<p>Brisbane-based developer <a href="https://www.apartments.com.au/developers/azure">Azure</a> is has been greenlit for its $115 million residential project within the Gold Coast Health and Knowledge Precinct in Southport</p>

<p>Following the acquisition of the site at <a href="https://www.apartments.com.au/new-townhouses/1-clarke-street-southport-qld-4215">1 Clarke Street</a> in October 2025 with development application Lodgement in January 2026, Azure has been granted approval for the 114 terraces which will form the final stage of the wider Lumina development.</p>

<p>“It’s a fantastic milestone for us to receive the green light on our second Gold Coast project,” said Trent Keirnan, Founder of Azure.</p>

<p>“The Gold Coast continues to evolve, with demand for considered, high-quality residences at an all-time high. This project has been thoughtfully shaped to respond to that demand.</p>

<p>“We’ve worked closely with Economic Development Queensland to bring this project forward, and the collaboration has been both proactive and highly considered. Their shared commitment to quality housing outcomes has enabled a streamlined approvals process and a strong result for the precinct.”&nbsp;</p>

<p>Appealing to a wide demographic, the project will deliver a range of two- and three-storey designs comprising a collection of three-bedroom terrace homes as well as one- and two-bedroom apartment-style residences. The designs by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a>&nbsp;focus on&nbsp;“urban coastalism”.</p>

<p>Residents will have access to an array of lifestyle amenities, including a resort-style pool with multiple lounging zones and landscaped gardens.</p>

<p>The residential offering will support the thriving Health and Knowledge Precinct, which includes Griffith University, Gold Coast University Hospital, Gold Coast Private Hospital and the new RDX Lumina and Proxima Towers, which are home to a range of health, education and research tenancies, including a 200-place childcare centre.</p>

<p>Azure aims for an off-market release for the project in the third quarter of this year, at the same time as construction is anticipated to start.</p>


Joel Robinson

Azure approved for new townhouse development in Southport

<p>Fortis has secured approval for a 57-room hotel at Richmond Square, marking another milestone in the delivery of the $330 million mixed-use precinct in Melbourne's inner east.</p>

<p>The hotel will occupy Levels 1 and 2 of Carmine House and forms part of Fortis' vision for Richmond Square, a precinct that will bring together apartments, hospitality, wellness and lifestyle offerings between Richmond and Cremorne.</p>

<p>Once complete, <a href="https://www.apartments.com.au/new-apartments/richmond-square-1-wiltshire-street-richmond-vic-3121">Richmond Square</a> will comprise 107 residences across Wiltshire House and Carmine House, alongside the hotel, hospitality venues, wellness facilities and a range of services aimed at both residents and visitors.</p>

<p>[smartcode_project:default project_id=13181 project_image_fid=348529]</p>

<p>The approval adds another layer to what Fortis is creating at Richmond Square, as developers increasingly look beyond standalone apartment buildings and towards mixed-use precincts that provide amenity and activation beyond the front door.</p>

<p>Jordan Winada, Head of Acquisitions (Commercial) Victoria at Fortis, said the approval was an important step in delivering the broader vision for the project.</p>

<p>"Richmond Square has always been about creating a destination rather than simply delivering residential apartments," Winada said.</p>

<p>"As buyer expectations continue to evolve, we're seeing increasing demand for developments that offer convenience, connection and access to high-quality experiences and amenity as part of everyday life.</p>

<p>"The hotel approval allows us to further realise that vision and create a precinct where residential living is complemented by hospitality, services and amenity in a way that is rarely seen in Melbourne's CBD and city fringe."</p>

<p>[smartcode_project:default project_id=13181 project_image_fid=348530]</p>

<p>The hotel will also support a range of optional services for residents of Carmine House, including housekeeping and linen refresh programs, laundry and dry-cleaning services, in-residence food and beverage delivery, grocery and pantry stocking services, and concierge assistance.</p>

<p>The approval comes as owner-occupiers continue to dominate Australia's new apartment market, with buyers increasingly seeking developments that offer convenience, flexibility and lifestyle amenity alongside their homes.</p>

<p>Winada said buyers are now placing greater emphasis on the broader precinct and surrounding amenity when making purchasing decisions.</p>

<p>"Residential amenity is no longer limited to what sits within an apartment building. Buyers are increasingly assessing the broader lifestyle ecosystem surrounding their home and the ways in which a precinct can support their day-to-day needs.</p>

<p>"Richmond Square has been designed to provide that experience through a carefully curated mix of residential, hospitality and lifestyle offerings that work together to create a more connected way of living."</p>

<p>[smartcode_project:default project_id=13181 project_image_fid=348534]</p>

<p>The hotel is expected to open in early 2027, with the operator to be announced later this year.</p>

<p>Further hospitality, retail and lifestyle tenants are also expected to be revealed in the coming months as Fortis continues to shape the offering at Richmond Square.</p>

<p>[smartcode_project_cta:default project_id=13181]</p>


Fortis approved for hotel component of Richmond Square precinct

<p>Having successfully expanded into a new region with its Caloundra apartment development, Sunset by Dusk Group, growing South East Queensland developer Dusk Group is again venturing into new territory.</p>

<p>The developer has lodged plans for a 70-apartment project in the Moreton Bay region, to be known as <a href="https://www.apartments.com.au/new-apartments/sunrise-on-sutton-25-sutton-street-redcliffe-qld-4020">Sunrise on Sutton</a>, named after its prime Sutton Street location, just one street back from Suttons Beach.</p>

<p><img alt="Sutton" data-entity-type="file" data-entity-uuid="88a9f9ee-6ace-47f5-a0c6-8fb134b27e98" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-15%20at%209.20.42%E2%80%AFAM.png?VersionId=iMXmJ7_BNZAmCt.jjupMSLdV_Qa9zJAK" /></p>

<p>Dusk Group Directors Huw Feeney and Anthony Short seized the opportunity to acquire the near-1,800 sqm amalgamated corner site at Sutton and Ella Streets for their first project in the area.</p>

<p>They have again enlisted MAS Architecture Studio, the architects behind Sunset by Dusk, to design the new eight-storey development.</p>

<p>The building will comprise a mix of one, two and three-bedroom apartments and has been designed to maximise views towards Suttons Beach, Margate Beach and Moreton Bay.</p>

<p>Pending approvals, the project could launch before the end of the year.</p>

<p><img alt="Dusk" data-entity-type="file" data-entity-uuid="90c0c26c-096c-4ceb-8c58-f8303aea542f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-15%20at%209.20.49%E2%80%AFAM.png?VersionId=nw8bqQtpOrf5nA95tuYhtqdB59YUzmO0" /></p>

<p>The development will provide 111 car parking spaces and 40 bicycle spaces.</p>

<p>Positioned within walking distance of Suttons Beach, Bluewater Square, Redcliffe Hospital and the Redcliffe Paceway, the development will sit within one of the peninsula's increasingly urbanised coastal pockets.</p>

<p>Redcliffe's new apartment market remains exceptionally tight, with Gardner Vaughan Group's One Redcliffe currently the only new apartment development actively being marketed in the beachside suburb.</p>

<p>It's another beach-focused development for Dusk Group, who has seen considerable success at its Caloundra apartment development, <a href="https://www.apartments.com.au/new-apartments/sunset-by-dusk-group-caloundra-5-7-bombala-terrace-caloundra-qld-4551">Sunset by Dusk Group</a>.</p>

<p>Over 80 per cent of the 36 apartments have sold ahead of its early 2027 completion.</p>

<p>&nbsp;</p>


First look: Dusk Group targets Suttons Beach precinct with 70-apartment Redcliffe proposal

<p>Leading Brisbane developer <a href="https://www.apartments.com.au/developers/consolidated-properties">Consolidated Properties Group (CPG)</a> has completed and settled $450 million worth of apartments at Monarch Residences in Toowong, marking one of Brisbane’s most significant and prestigious riverfront residential completions in recent years.</p>

<p>The final apartment at Monarch sold at auction on the 30th May for $4.1m.&nbsp;</p>

<p>The milestone has been marked at a ribbon-cutting ceremony at <a href="https://www.apartments.com.au/buildings/monarch-residences-toowong-600-coronation-drive-toowong-qld-4066">Monarch Residences</a>, with Cr Penny Wolff highlighting the importance of completing major residential projects to boost the city’s much-needed housing supply.</p>

<p>The 224 apartments, delivered across two 15-level towers, are now officially in the hands of owners, including Brisbane downsizers, families and professionals who have traded traditional houses for apartment living. The completion underscores sustained demand for absolute riverfront living in Brisbane’s inner west.</p>

<p><img alt="$450M Monarch Residences sells out as Brisbane riverfront demand surges" data-entity-type="file" data-entity-uuid="56ae05e9-092f-41f0-98a1-a10984fdd171" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ROBNN_MONARCHLAUNCHEVENT-131.jpg?VersionId=p76J6weGZqseNrE6aOAjmAHUah.y65Gd" /></p>

<p>Monarch Residences was planned and delivered over four years on a 1.2-hectare parcel with more than 130 metres of direct frontage to the Brisbane River, occupying one of the last remaining true riverfront sites of its scale and orientation within close proximity to the CBD. The site has been transformed from an underutilised, derelict block of land, into a thriving residential precinct with Middenbury House at its centre.&nbsp;</p>

<p>Consolidated Properties Group CEO and Chairman Don O’Rorke says the project’s completion represents the culmination of years of careful planning, design collaboration, market conviction and outstanding team delivery.</p>

<p>“We announced Monarch Residences in late 2021 and it’s been one of the most strongly received residential projects in our 45-year history,” Mr O’Rorke said.</p>

<p>"We are incredibly grateful to the outstanding team who helped bring Monarch Residences to life. A special thank you to Hutchinson Builders and their hardworking labour force for delivering a development of exceptional quality that our residents will be proud to call home for many years to come.</p>

<p>“Brisbane City Council and Titles Queensland also played a huge role in getting residents into their homes early through the pilot programs they ran to speed up the approval processes. They understand the challenges of the housing industry and are doing something about it.”&nbsp;</p>

<p>[smartcode_project:default project_id=113455 project_image_fid=211466]</p>

<p>Consolidated Properties Group Head of Residential, James MacGinley said Monarch Residences showed what could be achieved when private industry and government worked together to deliver new housing for Brisbane.</p>

<p>“Monarch Residences has delivered more than 200 new apartments in Brisbane’s inner-west at a time when additional housing supply is critically important,” MacGinley said.</p>

<p>“It’s fantastic to see residents now moving into this landmark riverfront development, which reflects the strength of collaboration between Council and the project team throughout delivery.</p>

<p>“All government agencies played a significant hand in achieving a fast-tracked outcome for Monarch Residences with Brisbane City Council, Urban Utilities, Energex and Titles Queensland assisted to remove hurdles to achieve settlements.”</p>

<p>[smartcode_project:default project_id=113455 project_image_fid=302326]</p>

<p>With Monarch Residences now complete, CPG has launched River Living, a bespoke on-site property management service designed to enhance the resident experience. The service will support all future CPG residential projects, including the recently announced <a href="https://www.apartments.com.au/new-apartments/gloriette-30-bedivere-street-yeerongpilly-qld-4105">Gloriette</a> in Yeerongpilly and <a href="https://www.apartments.com.au/new-apartments/castile-47-skyring-terrace-newstead-qld-4006">Castile</a> in Newstead.</p>

<p>The completion also marks the opening of a prized leasing opportunity at the heritage-listed Middenbury House, built in 1865 and which has been carefully restored and integrated into the broader masterplan.&nbsp;</p>

<p>CPG said the adaptive reuse of the landmark riverfront residence presents an opportunity to introduce a complementary boutique tenancy that respects the site’s historic significance while activating the riverfront frontage.</p>

<p>[smartcode_project:default project_id=113455 project_image_fid=211495]</p>

<p>Colliers Director of Residential Andrew Scriven said the move-in phase highlights continued demand for completed premium riverfront apartments in Brisbane.</p>

<p>“Residents are now experiencing firsthand the scale, craftsmanship and irreplaceable riverfront position that Monarch offers,” Scriven said.</p>

<p>“Opportunities to secure a brand-new, completed residence on Brisbane’s absolute riverfront are exceptionally rare. Combined with the proven track record of Consolidated Properties Group and Hutchinson Builders, combined with a design vision brought to life by some of Australia’s leading architects and designers, Monarch represents a unique opportunity to purchase a home of enduring quality and prestige.”</p>

<p>Monarch Residences was designed in collaboration with Melbourne-based architect Wardle Studio, alongside leading national practice Cottee Parker, with construction delivered by Hutchinson Builders.</p>

<p>[smartcode_project_cta:default project_id=113455]</p>


Consolidated Properties Group sells out Monarch Residences as Brisbane riverfront demand surges

<p>An entity directed by HSN's Rafi Assouline and Rebel Property's Allen Linz has filed plans for an impressive new precinct in Woolloomooloo.</p>

<p>The major mixed-use development would transform a prominent William Street site into a new residential village anchored by affordable housing and a large public park.</p>

<p>The proposal, submitted as a State Significant Development Application, covers 164-172 and 174-194 William Street, a 6,398 sqm site between Forbes Street and Dowling Street on the southern edge of Woolloomooloo.</p>

<p>Designed by fjcstudio in collaboration with Bangawarra, Studio Bright and Tribe Studio Architects, the scheme would deliver 227 apartments across four residential buildings ranging in height up to 18 storeys, alongside retail space, public domain improvements and a new publicly accessible park.</p>

<p><img alt="Rebel" data-entity-type="file" data-entity-uuid="0eb59b7c-914a-4a5c-b849-3a56749f5e93" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.18.51%E2%80%AFAM.png?VersionId=mxM6EEqeoLjrCiTlCzTKTvzpKuh6kSkH" /></p>

<p>It's another design scheme for Rebel, who took <a href="https://www.apartments.com.au/news/nsw/first-look-rebel-property-group-takes-woolloomooloo-precinct-to-nsw-government">concept plans to the NSW Gov late last year</a>.</p>

<p>The latest plans will be a mix of 167 build-to-sell apartments and 60 affordable apartments, with the affordable housing component representing 15 per cent of the project's gross floor area. The apartment mix includes 12 one-bedroom, 53 two-bedroom, 89 three-bedroom apartments and 13 penthouses, while the affordable housing component would comprise 42 one-bedroom and 18 two-bedroom apartments.</p>

<p><img alt="Rebel" data-entity-type="file" data-entity-uuid="3b3d4553-8a8c-4af5-aa8c-519ffb1e28c6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.20.12%E2%80%AFAM.png?VersionId=_Yb6ibN7eDnOtQjCNDK2eviORa4qzgv." /></p>

<p>Rebel Property is seeking to take advantage of the NSW Government's infill affordable housing bonus provisions under the Housing SEPP, which provide additional floor space and height in exchange for the delivery of affordable housing for a minimum of 15 years. The planning pathway allows a 30 per cent increase in floor space ratio and building height where 15 per cent of the development is dedicated to affordable housing.</p>

<p>&nbsp;</p>

<p>At the centre of the development is a 1,356 sqm sunlit public park designed to become a new community gathering space at the gateway to Woolloomooloo. The park would be complemented by a network of pedestrian laneways connecting William Street with the surrounding streets, improving permeability through what is currently a largely impermeable block.</p>

<p><img alt="Rebel" data-entity-type="file" data-entity-uuid="257af931-a393-4007-8c6d-7219796df58d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.20.51%E2%80%AFAM.png?VersionId=KAHy94GrhaReFsWTGDKfy39EDJ8gEEv4" /></p>

<p>The design team says the public domain has been heavily influenced by the site's topography and Aboriginal cultural heritage, drawing on the escarpments, gullies and landscape characteristics that historically defined the area before urbanisation. The landscape design has been developed in partnership with First Nations consultancy Bangawarra.</p>

<p>The project would be delivered across four separate buildings. The William Street East and William Street West buildings, designed by fjcstudio, would contain the majority of the apartments. Melbourne-based Studio Bright has designed the Forbes Street building, while Tribe Studio Architects is responsible for the Dowling Street building.</p>

<p>Rebel had secured approval for the concept plans late last year.</p>


First look: HSN, Rebel, advances Woolloomooloo precinct plans

Mining Downturn

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<div id="post-body-3564066941325967105" class="post-body entry-content">
<div>Another interesting article was written by the doyen of economic commentary Ross Gittins this weekend, in which he points out that the economy will look better once mining investment stops falling. </div>
<div> </div>
<div>The reversion in resources capital investment has long been flagged as a major downside risk for the Australian economy, or even as some kind of economic Armageddon.</div>
<div> </div>
<div>Engineering construction activity had declined by about 10 percent in the year to September 2015 to a quarterly value of around $25.4 billion, which is now some 24 per cent down from the peak of $33.6 billion.<br><br>Yet as highlighted by Gittins, despite this ongoing contraction the economy managed to grind out GDP growth of 2.5 per cent, helped by net exports and an increase in dwelling construction. Indeed, the non-mining economy grew by about 3 per cent.<br><br>I took a more detailed look at the components of GDP growth (and the troublesome decline in the terms of trade) over the year to September 2015.<br><br><strong><span style="text-decoration: underline;">Mining investment won't fall forever</span></strong><br><br>The good news noted by Gittins is that resources investment cannot continue to decline forever, and sooner or later the nadir will be reached.</div>
<div> </div>
<div>The latest available figures showed that the decline was reasonably well advanced by September 2015, although activity still remained well above its "normal" level, particularly in Western Australia and the Northern Territory.</div>
<br><div class="separator"><a href="/images/2016/02/02/A1.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/02/02/A1.jpg" alt=""></div>
<br><div>As you can see in the chart above the good news for Queensland is that much of the decline had already taken place by September, with quarterly engineering construction activity declining by 42 per cent year-on-year to just $4.9 billion. </div>
<div> </div>
<div>This was a substantial 57 per cent below the September 2013 quarterly peak, when engineering construction activity hit a state record $11.5 billion. </div>
<div> </div>
<div>The September 2015 National Accounts showed state final demand (a measure of activity which excludes exports) in Queensland of -0.2 per cent marking a fifth consecutive quarterly decline for the Sunshine State, driven by an ongoing weakness in private gross fixed capital formation (declining non-dwelling construction) as large scale resources projects approached their completion.<br><br>This was a significant improvement on the -1.3 per cent decline in Queensland state final demand in the June 2015 quarter, and hearteningly the largest part of the decline in engineering construction activity is now in the rear view mirror.</div>
<div> </div>
<div>A great challenge for Western Australia (where quarterly engineering construction activity is still highly elevated at $10.3 billion) and the Northern Territory (miles above historic norms at $2 billion, due to the massive Inpex Ichthys LNG project), however, is that the great bulk of the decline in construction activity has yet to take place. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Trade balance improving</span></strong></div>
<div> </div>
<div>It is worth noting that decline in resources construction is not in itself a bad thing: after all the whole point of constructing mining and resources projects is that they will eventually produce commodity exports (<em>reductio ad absurdum</em> if a decline in construction is a 'bad thing', we should never have partaken in a mining boom in the first instance).<br><br>A look at the latest International Trade figures shows that over the past three months Queensland has produced a positive trade balance of $1.2 billion per month, after churning out several negative prints in 2014. </div>
<br><a href="/images/2016/02/02/QLD2.jpg" target="_blank">Click to enlarge</a>
</div>
<div class="post-body entry-content">
<img src="/images/2016/02/02/QLD2.jpg" alt=""><br><div> </div>
<div>With the Gladstone natural gas venture now kicking into gear and the first shipments underway, GLNG exports will begin to make a welcome positive contribution in 2016, question marks over commodity price action notwithstanding.</div>
<br><strong><span style="text-decoration: underline;">The wrap</span></strong><br><div> </div>
<div>The figures show that the decline in mining investment still has a way to run, but eventually the downturn will be complete and the remainder of the economy will enjoy rising commodity exports.<br><br>The biggest unknown factor is what will happen to commodity prices over the years ahead.<br><br>Queensland's economy has been through a rough trot since 2013 as resources investment has nosedived, knocking it down to sixth spot in the state rankings.<br><br>However, things should begin to pick up in time, and although population growth from net overseas migration has slowed, Queensland will be one of only two states (the other being Victoria) to benefit from <a href="https://petewargent.blogspot.co.uk/2015/12/sydney-melbourne-dominate-population" target="_blank">net interstate migration</a>, particularly as more Sydneysiders opt to make the journey north. </div>
<div> </div>
<div>But if doom and gloom is your thing, fear not, for there will always be someone doing something stupid somewhere in the world, and in turn there will be something new to worry about: oil prices, China's property bubble, a Cyprus default, weapons in North Korea, the Ebola virus...</div>
<div> </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">The week ahead!</span></strong></div>
<div> </div>
<div>An exciting week ahead! </div>
<div> </div>
<div>The Reserve Bank of Australia (RBA) will leave interest rates on hold at 2 per cent on Tuesday afternoon (recall that it wasn't so very long ago that a rate cut by February was 100 per cent priced in). </div>
<div> </div>
<div>With the unemployment rate having declined from 6.4 per cent to 5.8 per cent and employment having reportedly grown by +2.6 per cent in 2015, another interest rate cut does remain fully priced in, but not until the fourth quarter of 2016.</div>
<div> </div>
<div>At the end of the week the RBA will also release its Statement on Monetary Policy (SOMP), within which it is expected that economic growth forecasts for 2015 will be revised up from 2.25 per cent to 2.5 per cent. </div>
<div> </div>
<div>Inflation forecasts on the other hand are likely to remain unchanged after this week's release showed that inflation is well under control. </div>
<div> </div>
<div>Also this week we will get the latest Building Approvals figures for December, which may show a bit of a bounce from last month's sharp drop, but we might expect to see the downtrend remaining in place.<br><br>
</div>
<div><a href="/images/2016/02/02/A2.jpg" target="_blank">Click to enlarge</a></div>
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<div>
<div class="separator"><img src="/images/2016/02/02/A2.jpg" alt=""></div>
<div class="separator"> </div>
</div>
<div>Finally there will be the latest International Trade figures to look forward to - expect to see a another substantial deficit in December of perhaps more than $3 billion, with low iron ore prices the key driver - and recall there was a wild explosion in rural exports (legumes boom!) last month, which surely cannot be repeated in December.<br><br><div class="separator"><a href="/images/2016/02/02/A3.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/02/02/A3.jpg" alt=""></div>
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<div> </div>
<div>The truth is still out there. Stay tuned, and have a great week! </div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em><span style="line-height: 1.3em;"> </span></p>
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pwargent-M4siyDbqQY

Brighter days ahead for Queensland: Pete Wargent

<html><body>
<p>GUEST OBSERVER</p>
<p>Australia continues to grow jobs, but wages aren’t keeping up and policymakers are running out of options.</p>
<p>Let’s begin with an economy that is doing relatively well.</p>
<p>In the US, the data were both predictable and moderately positive.</p>
<p>Consumer prices (as measured by the CPI) were up only 0.1% in October, but this was in line with expectations. Recall that two major hurricanes drove up gasoline prices in September, and those increases rolled off (they were up 13.1% in September and fell 2.4% in October). The year-on-year CPI increase was 2.0% – again, in line with expectations.</p>
<p>The Producer Price Index (PPI) rose by a healthy 2.6% on a year-on-year basis – despite a drop in gasoline prices for producers of 4.6% (note the difference between wholesale and retail price changes). Perhaps most importantly, there were relatively strong increases in elements of the index that the US Federal Reserve cares most about (as they are less cyclical than, say, energy prices), like healthcare costs.</p>
<p>Less expected, but happy news, was the 0.2% rise in retail sales. That puts retail sales up 4.6% on an annual basis. This is further evidence of the solid rebound in the US economy.</p>
<p>And now to Australia.</p>
<p>On the plus side, a fair number of jobs are being created. As Treasurer Scott Morrison was eager to point out on Thursday, 296,400 jobs have been created this year; 236,000 of them full-time.</p>
<p>But the continued depressing news is about wages. The wage-price index was up 0.5% for the third quarter, below market expectations of 0.7%. That puts annual wages growth at 2.0%. With inflation running at 1.8%, that means real wages growth is effectively zero. And it has been like that for a long time.</p>
<p>This is causing enormous problems for Australian households and policymakers.</p>
<p>Recall that Australian households are among the most highly leveraged in the world – with debts at around 190% of GDP. So what is going to reduce that debt?</p>
<p>There are two possibilities: more inflation or more income. Inflation helps reduce the debt in real terms, and income helps for obvious reasons. Right now, both avenues look shaky.</p>
<p>On the former, the Melbourne Institute reported on Thursday that inflation expectations fell this month, providing further evidence that future inflation is likely to be low.</p>
<p>On the latter, there has been a continued run of low wages growth. This is an experience being felt in advanced economies around the world. That suggests it is something to do with technology, or global economic conditions, and therefore not all that amenable to policy.</p>
<p>That leaves us with heavily indebted households, with no obvious way out. This, of course, puts a strain on consumer spending, which in turn affects business investment and employment, and the whole (vicious) cycle loops back on itself.</p>
<p>What is the cut-through for policymakers?</p>
<p>The RBA could drop interest rates from their current 1.50% level – and increasingly some economists are suggesting that. The worry is that a rate cut might further fuel housing prices, making the problem worse, not better.</p>
<p>Federal income tax cuts would be another avenue, but with the budget in structural deficit, and with an economically illiterate crossbench, that looks unlikely.</p>
<p>The government could embark on a major infrastructure spending plan, which could rejuvenate regional employment in areas hit by the forces of globalisation. With interest rates at very low levels, for very long maturities, this seems like a good idea, as long as the projects are assessed on a rational basis.</p>
<p>The concern in this regard is politics. Both major parties have their predilections and bases to pander to. A bad outcome would be, for example, a big coal mine investment by the Coalition, and some uneconomic green-energy boondoggle by the opposition.</p>
<p><img src="https://counter.theconversation.com/content/87517/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">As I have said before in this column, the US seems to be navigating the post-2008 economic world relatively well, although caution is certainly warranted. Australia is doing much less well. And the narrative that we have “successfully transitioned from the mining boom” seems a lot more like wishful thinking than hard evidence.</p>
<p><em><strong>Richard Holden</strong>, Professor of Economics and PLuS Alliance Fellow, UNSW.</em></p>
<p><em>This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/vital-signs-australias-mining-boom-transition-is-on-shaky-ground-87517" target="_blank">original article</a>.</em></p>
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j.ballantyne1990-6AQqhLzZaK

Australia's mining boom transition is on shaky ground: Richard Holden

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<p><span>GUEST OBSERVER</span></p>
<p><span>Australia's economy has done well, considering it has had to absorb a significant negative shock from the end of the mining boom. </span></p>
<p><span>Over the past few years, commodity prices have fallen by 60 percent and mining investment has declined from around 8 percent to 3.5 percent of GDP. </span></p>
<p><span>Historically, much smaller falls have typically caused recessions. But, as last week's GDP figures clearly illustrated, Australia's 'R-word' has been rebalancing not recession. Although business investment was a -1.6ppt drag on growth, overall GDP grew by a strong 3.3 percent y-o-y in Q2. </span></p>
<p><span>The mining investment fall has been more than offset by a ramp up in resources exports and growth in services exports, housing construction and household spending. Looking forward, the drag from mining investment and falling commodity prices should now fade. This is expected to mean continued solid overall GDP growth, despite the housing construction boom nearing its end. We see the RBA on hold in coming quarters. </span></p>
<p><span>The more downbeat economic observers have, in recent years, described the economy as falling off the 'mining investment cliff' and said that Australia would have an 'income recession' as a result of the fall in commodity prices. The end of the mining boom has, indeed, been a big negative shock to absorb. </span></p>
<p><span>But although mining investment has fallen significantly and declining commodity prices have weighed on nominal GDP, growth in real GDP and employment has remained solid. Last week's GDP numbers showed that Australia's economy grew at an above-trend 3.3 percent over the year to Q2 2016. Over the past five years, GDP growth has averaged 2.8 percent (which is around its trend rate) and jobs growth has been strong enough to see the unemployment rate fall from its early-2015 peak of 6.25 percent to now sit around 5.75 percent. </span></p>
<p><span>How has this happened? Australia's growth has been rebalancing from the mining to the non- mining sectors (</span><span>'Australia's great rebalancing act', December 2012</span><span>). Low interest rates have supported a housing price and construction boom while the lower AUD and rising middle class incomes in Asia are driving increased demand for Australia's services exports, including tourism, education and business services. </span></p>
<p><span>Importantly, the big drag from mining investment and commodity prices is almost done. The worst is in the past. As a result, even those that have been pessimistic about the impact of the end of the mining boom should now have less to worry about. </span></p>
<p><span>Mining investment, which has been a drag of a hefty 4.5ppts of GDP over the past four years, will stop being a drag soon. On our estimates, mining investment subtracted around 1.8ppts from GDP over the year to Q2 2016, but will only subtract 0.5ppts from growth in the year to Q2 2017 and will not be a drag the following year. </span></p>
<p><span>The drag will therefore subside by 1.3ppt this coming year and 0.5ppt the next year. And, because the LNG export ramp up will still be underway, the resources sector as a whole should contribute to overall real GDP growth. </span></p>
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<p><span>We also expect that commodity prices have already passed the trough. If so, nominal GDP growth, tax revenues and even wages should get some support. Commodity prices have already made up the losses from late last year and are flat y-o-y, so are no longer a drag. On our forecasts, nominal GDP growth could pick-up from 3.4 percent y-o-y in Q2 2016 to 6 percent y-o-y by Q2 2017. </span></p>
<p><span>Other downbeat commentators now point out that the end of Australia's housing price and construction boom could see weaker growth next year and into 2018. Having grown so strongly recently, housing construction will fall at some point and weaker house prices could deliver a negative wealth effect. While we agree that the housing price boom is over and that housing construction will start to be a drag on growth from around mid-2017, to us, the arithmetic suggests that this will be more than offset by the subsiding mining investment drag. </span></p>
<p><span>Mining will stop being a drag just as the housing sector becomes one. The net of the two effects should still leave the economy growing, as the fall in mining investment was much bigger than the decline in housing investment is likely to be. </span></p>
<p><span>We see little evidence that the housing price boom has driven a particularly strong positive wealth effect so doubt that the cooling of the housing price boom will see a significant negative one. </span></p>
<p><span>What will be the main driver of growth? Services exports, led by tourism, education and business services. It's already happening, and in our view, is set to continue. Keep in mind that the services sector accounts for over 70 percent of Australia's GDP. </span></p>
<p><span>This should continue to support jobs growth, as it has done in recent years. It should also start to spur more business investment. Last week's GDP numbers showed tentative signs of a pick-up in non-mining business investment. </span></p>
<p><span>Australia's rebalancing is almost complete, at which point we expect domestic wages and inflation to stabilise. Once we have passed the trough in domestic wages and underlying inflation we expect that the RBA is unlikely to cut further. Our central case has the RBA on hold at 1.50 eprcent in coming quarters. </span></p>
<p><span><span> </span><em><a href="https://www.about.hsbc.com.au/hsbc-in-australia/management-team" target="_blank">PAUL BLOXHAM</a> IS CHIEF ECONOMIST (AUSTRALIA AND NEW ZEALAND) FOR HSBC. </em></span></p>
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jchancellor-FAypfDUnLy

Property 101: Mining's big drag is almost done: HSBC's Paul Bloxham

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<p>GUEST OBSERVER</p>
<p>The rotation in economic activity towards the non-mining states is continuing, while conditions in mining states have become more challenging as commodity prices have fallen further.</p>
<p><span>•</span><span> </span><span><strong>In terms of domestic demand, NSW and Victoria will be the most solid performers, with growth gradually improving</strong>. </span></p>
<p><span>Both will receive less impetus from housing activity and prices in FY 2016-17. </span></p>
<p><span>Notwithstanding this, our central case remains for solid (though unspectacular) employment growth and lower petrol prices to sufficiently support household incomes and consumption (despite ongoing subdued wages growth). </span></p>
<p><span>•</span><span> </span><span><strong>The AUD is acting as a stabiliser, although the troubled global backdrop presents downside risk to all states and territories. </strong></span></p>
<p><span>Further depreciation of the AUD to USD66c will continue to improve the competitiveness of export-oriented and import-competing firms to varying degrees. </span></p>
<p>This will be particularly helpful for services sectors, including those benefiting from tourism and international student arrivals such as hospitality, retail and education. </p>
<p><span>States for which tourism-related activity makes up a large proportion of the economy such as Tasmania and Queensland will be particularly supported. </span></p>
<p><span>Tourism and education are also bright spots for NSW, Victoria, South Australia and the NT. </span></p>
<p>While not our core view, a sharper global slowdown could lower demand for travel to Australia, education exports and Australian property, particularly if the household sectors in China and East Asia come under stress. </p>
<p>Queensland and the Northern Territory will outperform in terms of overall gross state product in coming years as LNG export volumes ramp up.</p>
<p>However the outlook for associated income and government revenue has deteriorated as commodity prices have dropped further, and any residual mining-related investment in the pipeline is unlikely to proceed. </p>
<p>Western Australia is more advanced into the mining investment downturn, with broad-ranging effects to continue across the states’ economy in 2015-16, before LNG export volumes come through in subsequent years, but to a lesser extent than previously forecast. </p>
<p>A restrained approach towards non-mining business investment is likely to persist across all states in coming years.</p>
<p>Recent equity market volatility and uncertainty about future taxation arrangements are likely to add to this air of caution, particularly given firms continue to demand a restrictively high rate of return on investment. </p>
<p> </p>
<p><span>•</span><span> </span><span><strong>An overview of the outlook for each state and territory is in the attached document. Links to individual handbooks for each state and territory are available at the links below. </strong></span></p>
<p><span>•</span><span> <a href="https://business.nab.com.au/wp-content/uploads/2016/01/NSW_Jan16.pdf"><span><strong>New South Wales</strong></span></a></span><span> will remain the standout in terms of domestic demand. Robust employment growth will be supportive of household spending, while business conditions and capacity utilisation remain elevated, particularly across services sectors. The challenge for NSW will be maintaining robust growth as momentum from the housing sector begins to fade through 2016.</span></p>
<p>• <a href="https://business.nab.com.au/wp-content/uploads/2016/01/VIC_Jan16.pdf"><strong>Victoria</strong></a> will also continue to experience solid domestic demand growth, and is also well positioned to take advantage of the lower AUD in its tourism and education sectors. Strong employment growth will support consumer spending, although there will be less impetus from the housing sector through 2016. </p>
<p><span>•</span><span> </span><span>In <a href="https://business.nab.com.au/wp-content/uploads/2016/01/QLD_Jan16.pdf"><span><strong>Queensland</strong></span></a> , the sharp decline in mining investment will be offset by exports, although lower LNG and coal prices will reduce the export earnings, profitability and government revenue. Meanwhile, key tourist destinations are benefiting from the lower AUD (with interstate visitor arrivals particularly strong). Domestic demand growth is slowly improving. More attractive rental yields and housing affordability than in NSW and Victoria are driving dwelling investment in Brisbane.</span></p>
<p><span>•</span><span> <a href="https://business.nab.com.au/wp-content/uploads/2016/01/WA_-Jan16.pdf"><span><strong>Western Australia</strong></span></a></span><span> is well into the throes of the mining investment downturn, which is having a dramatic impact across many segments of the economy. Offsets from stronger mineral export volumes helped to prop up Gross State Product (GSP) growth in 2014-15, but big declines in state final demand have had a major impact on the state’s labour market and asset prices. These trends are expected to continue given the lack of momentum in non-mining sectors. A ramping-up in LNG exports in subsequent years should see growth lift, but by less than previously forecast.</span></p>
<p><span>•</span><span> <a href="https://business.nab.com.au/wp-content/uploads/2016/01/SA_Jan16.pdf"><span><strong>South Australia</strong></span></a></span><span> continues to underperform, challenged by unfavourable demographics and the structural decline of its manufacturing base. Business conditions remain weak, with the retail sector and some improvement in tourism rare bright spots.</span></p>
<p><span>•</span><span> <a href="https://business.nab.com.au/wp-content/uploads/2016/01/TAS_Jan16.pdf"><span><strong>Tasmania</strong></span></a></span><span> – while the outlook has improved over the last year, thanks in large part to a pick-up in business investment and strong domestic tourism, recent data suggest that the recovery may be losing a little steam. </span></p>
<p><span>•</span><span> <a href="https://business.nab.com.au/wp-content/uploads/2016/01/ACT_Jan16.pdf"><span><strong>Australian Capital Territory</strong></span></a></span><span> – the economy is gradually recovering from the recent fiscal tightening and public sector job cuts. The labour market has shown promising signs of improvement, and together with a modest pick up in population growth will support household consumption and dwelling investment. </span></p>
<p><span>•</span><span> <a href="https://business.nab.com.au/wp-content/uploads/2016/01/NT_Jan16.pdf"><span><strong>Northern Territory</strong></span></a></span><span> - Growth<strong> </strong>will remain strong in coming years as the Icthys LNG project commences export. Medium-term the economy will struggle to replace this source of income and employment, despite the lower AUD supporting tourism.</span></p>
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