One of North Sydney's best-known commercial buildings could become hundreds of new homes, with insurance giant Zurich Australia lodging a State Significant Development Application (SSDA) to transform 5 Blue Street into a mixed-use residential development above North Sydney Station.

Rather than demolishing the existing building and starting again, Zurich is proposing an adaptive reuse project that would convert the landmark office building into a 15-level residential development delivering 62 apartments, 86 affordable co-living dwellings, activated retail and significant upgrades to the Blue Street Plaza.

The proposal reflects a growing trend of commercial property owners repositioning ageing office assets into residential housing as Sydney grapples with housing supply shortages and changing workplace demand.

<img alt="Zurich" data-entity-type="file" data-entity-uuid="0bba7d12-06dc-4375-aad7-238c94b21ac5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.42.05%E2%80%AFAM.png?VersionId=NJl5oLAEBDGuPmY3RnyliKODjMc8lvRh" />

Located directly above North Sydney Metro and train station, the 3,051 sqm site occupies one of the most strategically positioned parcels of land on Sydney's Lower North Shore.

Designed by fjcstudio, the proposal seeks to retain and adapt much of the existing structure while creating a contemporary residential address that better connects with the public domain surrounding North Sydney Station.

The application proposes two basement levels, ground floor retail, affordable co-living accommodation across the podium levels, and apartments above, while preserving and enhancing the publicly accessible Blue Street Plaza.

Rather than pursuing maximum apartment numbers, Zurich has opted for a housing mix heavily weighted towards larger owner-occupier residences.

The proposal includes 62 build-to-sell apartments comprising 12 one-bedroom, 19 two-bedroom, 29 three-bedroom apartments and two premium penthouses. It also incorporates 86 affordable co-living dwellings, which would be managed in perpetuity by a Community Housing Provider.

That balance between traditional apartments and affordable housing reflects the NSW Government's push to increase housing diversity around major transport infrastructure.

The proposal has been lodged concurrently with a rezoning application, with Zurich arguing the site is ideally positioned to support additional housing given its immediate proximity to public transport, employment and services.

"The proposal aims to respond to the housing challenges facing Sydney through the delivery of diverse housing types in a highly accessible location," the design report by fjcstudio states. It also seeks to improve pedestrian amenity through upgrades to Blue Street Plaza while creating a high-performing residential building that responds to the surrounding context.

<img alt="Zurich" data-entity-type="file" data-entity-uuid="36082e15-c636-4481-bb68-5a5f6443fe39" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.41.36%E2%80%AFAM.png?VersionId=5P6VD.fvmqjQfIG3TWWMRXxQWiQBjeFB" />

Rather than replacing the commercial building, fjcstudio has developed a design that works with the existing structural framework above the rail corridor, an approach that significantly reduces demolition while allowing the site to be repositioned as a mixed-use residential precinct.

The existing structural constraints have informed much of the building's design, including its relationship with Blue Street and surrounding public spaces.

The building has been designed as a slender tower rising above a clearly defined podium, with vertically expressed façades intended to reduce the perceived bulk while reinforcing North Sydney's emerging skyline.

According to fjcstudio, the architectural language responds directly to the surrounding commercial towers while maintaining a finer grain expression more closely aligned with the neighbouring Lavender Bay streetscape.

The tower incorporates articulated façade elements, landscaped podium edges and recessed upper levels to soften its appearance and improve pedestrian amenity below.

A significant component of the proposal is the revitalisation of Blue Street Plaza.

The existing public space has long served as one of the primary pedestrian connections between North Sydney Station, Greenwood Plaza and Blue Street, yet its role is expected to become even more important following the opening of Sydney Metro.

Zurich's proposal seeks to strengthen that role by improving landscaping, introducing new retail frontages, enhancing pedestrian permeability and creating more active edges throughout the day and evening.

Ground floor retail would wrap the plaza, while separate residential and co-living entries have been designed to improve wayfinding without reducing street activation.

Landscape design has been integrated throughout the podium and public realm, softening what is currently one of the most heavily urbanised parts of North Sydney.

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fjcstudio has carefully oriented apartments towards Sydney Harbour and the CBD while using privacy blades and articulated façades to minimise overlooking between neighbouring buildings.

Large framed openings along the western elevation maximise harbour outlooks, while the eastern apartments have been angled towards the south-east to improve privacy from neighbouring development.

The project forms part of the continuing transformation of North Sydney from a predominantly commercial CBD into a genuine mixed-use city centre.

Since the completion of Victoria Cross Metro Station, developers have increasingly shifted their attention towards residential projects capable of leveraging the area's unparalleled transport connectivity.

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FiveX recently lodged plans for a 61-storey, 490-apartment tower that would become one of the tallest residential buildings in North Sydney if approved.

Aqualand continues to expand its Lower North Shore presence following the completion of AURA on Walker Street and its recent St Leonards and Roseville proposals.

Developers are also progressing projects throughout Walker Street, Miller Street and the Victoria Cross precinct as demand for well-located owner-occupier apartments continues to strengthen.

Joel Robinson

First look: Zurich targets North Sydney office conversion with 148-unit proposal above Metro station

Busy developer Aqualand Prestige has formally taken the next step in its expansion across Sydney's Lower North Shore, lodging a State Significant Development Application (SSDA) for its long-held Archer Street site in Chatswood.

The application covers <a href="https://www.apartments.com.au/new-apartments/51-55-archer-street-chatswood-nsw-2067">51-55 Archer Street</a>, a 1,767 sqm amalgamated site on the eastern edge of the Chatswood CBD, where the developer is seeking approval for a 45-level mixed-use tower delivering 114 apartments, including a significant affordable housing component, alongside retail, commercial space and six basement levels of parking.

The SSDA marks the latest milestone for a project Aqualand has been quietly progressing over the past two years. The developer first secured the site for its Aqualand Prestige platform before undertaking an alternative design excellence process with PTW Architects, ultimately avoiding a formal design competition through the Housing Delivery Authority pathway.

The proposal has evolved considerably from Aqualand's original concept. The revised scheme has been designed around larger owner-occupier product, with an unusually high proportion of three and four-bedroom apartments, targeting the more affluent buyer profile, and downsizer, emerging across the North Shore.

<img alt="Archer St" data-entity-type="file" data-entity-uuid="0171204c-5811-41b5-9b09-2335d1b7c3d0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%208.52.48%E2%80%AFAM.png?VersionId=6YTuxfq.puZo7k2wbfgemcO5K3QfXYGQ" />

The 114-apartment mix comprises six studios, 27 one-bedroom apartments, 18 two-bedroom apartments, 50 three-bedroom residences and 13 four-bedroom homes. A quarter of the building will be dedicated to affordable housing, well above the mandated 15 per cent&nbsp;

PTW has structured the building vertically, with affordable housing across levels one to six, premium apartments through levels seven to 31, duplex skyhomes on klevels 32 to 43, a penthouse on level 44, and a rooftop plant level above. Six basement levels will provide resident parking and servicing.

The tower is proposed to reach approximately 154 metres, placing it among a growing collection of residential high-rises transforming Chatswood's skyline.

Rather than competing purely on height, PTW says the design has been driven by creating a slimmer tower capable of delivering significantly larger apartments.

"The primary objective of this project was to create a distinctive building that stands out from the recently approved or built structures in the Chatswood area," the design report states, noting the structural efficiency allows greater investment into apartment quality and resident amenity.

Residents would have access to more than 450 sqm of communal open space including landscaped gardens, swimming pool, rooftop entertaining areas, fitness spaces, community gardens, children's play areas and barbecue facilities.

A major focus of the design has been the public domain.

The ground plane has been opened up through landscaped terraces inspired by Willoughby's sandstone ridges, with native planting, public seating, artwork, retail activation and a series of gathering spaces intended to soften what has traditionally been a hard commercial streetscape.

The landscape strategy references Blue Gum forests once common throughout the area, while incorporating Indigenous storytelling, public art and lighting installations to strengthen the connection to Country.

Chatswood has been one of Sydney's busiest apartment markets over the past 12 months, with a steady pipeline of both new project launches and fresh development applications.

Hyecorp recently launched Celine, a 122-apartment development just along Archer Street, while Changfa and Huirong Group are progressing The Anderson, an 84-apartment project on Anderson Street.

Develotek recently secured approval for a 101-apartment tower on Pacific Highway, while Tian An LFD received the green light for Hammond Greens, its apartment development on the edge of the Chatswood Bowling Club.

Commercial property developer FiveX is also making its move into the residential market. Last month it lodged plans for a 61-storey tower with 490 apartments, which, if approved, would become one of the tallest residential buildings in Chatswood.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-fivex-targets-chatswood-skyline-with-61-storey-tower-after-north-sydney-plans">First look: FiveX targets Chatswood skyline with 61-storey tower after North Sydney plans</a>

Aqualand is also expanding its development pipeline following the launch of its luxury residential brand, Aqualand Prestige. The developer has delivered a string of high-end apartment projects across Sydney's affluent suburbs over the past decade, most recently AURA by Aqualand on Walker Street in North Sydney.

[smartcode_project:default project_id=30959 project_image_fid=292863]

It has since quietly assembled its next wave of projects.

Earlier this year Aqualand launched Boronia in Roseville, a boutique 111-apartment development on Larkin Street. The project is one of the first significant apartment developments to launch in the suburb ahead of what is expected to become one of Sydney's most active new housing precincts under the NSW Government's Low and Mid-Rise Housing reforms, which allow greater density around train stations.

[smartcode_project:default project_id=152095 project_image_fid=373685]

The developer has also lodged plans for a two-tower, 413-apartment development on Herbert Street in nearby St Leonards, further strengthening its presence across the Lower North Shore.

Beyond that, Aqualand remains behind the final stage of Barangaroo, where plans will deliver a five-hectare mixed-use precinct comprising new homes, retail, hospitality and community facilities, alongside a new Metro entrance and more than two hectares of public open space, completing the Barangaroo precinct.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/central-barangaroo-development-takes-big-step-with-concept-proposal-approval">Central Barangaroo development takes big step with concept proposal approval</a>

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-aqualand-joins-st-leonards-apartment-party">First look: Aqualand joins St Leonards apartment party</a> 
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First look: Aqualand pushes ahead with Chatswood apartment tower as SSDA lodged for Archer Street

Mass timber is becoming an increasingly popular construction material in apartment developments, but Adelaide developer <a href="https://www.apartments.com.au/developers/otello">Otello</a> is taking the approach a step further.

At its new <a href="https://www.apartments.com.au/new-apartments/flowe-bowden-18-gibson-street-bowden-sa-5007">Flowe Bowden</a> development, the exposed cross-laminated timber (CLT) structure isn't just about reducing the building's environmental footprint. It also forms the foundation of a broader wellness strategy, influencing everything from indoor air quality and natural materials to the way residents move through and experience the building.

The 115-apartment mixed-use development, designed by Melbourne-based architecture practice Fieldwork, will occupy a prominent island site opposite Bowden Village Reserve, combining one, two and three-bedroom apartments with retail and a dedicated wellness destination.

[smartcode_project:default project_id=152022 project_image_fid=375528]

Wellness isn't confined to a gym or shared resident facility at Flowe. Instead, Fieldwork embedded the concept into the building itself.

The development has been split into two residential wings connected by a naturally ventilated central breezeway, replacing traditional enclosed corridors with open-air walkways that improve natural light, encourage cross ventilation and create more opportunities for neighbourly interaction.

"Rather than treating wellness as something that only happens on the ground floor, our response integrates it throughout the building, which led us to ask what it really means to design a healthy building," Fieldwork Director Quino Holland said.

[smartcode_project:default project_id=152022 project_image_fid=375531]

The building's architecture also reflects Bowden's industrial heritage. The lower podium references the area's historic brick and sandstone buildings, while the upper levels transition to exposed CLT, allowing the timber structure to become a defining feature throughout the apartments and shared spaces.

The use of mass timber sits alongside a range of sustainability initiatives, including a fully electric, gas-free design, rooftop solar and a targeted 5 Star Green Star rating.

[smartcode_project:default project_id=152022 project_image_fid=375524]

Inside the residences, the focus remains on natural, durable materials. Blackbutt engineered timber flooring, exposed CLT ceilings, porcelain surfaces and warm timber joinery create a calming interior palette, while low-VOC finishes and responsibly sourced materials have been selected to improve indoor air quality.

Kitchens have been designed as the centrepiece of each apartment, featuring porcelain island benchtops, timber-look cabinetry and brushed steel tapware, with layouts that maximise natural light and ventilation.

[smartcode_project:default project_id=152022 project_image_fid=375530]

The more traditional interpretation of wellness comes in the form of Level Eleven, a two-storey wellness club spanning the ground floor, mezzanine and first floor.

The facility will include a gym, yoga and reformer Pilates studios, Finnish and infrared saunas, magnesium hot and cold plunge pools, and dedicated recovery spaces. Unlike many residential wellness facilities, Level Eleven will also operate commercially, allowing the broader Bowden community to access the venue while giving residents exclusive membership benefits.

The ground floor has also been designed around everyday living. A café overlooking Bowden Village Reserve will activate the street frontage, while a bike workshop with tool storage, co-working space and dog wash has been incorporated to support daily routines and encourage interaction between residents.

"Flowe brings together my two biggest passions, creating places and creating healthier lives," Otello founder Daniel Harris said.

"We wanted to create something Adelaide hasn't seen before, a genuinely healthy building, where the way you live is lifted without even trying."

Flowe is positioned directly opposite Bowden Village Reserve and within walking distance of Bowden Railway Station and the Adelaide Entertainment Centre, placing future residents just minutes from the Adelaide CBD while remaining connected to one of the city's most established urban renewal precincts.

[smartcode_project_cta:default project_id=152022]

Otello launches wellness-focused Flowe Bowden with Adelaide-first mass timber apartment design

Not all apartment amenities are immediately visible.

Swimming pools, gyms, rooftop terraces and residents' lounges have long featured on buyers' wishlists, but as the way Australians live has changed, so too have the features that make apartment living more convenient.

Increasingly, buyers are placing value on the practical aspects of day-to-day life. Fast internet, EV charging, secure bike storage, flexible workspaces and parcel management are becoming just as relevant as lifestyle amenities, reflecting changing habits and expectations.

Online shopping has been one of the biggest drivers of that shift.

Australians spent a record $82.6 billion shopping online in 2025, with almost one in every four retail dollars now spent digitally, making parcel deliveries a routine part of everyday life rather than an occasional convenience.

For apartment residents, however, receiving those deliveries isn't always straightforward.

Without someone home to accept a parcel, deliveries can be redirected to a nearby Post Office, left in building foyers or common areas, or require building management to temporarily store packages. As apartment living continues to grow across Australia's cities, parcel management has become an increasingly important consideration for both residents and developers.

Australia Post's Parcel Locker network is one response to that shift.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/KPZ9j5FRdsQ?si=Qztc1dNP3ZvEIUhb" title="YouTube video player" width="560"></iframe>

Rather than relying on home delivery, eligible parcels can be directed to a nominated Parcel Locker, where they're securely stored until collected. Once a parcel arrives, residents receive a notification through the AusPost app or SMS and can retrieve it using a one-time code or QR code at a time that suits them.

The network has expanded to more than 1,500 locations nationwide, with Parcel Lockers positioned at Post Offices, shopping centres, supermarkets, transport hubs and, increasingly, within or alongside residential developments.

That growing presence reflects a broader change in how apartment buildings are being planned.

Developers are increasingly considering the operational side of apartment living alongside traditional lifestyle amenities. Just as secure mailrooms, bicycle storage and EV charging have become more common inclusions, parcel management is emerging as another feature that supports everyday convenience.

It also helps preserve the arrival experience within a building. Carefully designed lobbies and communal spaces can quickly become cluttered when deliveries accumulate, while secure parcel solutions reduce the likelihood of missed deliveries or parcels being left unattended.

For buyers comparing apartments, these everyday details are becoming part of the decision-making process.

Location, floorplans and finishes remain fundamental, but the features that simplify daily life are carrying greater weight than they once did. As online shopping continues to shape consumer behaviour, secure parcel delivery is increasingly becoming another amenity worth looking for.

Parcel delivery is joining the apartment amenity checklist

Inca Property Group has lodged a State Significant Development Application (SSDA) for Dawn, a 53-apartment oceanfront development overlooking Mona Vale Beach.

The proposal, at 35-39 Darley Street East, would replace an existing 18-apartment strata building with a new owner-occupier-focused development comprising 53 two and three-bedroom apartments, including nine affordable built-to-rent residences delivered under the State's infill affordable housing scheme.

Positioned on a 2,679 sqm elevated site around 280 metres from Mona Vale Beach, the development has been designed to maximise panoramic ocean views while responding to the site's sloping topography.

<a href="https://www.apartments.com.au/developers/inca-property-group">Inca Property Group</a> Managing Director Josh Thompson said the State Significant pathway provided greater certainty for projects of this scale.

"This State Significant pathway gives the team real certainty to progress <a href="https://www.apartments.com.au/new-apartments/dawn-35-39-darley-street-east-mona-vale-nsw-2103">Dawn</a> through to completion," Thompson said.

"It allows us to acquire a one-off site, design it carefully and deliver the right offering for the suburb, assessed by the NSW Government's planning department."

The project is one of the first developments in the area to be assessed under the NSW Government's Low and Mid-Rise Housing policy, with the site sitting on the edge of the policy's designated inner area.

The proposal includes three basement levels providing 124 car spaces, alongside a range of resident amenities including a swimming pool, gym, sauna, wellness facilities and private plunge pools for selected ground-floor and penthouse apartments.

<img alt="Dawn" data-entity-type="file" data-entity-uuid="fc1a1daf-0ce4-4f12-9076-b1fa553c7a91" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-21%20at%208.42.11%E2%80%AFAM.png?VersionId=4GZ9h.gpNkTljbxyAET8Jfhv51XUamDm" />

Thompson said Dawn had been designed specifically for owner-occupiers and downsizers, a buyer profile that has driven demand across Inca's recent Upper North Shore developments.

"The majority of buyers in our recent North Shore projects have been downsizers, and we are learning exactly what this market is looking for. Beyond the location itself, we have included resort-style amenities to deliver a genuine lifestyle offering," Thompson said.

Located within walking distance of Mona Vale Beach, the town centre, Mona Vale Golf Club and the Royal Motor Yacht Club, Dawn represents Inca's first Northern Beaches project following the sell-out of Tara on Park in Waitara and Ellis Residences, currently under construction in St Ives.

Construction will be undertaken by Inca's in-house construction arm, GOP Constructions.

Dawn is the latest major apartment proposal for Mona Vale, with the suburb emerging as one of the key beneficiaries of the NSW Government's new Low and Mid-Rise Housing policy.

New developer One Living, led by industry veteran Joseph Scuderi, recently secured a site on Mona Vale Road, on the border of Mona Vale and Pymble, where it is planning around 140 apartments.

IPM is also planning its third project in Mona Vale, significantly increasing the scale of its previous developments with an 82-apartment proposal at <a href="https://www.apartments.com.au/new-apartments/159-167-darley-street-west-mona-vale-nsw-2103">159-167 Darley Street West</a>, opposite Bayview Golf Course and less than 800 metres from Mona Vale town centre.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/one-living-enters-sydneys-new-apartment-market-with-northern-beaches-site-acquisition">One Living enters Sydney's new apartment market with Northern Beaches site acquisition</a>

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-ipm-plans-third-mona-vale-project">First look: IPM plans third Mona Vale project</a>

First look: Inca eyes Mona Vale with State Significant DA for Dawn apartments

Housing Sentiment

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The decline in house prices over the last year and a half has seen positive sentiment for housing affordability reach a 13 month high, according to Finder's RBA Survey.
REA Group chief economist Nerida Conisbee said that due to positive sentiment trending upward for employment and stronger numbers reported in March a rate cut won't happen this month, but it's coming.
"While the likelihood of a cut is increasing, this month is still too early," Conisbee said. “If economic data continues to deteriorate, then we will likely see movement in the second half of the year," Conisbee said. 
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This feeling is shared by many on the panel with nearly all (35/36) experts and economists forecasting the cash rate to be held at 1.50% on Tuesday (2 April 2019) for the 29th consecutive meeting. Economist Stephen Koukoulas from Market Economics had predicted a cut today. "The economy has slowed, with the per capita GDP recession in the second half of last year probably continuing into 2019.  “Inflation is low and with the household sector under pressure from falling house prices, some policy stimulus is needed," Koukoulas said. Seventy-six per cent of those surveyed expect the next rate change, whenever it does happen, to be a decrease. This belief is consistent with the 75% who held this prediction last month.
 
 
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Housing affordability reaches 13-month high: Finder RBA Survey

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House buyers who purchased in the past three years, particularly in Sydney and Melbourne, are the most worried by recent falls in house prices, according to a recent survey by home loan lender ME bank. 
The survey of 1,500 respondents indicated there may be a flow on to effect consumer spending.
Those who made purchases more than three years ago not as worried about owing more than their property is worth, 27% compared to those who bought property in the past 36 months of whom 62% say they are concerned.
<img src="https://www.urban.com.au/images/2018/12/3/Me%20bank%20worry.JPG" alt="">
Half of the respondents said falling prices made them feel less wealthy, while 73% said they would be more careful with their money in future.
Those who think prices will go up outnumber those who think prices will fall in every states except NSW, demonstrating that the recent turn in prices has had an effect on consumer sentiment.
ME’s head of home loans Andrew Bartolo sai,: “There’s little point worrying about what will happen to prices short-term if you’re intending to live in a property long-term. Same goes for long-term investors.
“Those looking to borrow should ensure they have a strong savings history, a deposit over 20%, and can demonstrate they can keep their levels of expenditure to low levels long-term,” he advised.
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House price movement is worrying recent buyers most: ME bank

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EXPERT OBSERVATION
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Sentiment towards the Australian housing market improved in Q1 as strong gains in WA and QLD offset falls in NSW and VIC. 
Confidence improved sharply in WA, but fell further in NSW amid expectations for bigger price falls. 
NAB has lowered its house price forecast for 2018 on continuing weakness in Sydney and a softer Melbourne market.
NAB recently suggested they only see Sydney house prices falling in 2019, with a stabilization in 2020.
The NAB Residential Property Index rose 3 points to +23 in the March quarter 2018 and remains well above its long-term average (+14). 
“But the overall result is masking an ongoing shift in sentiment across states” NAB Chief Economist Alan Oster said. 
It fell further in NSW and Victoria, driven down by weakening house prices, and was also lower in SA/NT. 
Sentiment towards the housing market in WA however rose strongly and recorded its first positive read since early-2014. It also continued to strengthen in Queensland. 
Overall confidence levels were broadly unchanged, but have risen strongly in WA and softened in NSW. “Survey house price expectations are mirroring these trends” said Mr Oster. 
Property experts are predicting bigger house price falls in NSW and have scaled back their outlook for Victoria. 
But they are much more bullish in WA, with stronger growth also expected in Queensland. 
Among other key survey findings, the market share of first home buyers climbed to new survey high, but that of resident investors hit a new low. 
According to Mr Oster: “Recent efforts by state governments to improve housing affordability is helping first home buyers, especially in Victoria and NSW, but the APRA inspired crackdown in investor lending is hurting investors.” 
Surprisingly, there was a small increase in the share of foreign buyers in new property markets after having fallen to a 6-year low in the previous quarter. This was led by NSW and WA. 
“Property experts also continue to tell us that credit access is still the biggest constraint on new housing development in the country and the biggest impediment for buyers of existing property” Mr Oster said. 
But concerns over interest rates are growing. 
“We’re not surprised given NAB’s own view is that interest rates will start rising gradually from late-2018, albeit with the risk this could be delayed until 2019” said Mr Oster. 
NAB’s forecasts on residential prices 
NAB’s view for 2018 now has a small fall in house prices in 2018 (now -0.8% was +0.7%). This is largely related to continuing weakness in the Sydney market (-3.4%) and a softer Melbourne market (+0.1%) with little improvement now expected during 2018. 
According to Mr Oster: “Looking forward it’s hard to see a near term rebound in Sydney and Melbourne house prices, especially given consumer concerns over the cost of living and high levels of household debt.” 
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National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686 
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“Strong performances in Tasmania and to lesser extent in regional areas, along with higher confidence in the West and Queensland won’t offset the aggregate effects of lower prices in Sydney and Melbourne. Nor will increased first home owner demand fill the gap” added Mr Oster 
For 2019, our house price forecasts remain broadly unchanged at +0.8% with only Sydney expected to fall (albeit modestly). 
Apartment forecasts are also broadly unchanged (-0.8% in 2018 &amp; -1.8% in 2019) reflecting large stock additions and softer outlook for foreign demand. 
For 2019, weakness will likely be concentrated on the Eastern seaboard - with apartment prices expected to fall in Sydney, Melbourne and Brisbane. 
“Naturally, any additional changes to government or prudential policy to address affordability or financial stability concerns are likely to have an impact on these forecasts” said Mr Oster. 
About 300 property professionals participated in the Q1 2018 survey.
Alan Oster is group chief economist, National Australia Bank, and can be contacted <a href="https://business.nab.com.au/author/alan-oster/">here</a>.
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Housing sentiment improves in Q1, but falls further in New South Wales: NAB

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Housing market sentiment improved in the third quarter of 2017, as more property professionals surveyed by NAB reported positive rental growth during the quarter and house prices continued to rise in most states. 
The NAB Residential Property Index rose 6 points to +20 in Q3, with sentiment (based on current prices and rents) improving in all states except NSW (which edged down). Sentiment rose sharply in Victoria (up 27 to +63) and in Queensland (up 4 to +16). 
“The NAB Residential Property Survey shows an improvement in market sentiment across most states last quarter, but we continue to see market conditions that vary across different locations,” NAB chief economist Alan Oster said.
“The momentum is clearly with Victoria, while NSW is experiencing something of a slowdown.”  
About 300 property professionals participated in the Q3 2017 survey. 
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Confidence (based on forward expectations for prices and rents) was up in all states, led by Victoria, with WA rising the most. 
In NSW, despite the weakening price growth, higher confidence is being supported by expectations for higher rents.
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First home buyers were among the key buyers in both new and established housing markets, accounting for over 36% of all sales in new housing markets and around 29% in established markets. 
Meanwhile, the market share of foreign buyers in new property markets fell to a five-year low of 9.5%, potentially due to lending restrictions on foreign buyers. Low foreign buying activity in new property markets was led by Victoria, where the share of sales to foreign buyers fell to 14.4% (20.8% in Q2). 
For the first time, tight credit was identified as the biggest constraint on new developments in all states, while access to credit was the biggest barrier for buyers of established property. Price levels were the biggest concern in both Victoria and NSW. In WA and SA/NT, property experts said that employment security was the biggest barrier to buying an established home. 
NAB Group Economics has revised its national house price forecasts, predicting an increase of 3.4% in 2018 (previously 4.3%) and easing to 2.5% in 2019. Unit prices are forecast to rise 0.5% in 2018 (-0.3% previously), with a modest fall expected in 2019. 
“More moderate market conditions reflect a combination of factors which vary across markets, including deteriorating affordability, rising supply of apartments, tighter credit conditions and rising interest rates in the second half of 2018,” said Oster. 
“But still relatively low mortgage rates, a favourable housing supply-demand balance and strong population growth population growth should continue to provide support for prices going forward.” 
“By capital city, house price growth is forecast to be moderate outside of Perth - where prices are flattening out - consistent with good business conditions and better employment growth.” 
“Melbourne and Hobart are currently experiencing solid growth in prices; Sydney is cooling and we expect Brisbane and Adelaide will cool. Finally, we expect 2018 to mark the beginning of a gradual turnaround for Perth.” 
 
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Sentiment rises despite tightening credit among property experts in Q3: NAB

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The housing market sentiment has softened amongst property professionals, according to the first NAB residential property survey since the official RBA cash rate cut in May
The NAB Residential Property Index fell to +3, from +6 in Q1 2016, to remain below its long term average of +13.
Sentiment moderated in all states except South Australia and the Northern Territory, which rose 19 points, albeit still in negative territory.
New South Wales joined Victoria as the best performing state, followed by Queensland.
Confidence has however improved, with the national index rising to +29 next year, and +36 in two years’ time.
The NAB Residential Property Survey for Q2 2016 also found that respondents expect Victoria and Queensland to provide the best capital returns over the next one to two years.
NAB chief economist Alan Oster said that it's still a mixed picture across Australia, with house price expectations for the next 12 months holding up well in the eastern states.
He suggested that the house price expectations will stay flat in South Australia and Northern Territory, and will continue to fall sharply in Western Australia.
NAB Economics has also revised its national house price forecasts for 2016 upwards to 5.1% (from 1.5%). Unit price forecasts were revised up to 3.6% for 2016.
“Our upwards revisions in price forecasts reflects the strength in prices to date. Over the last six months, Sydney and Melbourne prices have increased by an annualised rate of nearly 19% and 12% respectively,” Oster said.
“However, while there is significant amount of uncertainty over the outlook for prices, we expect that this renewed momentum in the housing market is unlikely to be sustained over the longer term.”
Looking out to 2017, NAB forecasts prices to be flat across most capital cities, with falls particularly in Perth, Melbourne and Brisbane.
While the declines in Perth largely reflect economic conditions, the falls in Melbourne and Brisbane can be partly attributed to added supply and weaker investor demand.
“NAB is forecasting a much softer residential property market, with 0.5% growth in house prices and nearly 2% decline in unit prices in 2017,” Mr Oster said.
NAB Economics continues to hold the view that residential property prices are unlikely to experience a sharp ‘correction’ without a trigger from a shock that leaves unemployment or interest rates sharply higher.
The residential property survey series also measures foreign buyer activity in the Australian housing market.
Market share of foreign buyers in new Australian housing markets fell for the third straight quarter in a row – to 10.4%. A sharp fall in foreign buyer activity in Queensland was offset by growth in Victoria and a modest rise in NSW. Market share of foreign buyers in established markets was unchanged at 7.2%.
 
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Housing market sentiment softens following the RBA rate cut: NAB residential property survey

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GUEST OBSERVER
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<div class="column">Aussie consumers seem to see the appointment of a new Prime Minister and cabinet as signalling a “fresh” start. Whether the initial positivity is sustained will depend on the future performance and direction of the new administration. But increased confidence is certainly a positive for the Australian economy – hopefully translating into increased spending, investment and employment.</div>
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 The Government leadership change would have been the main factor influencing consumer confidence last week. Other factors include a 2% lift in the sharemarket; stabilisation of the Aussie dollar near US71-72 cents; positive testimony on the economy by the Reserve Bank Governor; and the decision of the US Federal Reserve to leave rate settings unchanged. All these factors would have played a role in the rebound of consumer confidence.
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 More confident consumers are more likely to spend, but there are no guarantees. But as the Reserve Bank Governor observed, the most important of the five questions posed to consumers each week are those relating to household finances. And even before the latest survey, consumers had an above-average assessment of the state of their household finances compared with a year earlier.
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 The Bureau of Statistics confirms that Sydney’s property market is the exception, not the rule. While Sydney’s average home price was up 18.9% over the year – the fastest rate in the 12-year history of the series – Melbourne prices were up 7.8%and the average gain of other capital cities was just 1.2%. Sydney is witnessing a building boom and home prices will be more settled in 12-18 months. 
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<div class="column">The ABS has quietly revised the employment by industry data released last Thursday. Overall job gains in the quarter weren’t revised (still up 78,000) rather the changes occurred in terms of industry gains and losses. Previously Mining was reported to have led the gains in jobs but the 19,300 increase is now revised to show a 3,500 gain. Professional, Scientific and Technical Services is now shown to have led job gains in the quarter (up 18,100).</div>
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What do the figures show?
Consumer sentiment
The weekly ANZ/Roy Morgan consumer confidence rating rose by 8.7% 114.5 in the week to September 20. Confidence is up 1.4% over the year and 2.7% above the average level of 111.5 recorded since 2014.
All of the five components of the index rose in the latest week:
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<li>The estimate of family finances compared with a year ago was up from +7 to +10;</li>
<li>The estimate of family finances over the next year was up from +21 to +27;</li>
<li>Economic conditions over the next 12 months was up from -18 to +3;</li>
<li>Economic conditions over the next 5 years was up from -3 to +10;</li>
<li>The measure of whether it was a good time to buy a major household item was up from +20 to +23 points.</li>
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Residential property prices
The Bureau of Statistics (ABS) has released its Residential Property Price indexes.
"The price index for residential properties for the weighted average of the eight capital cities rose 4.7% in the June quarter 2015. The index rose 9.8% through the year to the June quarter 2015.
The capital city residential property price indexes rose in Sydney (+8.9%), Melbourne (+4.2%), Brisbane (+0.9%), Adelaide (+0.5%) and Canberra (+0.8%), was flat in Hobart (0.0%) and fell in Perth (-0.9%) and Darwin (-0.8%).
Annually, residential property prices rose in Sydney (+18.9%), Melbourne (+7.8%), Brisbane (+2.9%), Canberra (+2.8%), Adelaide (+2.7%) and Hobart (+1.5%) and fell in Darwin (-1.8%) and Perth (-1.2%).”
The ABS notes that as at June 2015 there were 9.53 million homes in Australia and the average price was $604,700. The number of homes has risen by 1.72% over the past year, ahead of the 1.42% growth of the population. But the number of homes in Sydney is up 1.3% whereas as homes in Victoria is up by 1.9%.
CommSec estimates that the increase in the value of homes has boosted per capita wealth by just over $26,000 over the past year. Also we estimate that the number of people per home fell from 2.501 to a 3-year low of 2.498 people per home in the June quarter.
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What is the importance of the economic data? 
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank. The Australian Bureau of Statistics (ABS) provides quarterly data on residential prices. The figures provide further perspectives on the state of the housing purchase sector. 
What are the implications for interest rates and investors?
The latest consumer confidence data just reinforces the Reserve Bank view. Even before the latest survey, the RBA noted that views on family finances were above average and supporting consumer spending. The lift in the value of Australian homes has further boosted wealth levels in Australia, and may underpin future spending.
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 Are more Gen Y children moving out of home into their own places? Perhaps. The latest data indicates that the number of people per home fell to a 3-year low in the latest quarter. Low interest rates and low rent levels have encouraged more young people to get their own homes, either singularly or sharing accommodation with others. 
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<div class="column">More home creations add to demand for household appliances, furniture and floor coverings.</div>
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<div class="column">CommSec expects no change to interest rates over the coming year. </div>
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Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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Biggest weekly lift in consumer confidence: CommSec's Craig James

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<div class="column">Westpac Economics research for July has found housing sentiment falling to the first sub-100 level since June 2010.</div>
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Respondents to the monthly Red Book survey question on whether or not now was the time to buy fell 15.4% to 94.8. 
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<div class="column">The report, however did note 5-8ppts of the July fall may be seasonal.</div>
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<div class="column">Allowing for a seasonal adjustments, the index reading of 94.8 is well under the average of 125.</div>
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<div class="column">The survey found states with a weak buyer sentiment and strong price outlook are Victoria and New South Wales, weak sentiment and weak price outlook in Western Australia and strong sentiment and strong price outlook in Queensland and South Australia.</div>
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