra Beach.

<a href="https://www.apartments.com.au/developers/mayd-group">MAYD</a> secured the site for $32.5 million in 2025, in what was one of the Gold Coast's largest property transactions of the year.

The development will be delivered across two stages, with the first stage carrying an estimated gross realisation value of around $360 million.

The latest amendments seek to reduce the overall apartment count and shift the project further toward the owner-occupier market, with larger residences designed for buyers wanting considerably more space than traditionally offered in a beachfront apartment.

The residential mix will include townhomes, oversized two-bedroom apartments, substantial three-bedroom residences and four-bedroom homes.

MAYD has appointed Cera Stribley to lead the architecture and interiors, with the Melbourne-based design practice drawing on the beachfront setting through a series of ocean-facing terraces and heavily landscaped balconies.

Strong horizontal forms and curved balconies will define the exterior, with subtropical landscaping integrated throughout the building to soften the built form and increase the connection between the residences and the beachfront.

The project will also include an extensive collection of resident wellness and lifestyle facilities, continuing the broader shift across the Gold Coast's luxury apartment market toward larger homes supported by resort-style amenity.

<img alt="MAYD" data-entity-type="file" data-entity-uuid="d1bcbb05-e659-4b47-8bd4-1e595315e2ad" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%202.05.03%E2%80%AFPM.png?VersionId=jj0XEud1X1DuLt7_KyElhjMdZGOXmLHP" />

MAYD Founder Todd Mould said North Kirra was increasingly appealing to buyers attracted to the more established, lower-density character of the southern Gold Coast.

"North Kirra presents one of the most compelling luxury residential opportunities currently emerging in Australia, combining absolute beachfront with the character and authenticity that buyers are increasingly seeking, and the same sense of tight-knit community that defined Burleigh and Currumbin perhaps 10 or 15 years ago," Mould said.

"With Gold Coast Airport on its doorstep, it also offers a level of accessibility that broadens its appeal across almost every market demographic."

The project comes as the southern Gold Coast continues to attract an increasing share of high-end apartment development and buyer activity.

Kirra in particular has emerged as one of the region's more tightly held beachfront markets, with its relatively low-density character, established surf and hospitality scene and proximity to Gold Coast Airport differentiating it from the higher-density markets further north.

Mould said those characteristics had informed the approach MAYD and Cera Stribley had taken to the project.

"We've worked closely with Cera Stribley to create a vision that is deeply connected to its surroundings," he said.

"Inspired by the coastline itself, the architecture has been shaped around space, privacy and resort-style living, creating a collection of homes that reflects the next generation of luxury on the southern Gold Coast."

MOTIV Managing Director Carly Cottam, who has been appointed to market the project, said buyer attention had continued to move south along the Gold Coast.

"Purchasers who may once have defaulted to Broadbeach, Main Beach or Surfers Paradise are increasingly recognising the value of a genuine beachfront location that offers lower density, strong amenity and a more established sense of community," Cottam said.

"Kirra has a powerful combination of growing demand and genuine scarcity. Beachfront supply is inherently constrained, the area remains relatively low density, and buyers are increasingly placing a premium on locations that feel established, uncrowded and authentic rather than heavily developed."

Cottam said the proximity to Gold Coast Airport was also proving increasingly important for interstate and second-home buyers.

"Being minutes from Gold Coast Airport makes it particularly compelling for interstate buyers, frequent travellers and second-home purchasers who can access an authentic coastal lifestyle almost immediately after stepping off a flight."

The acquisition takes MAYD's active development portfolio to more than $500 million, with the North Kirra project representing one of its largest undertakings to date.

MAYD is targeting an early 2027 launch.

First look at MAYD's North Kirra mixed-use precinct

<main data-perf-region="main">
Castle Hill, the longtime hub of the Hills District, has been one of the major beneficiaries of Sydney's Metro expansion, with improved connectivity helping drive continued population growth, development and buyer demand across the Hills District.

But despite that growth, the suburb has seen relatively few major new apartment projects brought to market over the past 18 months.

Hills District developer Reve Group is looking to fill that gap with <a href="https://www.apartments.com.au/new-apartments/nova-r-ve-castle-hill-2-garthowen-crescent-castle-hill-nsw-2154">Nova Rêve</a>, a major new mixed-use precinct on the corner of Garthowen Crescent and Old Castle Hill Road, a short walk from Castle Hill Metro Station and Castle Towers.

[smartcode_project:default project_id=152737 project_image_fid=377679]

The project will comprise three residential towers alongside a hotel, restaurants, cafes and a skybar, more than 1,600 sqm of ground-floor retail and almost an acre of landscaped gardens.

It represents the largest project undertaken by Reve Group, the development arm of the Kassis family, which has been building across the Hills District for more than 30 years through Kassis Homes.

[smartcode_project:default project_id=152737 project_image_fid=377675]

Nova Rêve also represents a significant step up from the family's first apartment development, Grand Rêve, which was delivered nearby on Garthowen Crescent.

Grand Rêve introduced larger, house-like apartment layouts and premium inclusions including Wolf and Sub-Zero appliances to the Castle Hill market.

Nova Rêve takes that approach to a precinct scale, combining the residential component with hospitality, retail and substantial public and resident landscaping.

[smartcode_project:default project_id=152737 project_image_fid=377685]

Reve Group Managing Director Sam Kassis said the project reflected the family's three decades of building in the Hills, which has evolved from trophy homes on quarter-acre blocks to larger-scale apartment development.

"Grand Rêve was our first apartment project here and it showed us what this pocket of Castle Hill could be. Nova Rêve is the refinement of that idea: not just apartments, but a place the whole suburb can use," Kassis said.

A key part of that approach is the hotel, which has been designed to operate as an amenity for the wider Castle Hill community rather than solely hotel guests.

It will include restaurants, cafes, skybars and all-day dining, alongside conference and event facilities catering to business functions, community groups and private events.

At ground level, more than 1,600 sqm of shops and cafes will open onto the surrounding streets and landscaped areas.

Almost an acre of gardens designed by Land and Form Studios will run through the precinct, incorporating pathways, seating, barbecue areas and children's play spaces.

[smartcode_project:default project_id=152737 project_image_fid=377680]

Reve Group's Romio Georges said creating an active ground plane had been central to the planning of Nova Rêve.

"There are gardens with pathways, barbecues, seating and play areas, shops and cafes opening onto the street, and a hotel with restaurants and a skybar that anyone in Castle Hill can walk into," Georges said.

The project's elevated position on one of Sydney's highest ridgelines will also provide apartments with outlooks toward the Sydney skyline, surrounding parkland and the Blue Mountains.

More than 80 per cent of the apartments will occupy corner positions, with Turner responsible for both the architecture and interiors.

&nbsp;

[smartcode_project_cta:default project_id=152737]

<h3 data-end="3697" data-section-id="q3n5ak" data-start="3672">&nbsp;</h3>
</main>

Nova Rêve arrives as Reve Group bets on Castle Hill's next growth phase

Housing Costs

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Treasury secretary John Fraser says Australia's the high cost of housing is a "worry".
Pressed at the Senate economics committee hearing on Wednesday on the high cost of housing , particularly for younger Australians, Mr Fraser said the gains in prices were fuelling a circle of increased wealth leading to people becoming more comfortable taking on more debt.
"It's a worry. As an old person I talk with people my age.
"And the bank of mum of dad is becoming more and more prevalent," he said.
"It has impacts on superannuation, and why people are saving in their older years to fund their children's housing needs."
Mr Fraser questioned whether households understand enough about the consequences of debt if their income was hit or jobs.
"I don't take any joy that we have this housing situation. Particularly for younger people."
Mr Fraser added that the biggest issue was a lack of supply and land release, as well as needed infrastructure investment on sewerage, roads, and transport.
In June 2015 he said there is was "no doubt in his mind there is a Sydney housing price bubble."
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j.ballantyne1990-6AQqhLzZaK

Treasury secretary John Fraser finds worry in high housing costs

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GUEST OBSERVER
Whenever you buy a property for the purpose of taking advantage of capital growth, it's going to be a process that comes with an assortment of expenses.
You'll want to be prepared for the various costs you're going to have to cover and know how to get the most out of your investment.
First of all are the costs directly related to the purchase of the property. That means paying stamp duty on top of the property value, which depends on both the price of the home and on which state you're in. Note that you can reduce stamp duty on house and land packages - depending on if the land falls within your particular state's guidelines, you could end up paying it on the land and not the house. You may also have to pay for the services of a solicitor or conveyor, who will oversee the settlement process and ensure it goes smoothly.
If you require investment finance, which you almost certainly will, you'll also need to pay for the various costs involved in a loan application and have a deposit of at least 10 per cent of the value, whether through savings or home equity. Depending on how much of the value you're borrowing, you may also need to pay for lenders mortgage insurance.
<div class="columns small-10 large-5 vgrid-small-offset-bottom-1 vgrid-small-offset-top-0 large-push-1 right">You yourself will have to take out cover for the property, too. You might choose to take out landlords insurance if you're planning to rent the property out, which can protect your property from any damage, whether wilful or accidental. If you're constructing a new home, you'll need building insurance, too. </div>
Finally, don't forget the cost of building inspections and, for existing properties, pest inspections, which will give you peace of mind but can run into hundreds of dollars each. You'll also need to factor in any moving costs for furniture, plus council rates. 
With so many expenses, to take care of, it's a wise idea to do all you can to maximise your profit. This can involve a number of tax-reducing strategies:
<ul>
<li>Claim as many tax deductions as you can on the costs involved in running the property, from advertising for tenants to driving over to inspect the home.</li>
<li>Have a professional quantity surveyor carry out a depreciation schedule, so you can claim the depreciation of your investment property and its contents come tax time.</li>
<li>Consider structural factors like whose name the property is under. If your partner is not earning money, for example, they can't reduce their tax - so it's worth putting it mostly in your name.</li>
<li>Complete a tax variation form so you can receive tax off-sets with every pay cheque</li>
</ul>
Remember to speak to professional property experts like DPN to make sure you've got your bases covered. In some cases, we can access occupation specific benefits which may avoid the need for mortgage insurance.
SAM KHALIL is founder and director of <a href="https://www.dpn.com.au/" target="_blank">Direct Property Network</a>.
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jchancellor-FAypfDUnLy

Get the most out of your investment: DPN's Sam Khalil

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GUEST OBSERVER
The Australian Bureau of Statistics (ABS) has released demographic data for the September 2015 quarter recently.
The data showed a continuation of the trend towards a slower rate of population growth at a national level. At the end of the quarter, it was estimated that there were 23,860,133 residents of Australia, an increase of just 0.3 percent over the quarter and 1.3 percent over the past year.
<a href="/images/2016/03/30/Chart-1-4-580x206.jpg" target="_blank">Click to enlarge </a>
<img src="/images/2016/03/30/Chart-1-4-580x206.jpg" alt="">
The 12 months to September 2015 saw an additional 313,237 residents of Australia which is 7.3 percent lower than over the same quarter in 2014.  In fact, the annual increase in population for the country is the lowest it has been since the June 2011 quarter.
<a href="/images/2016/03/30/Chart-2-3-580x205.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/30/Chart-2-3-580x205.jpg" alt="">
At a national level, there are two components of population growth, natural increase (births minus deaths) and net overseas migration.  Over the past year, there was a natural increase of 145,585 persons and net overseas migration of 167,652 persons.  As the above chart shows, the two measures are converging due to a sharp decline in net overseas migration.  Annual net overseas migration is now at its lowest level since September 2006, is -7.0 percent lower over the year and -46.9 percent lower than its peak in December 2008.
<a href="/images/2016/03/30/Chart-3-4-580x206.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/30/Chart-3-4-580x206.jpg" alt="">
Looking at population growth across the states and territories, the rate of growth has been strongest over the past year in Victoria at 1.7 percent and lowest in the Northern Territory at 0.3 percent.
The annual rate of population growth is above 1 percent in all states and territories except the Northern Territory, Tasmania and South Australia. In terms of raw number population increase over the year, New South Wales and Victoria are way out in front of all other areas with increases of 102,243 persons and 102,311 persons respectively. 
Queensland (55,232) and Western Australia (32,542) were the only other two regions to record annual population growth of more than 15,000 persons.  Across the remaining states and territories the annual population increase was recorded at: 12,396 persons in South Australia, 5,491 persons in the Australian Capital Territory, 2,159 persons in Tasmania and 826 persons.
The four most populous states accounted for 93.3 percent of total population growth over the year with New South Wales and Victoria accounting for 65.3 percent.
The mining states and territories in particular have felt the full brunt of the slowdown in population. At its peak in December 2008, Queensland recorded a population increase of 115,561 with annual growth now less than half this figure.  In Western Australia, annual population increases peaked at 88,156 persons in September 2012 and in Northern Territory the annual population increase peaked at 7,073 persons in March 2013.
It is also worthwhile at the state and territory level to have a look at the interstate migration trends.  As well as net overseas migration there is net interstate migration across the states and territories which affects population growth.
<a href="/images/2016/03/30/Chart-4-4-580x206.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/30/Chart-4-4-580x206.jpg" alt="">
Firstly if we look at annual net overseas migration, New South Wales (66,540) and Victoria (55,447) account for an overwhelming majority of the population increase.  In fact, 72.8 percent of all net overseas migration was into these two states which is the highest proportion since December 1984.
Elsewhere the number of net overseas migrants has been recorded at: 16,725 persons in Queensland, 10,255 persons in South Australia, 14,249 persons in Western Australia, 1,119 persons in Tasmania, 975 persons in the Northern Territory and 2,333 persons in the Australian Capital Territory. Annual net overseas migration into Queensland is at its lowest level since December 2000 and South Australian net overseas migration is at its lowest level since December 2011.
<a href="/images/2016/04/5/Chart-5-2-580x205.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/5/Chart-5-2-580x205.jpg" alt="">
Turning to net interstate migration, movement between the states and territories is slowly starting to rise again; the above chart shows the annual movements between states and territories.  The chart shows that since 2003 there has been a fairly consistent decline in the proportion of the population moving interstate.  I have to admit this is a little surprising given that it coincides with the end of Sydney’s and Melbourne’s housing boom and is pretty much the beginning of the mining boom.  Although, the sudden slowing of interstate migration coincides with the substantial ramping-up of net overseas migration and with net overseas migration we are now seeing a pick-up in interstate migration.
<a href="/images/2016/04/5/Chart-6-1-580x210.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/5/Chart-6-1-580x210.jpg" alt="">
Over the past 12 months, Victoria and Queensland are the only two states or territories to have recorded a positive net inflow of population form other states.  Net interstate migration to Victoria was a record high 11,187 persons over the past year compared to 6,890 persons to Queensland. 
Net interstate migration into Queensland seems to be turning a corner after hitting a trough of 5,598 persons over the year to December 2014. 
Across the remaining states and territories there have been losses from net interstate migration of: -7,451 persons in New South Wales, -4,125 persons in South Australia, -2,721 persons in Western Australia, -180 persons in Tasmania, -3,019 persons in the Northern Territory and -581 persons in the Australian Capital Territory.  The net loss of persons from interstate migration is at its highest level since March 2014 in New South Wales, its highest since June 2009 in South Australia and its greatest since March 2003 in Western Australia. In Tasmania the loss of residents to interstate migration is at its lowest level since June 2011 and it is at its lowest level since December 2013 in the Australian Capital Territory.
The more up-to-date overseas arrivals and departures data indicates that net overseas migration is likely to trend even lower next quarter which will dampen the national rate of population growth further.  At the same time, the data shows that Victoria (which would seem to be a proxy for Melbourne) is the migration epicentre of the country attracting large numbers of both overseas and interstate migrants. 
Meanwhile the outflow of residents leaving New South Wales is picking up pace while interstate migration to Queensland is starting to build.
Perhaps we are seeing the impact of high housing costs in Sydney and fairly strong jobs growth in Victoria and Queensland starting to attract Sydneysiders to other parts of the Eastern Seaboard.  Weaker economic conditions in Western Australia are seeing residents leave with Victoria and Queensland the benefactors.  Meanwhile, Tasmania’s outflow of residents is slowing on the back of the booming tourism sector and a recent improvement in economic conditions.
Finally with population growth slowing we are seeing a better relationship between housing supply and housing demand.  After recently hitting record high levels, it is reasonable to expect that the slowing population growth will see property developers respond by seeking fewer approvals for new residential properties.
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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ckusher-ujnxiKuFQs

Population growth continues to slow due to ongoing decline in net overseas migration: Cameron Kusher

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GUEST OBSERVER
Income inequality is undoubtedly one of the most controversial economic issues of modern societies, with many countries facing incredible differences between those who make more and those who make less. But what is happening across Australian regions?
Although researchers such as Peter Whiteford and Nicholas Biddle have investigated the issue in Australia, there are no official records on income inequality measured consistently across regions of the country – even at national level income inequality measures are rarely available in international comparisons (see for instance, World Bank and OECD data.
This lack of evidence is a clear reflection that income inequality is less conflicted in Australia compared to other countries, as Australia is characterised as having very low rates of poverty and economic segregation, compared to other societies, and a culture of “a fair go”.
However, regardless of the apparent “economic equality” in our society, income inequality is still an important issue to track and analyse. In order to fill the gap on income inequality measures across the country, we have developed a method to approximate Gini coefficients for different Australian regions, including states and local councils.
What we found
At state level, based on our estimates in 2011, the most unequal jurisdiction was NSW (0.42), followed by the Northern Territory (0.40), while the least unequal was Tasmania (0.38), meaning that the gap between the rich and the poor was bigger in NSW than in Tasmania.
However, income distribution varies over time, with the ACT showing the biggest change in income inequality, where the Gini coefficient increased from 0.35 in 2001 to 0.39 in 2011.
<a href="/images/2015/09/28/image-20150925-17697-1y399g4.png" target="_blank">Click to enlarge</a>
 <img src="/images/2015/09/28/image-20150925-17697-1y399g4.png" alt="">
At sub-state level, within metropolitan areas, we found that the local councils of Burwood, Strathfield, Kogarah and Sydney (all from the Sydney Metropolitan area) had the highest income inequality in the country in 2011, while the local councils of Melton (in Melbourne), Light (in Brisbane), Mallala (in Perth) and Palmerstone (in Darwin) had the lowest income inequality.
In terms of trends in cities, interestingly Perth captured both extremes: while the suburbs of Cottesloe and Subiaco is where income inequality has increased the most, the local council of Perth had the lowest increase in inequality across Australian cities.
<h2>Using the Gini co-efficient</h2>
The Gini is one of the most used indicators for income inequality across the world for its simplicity: a Gini of 0 means that the total income of the region is distributed evenly across all persons of the region, while a Gini of 1 means all income captured by just one person. According to the OECD, in 2012 Australia had a Gini of 0.326, while the US had a Gini of 0.390.
Thus, in order to provide more insights about the effects of the mining boom of the recent decade across Australian regions, we have constructed Gini coefficients for family income reported in the national censuses of 2001 and 2011, across all regions of the country.
Although our measures are not perfect and are subject to some assumptions, including the assumption that 30% of families in the richest income bracket capture 70% of the income in that segment, they do provide a good sign of how income inequality varies across the country and how it has been changing over time.
All Gini coefficients across regions are available here.
<h2>Policy implications</h2>
These income inequality data raise several questions. Are the reasons for income inequality different around the country? Does income inequality affect other factors such as health, as evidenced in the US?
What levels of income inequality are acceptable across Australian regions? And what actions are required to address this? These are the questions policy makers should now tackle.
 
David A. Fleming is researcher, CSIRO and can be contacted <a href="https://theconversation.com/profiles/david-a-fleming-110682" target="_blank">here</a>.
Tom Measham is senior research scientist, CSIRO and can be contacted <a href="https://theconversation.com/rich-and-poor-which-areas-of-australia-are-most-unequal-42409?utm_medium=email&amp;utm_campaign=Latest+from+The+Conversation+for+September+28+2015+-+3499&amp;utm_content=Latest+from+The+Conversation+for+September+28+2015+-+3499+CID_dbd79abf7855b7f7ffb01ac423d4b749&amp;utm_source=campaign_monitor&amp;utm_term=Rich%20and%20poor%20which%20areas%20of%20Australia%20are%20most%20unequal" target="_blank">here</a>.
Both are authors for The Conversation.
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Rich and poor: which areas of Australia are most unequal?

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Last week the Reserve Bank’s (RBA) Head of Financial Stability Luci Ellis gave an interesting speech entitled ‘Property Markets and Financial Stability: What We Know So Far.' 
In my opinion one of the more interesting pieces of analysis in the speech was the analysis of inner city housing prices relative to those in the outer ring.  The chart below was the analysis showed in the speech.
<a href="/images/2015/09/16/Chart-12.jpg" target="_blank">Click to enlarge</a>
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Regarding this chart, the speech noted the following key points:
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<li>Land is two things: it is both space and place. Many have observed that Australia has plenty of the former. But I think the lesson of past booms as well as recent times is that it’s place – location – that really matters. If we think back to boom–bust episodes of the past, whether in land for new development, railways or prime office buildings, in every case you can see people trying to get their hands on the best locations, to take advantage of whatever future economic outcomes they expect. </li>
<li>Location explains far more of the variation in individual property prices than block size (Hansen 2006). Yes, some people like a bigger garden, for privacy or to enjoy in other ways. But being in the ‘right’ kind of neighbourhood with the best amenities, close to commercial centres and other services, is more important to most people, if their willingness to pay for it is any guide.</li>
<li>The physical reality is that the supply of good locations is more or less fixed in the short term. So any sizeable boost to demand cannot be fully absorbed by more supply. The newly built property is simply not the same as the existing stock, because it’s somewhere else. We should therefore not be surprised that strong demand for property does not just change the general price level for that asset, but also its distribution. We can see this in the increase in prices of inner-ring properties relative to those further out, especially in Sydney</li>
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I agree with this analysis; housing closer to the city centres and closer to major working nodes is more desirable. Also in many capital cities, as we see houses in inner city areas knocked down to make way for higher density development, the underlying land component becomes intrinsically more valuable. Subsequently, the availability of houses in many inner city areas are actually reducing. After I read this section of the speech I decided to go digging in the data to see just how much difference there was in terms of inner city house values and growth in these values over the past year relative to values and growth across the rest of the capital cities.  For the purposes of this analysis we have determined that the inner-city region is within 10 kilometres of each capital city.
<a href="/images/2015/09/16/Chart-22.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/09/16/Chart-22.jpg" alt="">
The above chart shows that in terms of median house values, the proportion of homes above the city-wide median is substantially higher in inner city areas. Even in a city such as Sydney where housing is less affordable, once you shift more than 10 kilometres from the city centre, only 29.3% of suburbs have a median house value above the city-wide median. In all cities, more than half of all inner city suburbs have a median higher than the city-wide median and all non-inner city areas have less than 50% of suburbs with a median greater than the city-wide median.
While the fact that the cost of housing is higher as you move closer to the city-centre the magnitude of the difference is significant. The other factor to consider is the growth in values in the inner-city versus the rest of the city.  This is where the results change somewhat.
<a href="/images/2015/09/16/Chart-31.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/09/16/Chart-31.jpg" alt="">
Sydney is probably the most interesting result here. Although it has seen the sharpest rises in home values over the past year, suburbs outside of the 10 kilometre inner ring have generally experienced stronger value growth. Of course it is important to recall that Sydney values have been rising for more than three years, and growth, while continuing, has shifted from inner city areas to more affordable outer housing markets. 
Melbourne, Brisbane, Adelaide and Canberra were the only capital cities in which more than half of the inner city suburbs have recorded value growth in excess of that recorded across the cities. Notably each of Perth, Hobart and Darwin are seeing more outer suburbs outperforming than inner suburbs. Of course it should be remembered that home values are now falling in Perth and Darwin and clearly this is impacting the inner city performance. 
The lesson here of course is just because inner city housing is generally more desirable, it doesn’t mean it is immune from falls in the event of a housing market downturn.
Inner city housing markets will likely remain more desirable than those suburbs further afield, due in large to the abundant amenity typically available in these areas.  Although the desire to live in these inner city areas is strong, the reality is that the cost of housing in these locations is restrictive and the supply is relatively short, so many can’t access the housing they want in these areas. 
As some of the examples show, although housing in inner city areas is more expensive, it doesn’t necessarily mean that value growth will consistently outperform growth across the rest of the city. 
Furthermore, as the Perth and Darwin highlights, inner city housing isn’t bullet-proof and in the event of a housing market downturn it has in the past and will potentially in the future also see value declines.
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.
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Inner city housing more expensive but growth not strongest: Cameron Kusher

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GUEST OBSERVER
The Westpac –Melbourne Institute Consumer Sentiment Index fell by 5.6% in September from 99.5 in August to 93.9 in September. 
This solid fall in the Index comes as no surprise. We were somewhat puzzled by the surprise increase in the Index last month of 7.8% and there was always likely to be some correction this month. Of course the deluge of disturbing news around violent gyrations in both Australian and overseas equity markets; poor economic data from China; a disappointing report on Australia’s growth rate and the weakness in the Australian dollar were also likely to have unnerved households.
This print on the Index now marks the 17th out of the last 19 months that the Index has been below 100. A level of the Index below 100 indicates that pessimists outnumber optimists. After acknowledging some volatility in the series the underlying picture is that confidence has been little changed over the last year – firmly stuck below 100 and averaging around 96.
For the September survey we also ask respondents about the news items they most recall. This provides an objective test of our assumptions around the factors driving the movements in the Index. For this survey the most recalled news items were around domestic economic conditions overseas issues. Nearly 42% of respondents recalled overseas news items – the second highest proportion on records back to 1975. The highest proportion came in December 2011 (55%) when the European financial crisis was dominating headlines. Domestic economic conditions (54%) were also important this month. Respondents were significantly more negative around domestic conditions than in June.
News on the Australian dollar was noted by 15.5% of respondents – the highest on the dollar since June 2002.
The government would be pleased to see that ‘Budget and taxation’ caught the attention of only 23.1% of respondents compared to 62.7% in September last year.
This heightened concern around the world economy unnerved respondents about the labour market. Almost all respondents who recalled news items about the jobs market noted that the news was unfavourable. There was a sharp 5.8% increase in the Westpac– Melbourne Institute Index of Unemployment Expectations (a higher print indicates heightened employment concerns). The Index is now at its highest read since December 2014.
Most of the components of the Westpac-Melbourne Institute Consumer Sentiment Index fell in September. Households responded negatively around their own finances. The sub-index tracking assessments of ‘family finances vs a year ago’ fell by 5.7%, while that tracking expectations for ‘family finances over the next 12 months’ fell by 1.1%. Nevertheless, both of these components is comfortably higher relative to September last year (7.6% and 8.7% respectively). The volatile sub-index tracking expectations for ‘economic conditions over the next 12 months’ fell by 11.2% (down 11.5% over the year) while the sub-index tracking expectations for ‘economic conditions over the next five years’ increased by 6.2%.
<a href="/images/2015/09/09/Screen%20Shot%202015-09-09%20at%2010.51.00%20AM.png" target="_blank" style="line-height: 1.3em;">Click to enlarge</a>
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However, the biggest move came from the sub-index tracking assessments of ‘time to buy a major household item’ which fell by 13.5% to be down by 13.3% over the year. While the fall in the ‘finances’ components would explain part of this fall the near 5% drop in the Australian dollar since the last survey may have discouraged purchasers who will now be expecting higher import prices.
Confidence around the housing market continues to erode. The ‘time to buy a dwelling’ index fell by 0.9% to be 8.6% down on a year ago and 30% lower than two years ago. The New South Wales Index continues to underperform with a 14% fall this month to be 34% down on a year ago and 55% over the last two years. Within that Index the Sydney component is down by 46% over the last year and has reached its lowest level since the survey began in 1975.
House price expectations are also waning. The Westpac House Price Expectations Index fell from 132.7 in August to 127.3 in September (down by 6.1%). This Index is now down by 17% over the last year although remains well above 100 indicating that more respondents still expect prices to continue to rise.
This month we also asked respondents about their choice of the wisest place for savings. Bank deposits remain the most popular choice at 27% (down from 29.4% in June). However this was lowest proportion registered since September 2009. 
This evidence of lower risk aversion is further highlighted by the lift in real estate as a favoured form of saving. The proportion of those respondents favouring real estate increased from 24.6% in June to 28.2% in September. This represents the highest proportion of respondents favouring real estate since September 2003 – the last time we had an investor-led boom in real estate.
The increase in the proportion favouring real estate is likely to be capturing the improving optimism of investors in the housing market whereas the deteriorating prints on the ‘time to buy a dwelling’ index is probably reflecting affordability concerns of upgraders and first home buyers. In that regard note that the Westpac – Melbourne Institute Index of House Price Expectations continues to point to rising prices, albeit at a slower pace.
The Reserve Bank Board next meets on October 6. We expect the Board will maintain its steady rates policy for the remainder of this year and throughout 2016.
The key to any decision to further cut rates, as expected by the financial markets, will be whether the Bank’s current forecast that the unemployment rate can stabilise around current levels proves sustainable. Despite soft economic growth, jobs growth has been strong over the past year partly because of the strong contribution to jobs from the improving export services sectors. A sustained deterioration in the jobs market will not be apparent until next year complicating the market’s expectations of a rate cut by year’s end.
 
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Bill Evans is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Solid fall in September Consumer Sentiment Index: Westpac's Bill Evans

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GUEST OBSERVER
Housing affordability is more than just house prices. It also includes ready access to public transport, schools, good road networks, and of course access to all the basic utilities. However, local governments don’t have the money to build all the infrastructure new housing estates need.
So developer charges were introduced as a “user pays” method of funding new urban infrastructure. These charges are levied on property developers by local authorities at the time of planning approval. Some think these costs are passed back to the original land owner by way of lower land prices.
But property developers claim these charges are instead added on to new house prices, with a negative impact to housing affordability. When new house prices increase, existing house prices are also dragged up, extending the housing affordability issue throughout the community.
However, new research by QUT has uncovered evidence that these costs are not merely passed on to homebuyers, but are passed on at significantly over-inflated rates.
In an Australian first, the study empirically examines the impact of developer charges on housing affordability, providing evidence that developer charges are passed on to all homebuyers in the community. So while policy makers think they are charging developers for the provision of infrastructure in new communities, the cost is really being borne by all homebuyers.
<h2>The research</h2>
This research applied a hedonic house price model to 4,699 new and 25,053 existing house sales in Brisbane from 2005 to 2011. Using diverse data sets on both housing supply and demand items, it tested the impact developer charges had on both new and existing house prices over this time.
This study has provided the first Australian evidence that developer charges are passed onto home buyers. But these charges aren’t passed on in a dollar-for-dollar fashion. Consistent with international evidence, there is evidence that suggests these charges are inflated on both new and existing homes by around 400%.
What does that mean? It means that $10,000 of developer charge adds about $40,000 to the price of both new and existing houses.
In Queensland, where developer charges are around $28,000 per new house, this one fee alone could be responsible for over $110,000 of the house price. Over the term of a 30 year mortgage, this could be costing homebuyers in excess of $338,000 or almost $1,000 per month extra mortgage payments.
This is not to say developers are profiteering. The competitive nature of the development industry ensures developer margins are kept within a range reflective of the risky nature of property development. Developer fees are a supply side cost that often aren’t locked in until many years after the land is first bought for subdivision.
Demand factors, such as low interest rates and limited supply force up prices and land owners quickly adjust their expectations, asking more for the undeveloped land that will help with supply. Holding costs, time delays, limited supply of serviced land and imperfect data and models are all thought to contribute to this problem.
<h2>All buyers pay</h2>
This price inflation affects new home buyers and also buyers of existing homes, resulting in increased mortgage repayments of close to $1,000 per month in Australia.
Thus this inefficient developer “tax” isn’t being paid by developers at all. It is being paid by all home buyers across the community, even though the actual infrastructure built only services the new developments.
These findings suggest that developer charges are not only an inefficient tax, but are a significant contributor to increasing house prices and reduced housing affordability.
It is inefficient and inequitable to expect the community to pay four times the cost of infrastructure that services only new housing estates.
In the current environment of resource constraints and declining housing affordability, it’s now time other infrastructure funding models were considered by policy makers.
 
Lyndall Bryant is lecturer in Property Economics at Queensland University of Technology and author for The Conversation. You can contact her <a href="https://theconversation.com/profiles/lyndall-bryant-178983" target="_blank">here</a>.
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Inefficient tax slugs all homebuyers

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Home builder AV Jennings has hit out at stamp duty, which it said was holding up construction and adding to housing costs. 
Chief executive Peter Summers made the comments in announcing the company’s $48.2 million before-tax profit for the 2015 financial year, which was up 78.3% on 2014.
The profit increase was driven by improving residential markets, which lifted revenue by 26.9% to $317.9 million. But Summers said recent activity in new housing markets followed a sustained downturn in sales and a lack of supply in many markets. 
He blamed stamp duty for contributing to housing costs and called for debate on the tax.
“The company has for many years talked about the impact of government charges and taxes and the cost of red tape causing delays that are impacting affordability,” Summers said. 
While price growth has been strong in some markets such as Sydney and Melbourne, AV Jennings noted in its annual report that price growth had been “more muted” in the markets in which it operates.
“It has been disappointing to see that much of the commentary on the housing market has focussed on extreme examples or specific micro-markets, such as parts of inner Sydney, which are then extrapolated into the rest of the Australian market,” Summers said. 
Residential markets in South Australia and Western Australia were subdued. Demand and supply were balanced in the mid-to-outer areas of Melbourne where the company has developments, and prices were firming in Brisbane, Noosa, Caloundra and Coomera in Queensland the company noted. 
AV Jennings sells most of the homes it develops to domestic buyers and owner occupiers. It settled 1538 lots in the 2015 financial year, up 22.6% on the previous year. It said it expected to end the 2016 financial year with contracts signed for 1800 to 2100 lots.
It paid dividends of 4 cents per share, fully franked, for the full year and said in future it would pay out 40-50% of after-tax net profit. 
The picture above is taken from the AV Jennings The Mill Apartments development at Eastwood, Lot 404/8 Avondale Way.
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AV Jennings hits out at stamp duty

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In its submission to the House of Representatives Standing Committee on Economics Inquiry into Home Ownership in Australia, the Department of the Treasury reminds that state and territory governments have the primarily responsibility in housing supply. Removing regulatory impediments, land use and housing infrastructure policies is what improving housing supply is about.
"Reform addressing states and territories’ planning and land supply policies is not a new area of work. The Productivity Commission Inquiry into First Home Ownership in 2004 noted the need for state and territory governments to have appropriate land release strategies in place and to improve the efficiency and effectiveness of planning and development policies. 
"Reform in this area has also been attempted previously. In July 2012, the Council of Australian Governments committed to the recommendations of the Housing Supply and Affordability Report (HSAR), which included improving planning, development and rezoning processes, and the release of land."
The demand for housing has increased along with the population. On the other hand, dwellings completion have not followed the population growth and remained constant over the past 15 years. The insufficient housing supply appears to have driven the increase in the dwelling prices.
"Housing is the largest asset class owned by Australian households, and is therefore a key driver of saving decisions. 
"Home ownership rates are relatively uniform across Australia with the exception of the Northern Territory. South Australia recorded the highest home ownership rate in Australia at 72.3%, with Northern Territory recording the lowest rate at 53.2%. 
"Home ownership rates in Australia are higher than comparable countries like the United States, United Kingdom, and New Zealand and a little below Canada. Rates of home ownership in some countries, such as Germany, are considerably lower."
"Dwelling investment accounts for around 5.5% of GDP in Australia. However, it has been highly cyclical in the past and has had significant impacts on GDP growth. 
"Between 2002 and 2012 there were two periods of strong increases in dwelling prices with price growth peaking in late 2007 and early 2010, but the supply response was muted compared with past cycles. 
"The number of building approvals for dwellings rose 17.6 per cent through the year to May 2015, implying a large stock of work yet to be completed. Reflecting the pipeline of work pending, the 2015-16 Budget forecasts dwelling investment to grow by 6 1⁄2% in 2015-16 and 41⁄2% in 2016-17. Dwelling construction is expected to directly contribute 0.3 percentage points to growth in both 2014-15 and 2015-16. 
"While construction is growing more rapidly in New South Wales than Victoria, Victorian construction is starting from a higher level, so the supply of new dwellings has been higher in that state over the past decade 
"Data suggest that there is still significant scope to increase the total supply of housing. National rental vacancy rates have been rising slowly since 2007 but remain low at 2.7% in the March quarter of 2015, well below the previous peak of 4.7% in 2002 
"Despite this, rental yields are low by historical standards. Net rental yields for three bedroom homes have fluctuated between 3.2% and 3.5% since late 2009 and are currently 3.3%. Low rental yields are a consequence of house price growth, which has outstripped growth in rents for most of the past two decades. 
"Rental yield is the average across Australian capital cities and is calculated by dividing net annual rental income by the median price. It does not take capital growth into account.
"National dwelling prices rose by 9.8% over the year to June 2015, a little below the peak reached in the middle of 2014.
"Price growth has been concentrated in Sydney and to a lesser extent, Melbourne. Dwelling prices in Sydney grew 16.2% in the year to June 2015, and by 10.2% in Melbourne." 
"In Sydney, price growth in the year to May 2015 varies between 9.3% in the Eastern Suburbs and 20.7% in Outer South Western Sydney. Of the 14 subdivisions that cover Sydney, price growth is stable or moderating in 10. 
"Melbourne price growth in the year to May 2015 varies between -0.2 per cent in Melton-Wyndham and 17.7% in Eastern Middle Melbourne, but 11 of the 16 subdivisions are experiencing growth between 3.3% and 6.8%. The majority of subdivisions in Melbourne have had steady price growth at current levels for the past year." 
Distribution of Home Ownership 
"The home ownership rate among households headed by a person aged 25 to 34 has fallen from 52.2% in 1995-96 to 42.0% in 2011-12, while for households led by a person aged 35 to 44, the rate has fallen from 72.9% to 62.1% over the same period. Ownership rates have been steadier for older age cohorts.  
"The proportion of loans being approved to first home buyers' is currently around 15%.This is slightly below the average over the past five years of 17.0%, and below the average of 21.6% in the second half of the 1990s. 
"The number of Australians buying a home for the first time has averaged around 4 per 1,000 people over the past five years, compared with around 5 per 1,000 people in the second half of the 1990s. 
"The two key factors influencing the purchase of a first home are savings for a deposit and having sufficient income to service a mortgage. 
"Since 2000, investors have generally accounted for between 30 and 40% of all housing finance approvals. However, during periods of strong price growth, investors tend to represent a larger proportion of financing, particularly in New South Wales."
Long-term macroeconomic drivers 
"Over the past 20 years annual net overseas migration has contributed between 0.3% and 1.5% to annual population growth. Net overseas migration grew strongly between 2006 and 2008 with the contribution of net arrivals peaking at 1.5% in 2008. 
"Net migration contributed 0.8% to annual population growth in the year to the December quarter 2014. Annual population growth rose above 1.3% for the first time since 1991 in 2006 and has remained above this level. 
"During the 1980s and 1990s migration flowed out of New South Wales and Victoria and into Queensland. The outflow from Victoria reversed in the mid-1990s, while the outflow from New South Wales intensified around 2001. Net interstate migration to Queensland has fallen from around 37,000 in 2002 to 6,000 in the most recent year (up to the December quarter 2014). 
"Net interstate migration to South Australia has been negative for most of the past 30 years. Western Australia has generally experienced inward interstate migration, although this flow fell sharply over the past two years and has been negative over the 3 quarters to December 2014, reflecting developments in the resources sector. 
"Overall, the rate of interstate migration in Australia has typically had a smaller influence on state populations than either natural increase or overseas migration. 
"Since 2001 the average size of households has remained steady at 2.6 people indicating a slowdown in the rate of household formation. 
"The long-term supply of dwellings in Australia is determined by the availability of land and redevelopment opportunities and the underlying capacity of the construction sector. 
"Data on the availability of land suggest that residential land releases have been declining over the past 15 years. This is consistent with a greater focus on the redevelopment of land closer to city centres, but also highlights the lack of growth centres outside of capital cities, with land release declining faster in regional areas."
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Treasury's submission to Aussie home ownership

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GUEST OBSERVER
The headline CPI lifted 0.7% in Q2 compared to Westpac’s 1.0% forecast and the market’s expectation for 0.8%. The annual rate is now 1.5%yr compared to 1.3%yr in Q1, 1.7% in Q4 and 2.3%yr in Q3.  
The core measures, which are seasonally adjusted and exclude extreme moves, rose 0.5%qtr compared to market expectations of 0.6%qtr and Westpac’s estimate of 0.5%qtr. In the quarter, the trimmed mean gained 0.56% while the weighted median lifted 0.51%. The annual pace of the average of the core inflation measures is now 2.3%yr, a slight moderation from the 2.4%yr pace in Q1.
The six month annualised pace of core inflation was 2.5%yr in Q2 a moderation from the 2.8%yr in Q1 and moving back toward the 2.1%yr pace at the end of 2015. Core inflation continues to meet the RBA’s expectations for inflation to remain within the band.
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<img src="/images/2015/07/22/Screen%20Shot%202015-07-22%20at%203.16.13%20PM.png" alt="">
 
In the June quarter the expected surge in petrol prices was there (12.2%qtr) but the big surprise for us was the soft print on food, –0.2%qtr, in part due to a very soft –1.2% from fresh fruit &amp; vegetables. Also surprising us on the downside was a –3.4% fall in holiday travel. Clothing &amp; footwear rose much as expected at 1.3%qtr.
Housing costs continue to underpin both core and non-tradeable inflation rising 0.7%qtr driven by a very solid 1.5% rise in dwelling purchase prices. To this was added the solid gains in hospital &amp; medical services (3.4%qtr) and alcohol &amp; tobacco (1.2%qtr). The modest offsets came from pharmaceuticals (–1.8%qtr), audio visual &amp; computing services (–1.6%qtr) and communications (–0.6%qtr). 
Traded goods, boosted by fuel, gained 1.2%qtr/–0.3%yr, while non-traded goods (housing, health and education) were around expectations at 0.5%qtr/2.6%yr. 
Despite the downside surprise on food, the CPI came in much as expected with housing continuing to underpin modest outcomes for core and non-tradeable inflation. 
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<img src="/images/2015/07/22/Screen%20Shot%202015-07-22%20at%203.15.55%20PM.png" alt="">
 
Justin Smirk is senior economist, Westpac Group and can be contacted <a href="https://au.linkedin.com/pub/justin-smirk/9/1b9/b2a" target="_blank">here</a>.
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