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

Mining Investment

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It may be the biggest mistake property investors make: once they have bought something, they stop researching.
There’s a common mentality among real estate consumers that the need to stay informed disappears once you’ve fulfilled your buying criteria.
Prior to purchase, some (not all) will spend some time and/or money on research and advice. But they won’t make the same effort, or any effort, to stay informed beyond acquisition. 
I recently hosted a webinar in which Melbourne buyers’ agent and author Miriam Sandkuhler was the guest presenter. One of the key points she impressed upon her audience was the importance of a regular review of your property portfolio and your overall goals and strategies.
Most Australians don’t do that. Set and forget seems to be the overriding philosophy. And many with that approach get caught in bad situations.
Hotspotting receives a lot of distress calls from investors who bought in locations where property values have fallen subsequently.
Sometimes they’ve bought in locations that were never going to perform. But often they’ve bought in an area that delivers growth initially, until something fundamental changes. That causes a downturn in the market – but investor owners often find out too late.
Queensland boom-bust industrial city Gladstone provides a case study. Five or six years ago, this looked like a good place to invest, with three gas projects worth a combined $60 billion (bringing tens of thousands of jobs) poised to start construction. And, for a couple of years, that promise was borne out by results. Rents and prices rose strongly.
But then big changes occurred in that market. One was that developers had flocked in large numbers to that market and too much new product was being built. The problem was exacerbated by the second fundamental shift, which was the decision by the resources companies to use primarily FIFO workforces with personnel staying in temporary accommodation camps, rather than buying or renting local dwellings.
We wrote extensively about the shift in that market and the likely consequences. The message was: stay out of that market – or, if you already own there, now might be a good time to sell before the market drops.
But many of those who had already bought in Gladstone had tuned out. They no longer had their finger on the pulse. By the time many owners realised the tide had turned against them, it was too late to sell without taking a loss.
Anyone who bought in coal-mining town Moranbah in the early part of the century would have enjoyed a decade of the most spectacular capital growth in Australian history. If they’d sold at any point before 2013, they would have made lots of money.
Then the market turned for reasons that are similar to those for Gladstone, with the added element of the big downturn in coal prices. What followed by the polar opposite of the previous spectacular growth. 
Similar, though less dramatic, scenarios are being played out regularly in markets around Australia. Two or three years ago the middle-market suburbs on Brisbane’s northside were market leaders for sales activity and price growth. Small to medium sized developers saw an opportunity and suddenly these areas are awash with development of new units and townhouses. Vacancies have risen to unacceptable levels in some suburbs. 
If you bought something in that precinct two years ago and then focused on other things, you’re probably not aware of the change in the market.
The message again and again is: you can’t stop the research process just because you’ve filled your current buying criteria. You need to stay up to date. And you need to conduct that regular review of your investment situation suggested by Miriam Sandkuhler.
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a>
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terryryder-YECXbqmri2

Property price slides in mining towns Gladstone, Moranbah playing out around Australia

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The Australian property market generally performed well in the June quarter, according to the Residex research group.
The Sydney, Melbourne and Brisbane markets saw strong gains over the June quarter, with the exception of Brisbane units.
The resource markets in WA and NT continued their decline, however the pace of the declines has slowed. 
Table 1: June 2016 Summary
<a href="/images/2016/08/04/700_table_1.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/08/04/700_table_1.jpg" alt="">
Source: Residex
Australia wide, the median house increased in value by a very modest 0.03 percent during the June quarter, while units increased by 2.58 percent.
However, the strong growth in the unit market follows a 1 percent decline in the previous quarter. Graph 1 shows quarterly growth over the last 10 years.
Graph 1: Quarterly Growth in Australian Houses &amp; Units
<a href="/images/2016/08/04/Graph_1.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/08/04/Graph_1.jpg" alt="">
Source: Residex
"Recent divergence between the performances of the different dwelling types may be partially explained by the growth cycles of houses and units being unsynchronised," Eliza Owen, market analyst for Onthehouse.com.au/Residex said.
"At times, the unit market appears to have led the house market.
"This can be seen in Graph 1 in the upswing of 2009 and again in 2012-2013.
"As property has become increasingly used for investment purposes, and units become popular amongst investors, unit investment from speculators may provide first movement in the market.
"This early signal may then flow through to other segments of the market, adding to momentum and overall demand," she said.
Other explanations for the divergence may be the relative affordability of units, or units becoming an increasingly preferred dwelling for locations in cities.
"In Sydney, the house market saw strong growth of almost 3% in the June quarter – largely driven by capital gains in June," Eliza Owen said.
Sydney houses grew 8.02% in the 12 months to June, increasing the median value by $55,000. However, this annual growth rate is down from a peak in the growth cycle of 21.95% in September 2015 when the median Sydney house increased $172,000 over the year. Growth in Sydney may ease further as dollar rents are stagnating in units and falling in houses.
A similar surge in the June quarter occurred in Brisbane houses, which had the strongest quarterly capital growth rate at 2.95%.
Quarterly growth in Hobart houses began to subside, with values falling 1.34% over the June quarter.
In Darwin, median values continue to fall with houses losing 5.16% over the year to June while units declined in value by 6.23%. However, the data suggests that the pace of losses have started to ease as the dwelling growth cycle may have entered a cyclical trough. In the short term, growth may come into a cyclical upswing, though this is somewhat dependent on the amount of investment and interest in the Northern Territory.
Graph 2: Quarterly Growth in Darwin Houses &amp; Units
<a href="/images/2016/08/04/Graph_2.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/08/04/Graph_2.jpg" alt="">
Source: Residex
"There was a cyclical trough in growth reached in early 2011 and again in early 2016.
"The growth patterns show that a trough does not signify the end of a downward trend in these dwellings.
"With completion of the Ichthys project expected in early 2017, as well as ongoing declines in rental rates and transaction numbers, it is uncertain whether this market has fully corrected," Eliza Owen, market analyst for Onthehouse.com.au said.
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Mining dependent WA and NT pace of price decline has slowed: Residex

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GUEST OBSERVER
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.
• In terms of domestic demand, NSW and Victoria will be the most solid performers, with growth gradually improving. 
Both will receive less impetus from housing activity and prices in FY 2016-17. 
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). 
• The AUD is acting as a stabiliser, although the troubled global backdrop presents downside risk to all states and territories. 
Further depreciation of the AUD to USD66c will continue to improve the competitiveness of export-oriented and import-competing firms to varying degrees. 
This will be particularly helpful for services sectors, including those benefiting from tourism and international student arrivals such as hospitality, retail and education. 
States for which tourism-related activity makes up a large proportion of the economy such as Tasmania and Queensland will be particularly supported. 
Tourism and education are also bright spots for NSW, Victoria, South Australia and the NT. 
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. 
Queensland and the Northern Territory will outperform in terms of overall gross state product in coming years as LNG export volumes ramp up.
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. 
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. 
A restrained approach towards non-mining business investment is likely to persist across all states in coming years.
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. 
 
• 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. 
• <a href="https://business.nab.com.au/wp-content/uploads/2016/01/NSW_Jan16.pdf">New South Wales</a> 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.
• <a href="https://business.nab.com.au/wp-content/uploads/2016/01/VIC_Jan16.pdf">Victoria</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. 
• In <a href="https://business.nab.com.au/wp-content/uploads/2016/01/QLD_Jan16.pdf">Queensland</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.
• <a href="https://business.nab.com.au/wp-content/uploads/2016/01/WA_-Jan16.pdf">Western Australia</a> 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.
• <a href="https://business.nab.com.au/wp-content/uploads/2016/01/SA_Jan16.pdf">South Australia</a> 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.
• <a href="https://business.nab.com.au/wp-content/uploads/2016/01/TAS_Jan16.pdf">Tasmania</a> – 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. 
• <a href="https://business.nab.com.au/wp-content/uploads/2016/01/ACT_Jan16.pdf">Australian Capital Territory</a> – 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. 
• <a href="https://business.nab.com.au/wp-content/uploads/2016/01/NT_Jan16.pdf">Northern Territory</a> - Growth 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.
 
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A delicate re-balancing act: NAB's Alan Oster

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Commercial property markets in the Newcastle and Hunter region have improved, however the market is suffering in the mining sectors of the region.
Valuation firm Herron Todd White suggests that the industrial market is relatively robust in strong and well sought after locations such as Beresfield and Thornton.
"While there is certainly downward pressure on market vales, we haven’t really seen solid market evidence of capital value decreases.
"Current rents have reduced slightly from the soft peak of two to three years ago," the report says.
The HTW month in review suggests however the market is suffering significantly north of Hunter Valley where mining takes over from Newcastle's city and port.
"We’ve noted hard evidence during the year of both capital and rental value diminution in the Rutherford market where activity has been very limited.
"Further up the valley to areas even more heavily mining sector reliant such as Singleton (McDougalls Hill) and Mount Thorley, local agents indicate that buyer enquiry is essentially at a standstill," the report says
Herron Todd White said that they are aware of numerous indiustrial properties built in the last five years that the occupier has had to vacate.
"One of these properties has been on the market for sale and lease since construction in 2011 with only minor subleasing of office components occurring," says the November review.
Despite the negative figures posted north of Hunter the selling activity in small start titled industrial units closer to Newcastle remains relatively strong, with the sales activity being dominated by owner occupiers generally buying the property through superannuation funds, the report indicates.
"This trend remains unchanged throughout the year and has intensified marginally given the potential tax savings available under this scenario.
"The industrial market in 2015 has most definitely been affected by reductions in mining sector activity and spending cutbacks which directly influences the requirement for mining services companies in the Hunter Valley.
"We expect this trend to continue in 2016 and if mortgage stress takes hold with any increase in interest rates, the potential for further value reductions in the Hunter Valley is high."
 
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jrobinson-rf4aSBido9

Commercial property in Newcastle improving: HTW

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GUEST OBSERVER
Based on current indicators, Australia appears to be about 30% of the way through the mining capex decline. The remaining downturn in mining investment will make a significant detraction from the economy, from a GDP perspective, but also from the impact on the labour market. The labour‑intensive nature of the mining investment upturn means that a major risk from declining investment resides in the potential job losses.
To date, the labour market has held up reasonably well.  While the unemployment rate has increased by 0.1ppts over the past year (as the participation rate has increased by 0.3ppts), annual employment growth is running at a solid 2.1% (or 220K).  This outcome is a noticeable step up from the 1%pa employment growth a year ago.  Job gains in construction areas (related to the residential construction upturn) along with parts of the services industry (health, professional services, tourism) are more than offsetting mining‑related job losses. 
<a href="/images/2015/08/13/Screen%20Shot%202015-08-13%20at%2012.47.46%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/08/13/Screen%20Shot%202015-08-13%20at%2012.47.46%20PM.png" alt="">
The questions now are how many more mining‑related job losses will flow through the labour market? And will the labour market be strong enough to absorb these potential job losses?
Resource construction versus resource production employment
One of the offsets to declining resource construction jobs is the pick up in production/extraction jobs created as the mining boom enters the final (or third and operational) phase of the mining boom cycle.  But, the operational stage of the mining process requires much fewer jobs compared to the workforce required in the construction phase.  
<a href="/images/2015/08/13/Screen%20Shot%202015-08-13%20at%2012.49.18%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/08/13/Screen%20Shot%202015-08-13%20at%2012.49.18%20PM.png" alt="">
RBA research indicates that the ratio of construction to operational workers is:
·         2‑3:1 for coal and iron ore mines (8% of capex);
·         10:1 for WA LNG projects (around 51% of capex) and;
·         5:1 for QLD LNG (as per our research).  QLD LNG accounts for around 32% of capex.  
QLD LNG is based on coal seam gas and requires an ongoing investment in drilling wells and pipeline construction, therefore requiring an ongoing construction‑related upstream workforce.
<a href="/images/2015/08/13/Screen%20Shot%202015-08-13%20at%2012.50.51%20PM.png" target="_blank">Click to enlarge</a>
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Diana Mousina is economist for CommonWealth Bank of Australia. You can follow her on Twitter <a href="https://twitter.com/dianamousina" target="_blank">here</a>.
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