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

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.

“It’s a fantastic milestone for us to receive the green light on our second Gold Coast project,” said Trent Keirnan, Founder of Azure.

“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.

“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;

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”.

Residents will have access to an array of lifestyle amenities, including a resort-style pool with multiple lounging zones and landscaped gardens.

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.

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.

Joel Robinson

Azure approved for new townhouse development in Southport

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.

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.

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.

[smartcode_project:default project_id=13181 project_image_fid=348529]

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.

Jordan Winada, Head of Acquisitions (Commercial) Victoria at Fortis, said the approval was an important step in delivering the broader vision for the project.

"Richmond Square has always been about creating a destination rather than simply delivering residential apartments," Winada said.

"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.

"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."

[smartcode_project:default project_id=13181 project_image_fid=348530]

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.

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.

Winada said buyers are now placing greater emphasis on the broader precinct and surrounding amenity when making purchasing decisions.

"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.

"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."

[smartcode_project:default project_id=13181 project_image_fid=348534]

The hotel is expected to open in early 2027, with the operator to be announced later this year.

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.

[smartcode_project_cta:default project_id=13181]

Fortis approved for hotel component of Richmond Square precinct

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.

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.

<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" />

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.

They have again enlisted MAS Architecture Studio, the architects behind Sunset by Dusk, to design the new eight-storey development.

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.

Pending approvals, the project could launch before the end of the year.

<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" />

The development will provide 111 car parking spaces and 40 bicycle spaces.

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.

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.

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>.

Over 80 per cent of the 36 apartments have sold ahead of its early 2027 completion.

&nbsp;

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

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.

The final apartment at Monarch sold at auction on the 30th May for $4.1m.&nbsp;

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.

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.

<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" />

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;

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.

“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.

"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.

“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;

[smartcode_project:default project_id=113455 project_image_fid=211466]

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.

“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.

“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.

“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.”

[smartcode_project:default project_id=113455 project_image_fid=302326]

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.

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;

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.

[smartcode_project:default project_id=113455 project_image_fid=211495]

Colliers Director of Residential Andrew Scriven said the move-in phase highlights continued demand for completed premium riverfront apartments in Brisbane.

“Residents are now experiencing firsthand the scale, craftsmanship and irreplaceable riverfront position that Monarch offers,” Scriven said.

“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.”

Monarch Residences was designed in collaboration with Melbourne-based architect Wardle Studio, alongside leading national practice Cottee Parker, with construction delivered by Hutchinson Builders.

[smartcode_project_cta:default project_id=113455]

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

An entity directed by HSN's Rafi Assouline and Rebel Property's Allen Linz has filed plans for an impressive new precinct in Woolloomooloo.

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.

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.

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.

<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" />

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>.

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.

<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." />

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.

&nbsp;

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.

<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" />

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.

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.

Rebel had secured approval for the concept plans late last year.

First look: HSN, Rebel, advances Woolloomooloo precinct plans

Paul Bloxham

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Sydney house prices could fall by as much as 15 per cent next year, while Melbourne could see a 17 per cent drop, according to an HSBC analysis.
Australian house prices could tumble 12 per cent in 2021, as a U-shaped recovery and COVID-19-related policies take their toll, Paul Bloxham, chief economist at HSBC, suggests.
However this year, the gains already accumulated before the pandemic will offset the decline in prices expected in the second half.
Nationally, prices could end 6 per cent higher, with Sydney up as much as 9 per cent and Melbourne as much as 7 per cent higher.
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Bloxham predicts stalled migration and rising unemployment were likely to drive housing oversupply.
However Bloxham said low interest rates would work to make the housing market attractive to borrowers.
<div>The overall impact, Mr Bloxham said, was that national housing prices will fall between 2 per cent and 12 per cent in the 2021 financial year.</div>
The drop could even be deeper if the economic recovery was an “L” or “W” shape.
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Next year Sydney prices could fall between 5 per cent to 15 per cent, with Melbourne dropping by 7 per cent to 17 per cent.
The analysis was by HSBC's chief economist, Paul Bloxham, and colleague Daniel Smith.
"Forecasting housing prices is difficult at the best of times, but at the moment it is particularly challenging," they wrote.
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<div id="adspot-320x360_320x120_320x50_300x250_300x50-pos2-mobile"> "We expect larger declines in housing prices in Sydney and Melbourne than in Australia's other cities, given greater reliance in these cities on migration and foreign students, which have stalled as a result of border closures."</div>
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j.ballantyne1990-6AQqhLzZaK

Sydney house prices could fall by 15 per cent, and Melbourne 17 per cent drop next year: HSBC

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After five years of strong house price gains in Sydney and Melbourne, the market is cooling, particularly in Sydney (Chart 14).
 In both cities, housing price growth has run at double-digit annual rates over the past five years. However, in the past six months, Sydney house prices have declined 3% and Melbourne price growth has slowed to a 5% annual rate. The rest of the country has had low single-digit house price growth over the whole period.
Click <a href="https://www.propertyobserver.com.au/images/2018/1/22/blox4.jpg" target="_blank">here to enlarge.</a>
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The slowdown in Sydney and Melbourne has been driven by a number of factors. 
First, housing supply has ramped up, as an apartment building boom has delivered new dwellings to market.
 Second, prudential settings have been tightened, which has also included an increase in lending rates for investors. 
Third, foreign demand has pulled back, reflecting restrictions on Chinese capital outflows, constraints on lending to foreign buyers by domestic banks and increased local taxes on foreign buyers. 
We expect these factors to continue to weigh on housing price growth in the coming quarters and forecast national housing price growth to slow from the near double-digit rates of recent years to 3-6% in 2018 (Table 16). 
Click here <a href="https://www.propertyobserver.com.au/images/2018/1/19/FORECAST.jpg" target="_blank">to enlarge.</a>
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We expect housing construction to remain at a high level over the next 6-9 months – given a large pipeline of apartment construction that is already underway – and expect it to be a drag on GDP growth from H2 2018 and in 2019 (Chart 15). 
However, we do not expect a sharp decline in housing prices and expect only a modest decline in construction activity, as both are likely to be supported by strong population growth and low interest rates. Although we see the RBA beginning to lift its policy rate in 2018, we expect only a slow pace of cash rate tightening and some relaxation of current tight prudential settings as the housing market cools. 
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A hard landing is possible, but we believe this would require a negative shock from abroad and a sharp rise in the unemployment rate. In short, we do not see a significant local housing imbalance and view Australia as having had a housing boom rather than a bubble (for more on this see Downunder Digest: Australian housing: Cooling not crashing, 12 December 2017). 
Household debt concerns may be overdone 
A key concern that has been flagged by the RBA, amongst other observers, is that household debt levels have risen in recent years (Chart 17). 
This concern has a number of dimensions. 
First, if new household debt has been misallocated, then falling housing prices or a rising unemployment rate could threaten financial stability. 
While this could be a concern, we see the recent household debt as having been reasonably well allocated, given tightened prudential settings. We also expect the unemployment rate to fall, rather than rise in the coming quarters. 
Second, slower growth in credit, as the housing boom cools, could crimp consumer spending. However, we see little evidence that the ramp up in household debt in recent years has supported much consumer spending. Unlike the housing price and debt boom of the early 2000s, households have been injecting equity into their houses in recent years, rather than withdrawing it (see Downunder Digest: Australia’s shifting consumer, 27 June 2017). 
In addition, although the national household savings rate has fallen, which could be a sign of a wealth effect, it has not fallen in the states that have had housing booms – New South Wales and Victoria (Chart 18). Instead saving rates have fallen in the mining states, which is likely to reflect the end of the mining boom weighing on incomes, rather than a positive wealth effect. 
Finally, it is also worth keeping in mind that although household debt has risen, driven by a rise in new borrowing, on average, existing mortgage holders have been paying down their mortgages faster than required and thereby building up a buffer against negative income shocks. 
One way to measure this buffer is to look at how much funding households have in their mortgage offset accounts.
 As Chart 17 shows, when these account balances are netted out, the climb in household debt has been much shallower. 
In our view, the key to the outlook for consumption growth is the forecast for household incomes. Strong jobs growth is already supporting a pick-up in household income growth and our central case suggests the tightening labour market will also see wages growth lift in 2018, further supporting household income growth and consumer spending.
 There are already signs that consumer sentiment is lifting (Chart 19). 
Click here<a href="https://www.propertyobserver.com.au/images/2018/1/19/sneitment.jpg" target="_blank"> to enlarge.</a>
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We see the RBA lifting its cash rate in 2018
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Given the expected pick-up in growth, tightening labour market and expected rise in wages growth this year, we expect the RBA to begin to normalise its cash rate setting in 2018. 
The cash rate has been at its record low of 1.50% since August 2016 and the RBA has stated that it estimates Australia’s neutral rate to be around 3.5%, suggesting that monetary policy is currently very stimulatory. As the policy rate setting is well below neutral, we see the RBA as likely to want to start lifting its cash rate as soon as it is confident that wages growth is past its trough. 
Keep in mind that wages growth is usually a lagging indicator of the economy. 
Our central case is that the RBA will lift its cash rate in Q2 2018 although the risk is that it takes a little longer for the central bank to be convinced that wages growth is past its trough and underlying inflation is headed back to target. 
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jrobinson-rf4aSBido9

Any 2018 property market hard landing requires a shock from abroad and sharp rise in unemployment: HSBC's Paul Bloxham

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Australia is set to ride the global growth wave.
 We forecast above-trend (and above-consensus) growth of 3.2% in 2018.
An improving business sector and tightening labour market should lift wages growth, supporting household spending.
We expect the RBA to start lifting its cash rate around mid- 2018 and see the AUD rising to US84 cents in 2018.
Hangin’ ten on a global wave 
A wave of global growth is gaining momentum and should support Australia’s economy in a number of ways. First, commodity prices have lifted, boosting national incomes, corporate profitability, and tax revenues. Second, rising global demand is supporting demand for exports of energy commodities, high-quality food products, and tourism and education. Finally, the lift in global optimism is supporting a pick-up in business conditions, driving rising local investment and hiring. 
We expect GDP growth to pick up from 2.4% in 2017 to 3.2% in 2018 (consensus is 2.8%). This outlook is underpinned by HSBC’s above-consensus China growth forecast (6.7% versus 6.4%) and our view that the lift in local business conditions will continue to support hiring, which, as it tightens the labour market, should drive a pick-up in wage growth. The lift in wage and jobs growth is expected to support stronger growth in household incomes, consumer spending, and tax revenues. 
Although Australia’s housing construction boom is coming to its end, we expect the drag to be more than offset by a stabilisation in mining investment (after significant declines in previous years), a pick-up in investment in urban infrastructure, and by rising business investment. Overall, investment is set to rise solidly in 2018. 
We see house price growth slowing in 2018, after a five-year boom. However, we do not expect significant price falls, as the market is supported by strong population growth, some expected loosening of prudential settings, and mortgage rates that are still historically low (despite our view that they will edge higher in 2018). 
The clearest signs of improvement in the economy are in the labour market. Jobs growth has been strong and the timely indicators suggest continued solid momentum. We expect the unemployment rate to fall to a ‘full employment’ level in 2018, supporting a pick-up in wages growth. We also expect growth in 2018 to be the most broad-based across regions and industries in more than a decade, which should see increased demand for skills across a wide range of areas, supporting wages growth. 
We expect the RBA to lift its cash rate in 2018, with a first hike pencilled in for Q2. With hikes expected, we see the AUD rising to US84 cents in 2018. 
<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.  
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Australia in 2018 : Surfs up! Cash rate too! Riding the global growth wave

Australian housing, cooling not crashing: HSBC's Paul Bloxham

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Australia’s current expansion is its longest boom.
GDP growth has been continuous for 26 years, with no ‘technical recession’ during that period.
By some measures, Australia’s is the longest boom of any developed economy, although there is some debate about that. What it means can also be disputed.
For example, Australia has had contractions in per capita GDP, so part of the boom is due to strong population growth. Although the cycle is not dead, its amplitude has been tamed, at least for now. It is also important to understand how it happened. Luck and good management have both played a role. There may also be lessons that can help sustain growth in the future, as well as for other countries. Fiscal reform is a priority if the longest boom is to continue.
Recessions are nasty. They usually result in a rise in unemployment, which is highly positively correlated with ill-health, high crime rates, and other negative social and political outcomes. Recessions can also have lasting effects. Long-term unemployment can lead to skill atrophy, making it harder to find a job even once the economy recovers. Deep and long recessions, like the Great Recession, have had a lasting negative effect on a generation of workers.
Although not recent, examples from Australia’s recessions are still powerful and worth recalling. The impact of Australia’s early 1990s recession (1991) on the labour market was deep and damaging. The unemployment rate rose significantly and did not return to its pre-recession level for 14 years. It caused significant harm. For example, many middle-aged workers who lost their jobs in Victoria’s manufacturing industry, which was hard hit, never worked again. Designing policy to avoid recessions has been the macroeconomist’s ‘Holy Grail’.
Australia’s 26 years of growth are important and worth acknowledging. They will also hopefully yield lessons for the future. However, it is important to be clear about what Australia’s experience is not. It does not mean that the cycle is dead. The world has had a number of periods where sensible observers claimed that this was the case. In 2003, Nobel prize-winning economist, Robert Lucas, famously stated that the ‘central problem of depression-prevention has been solved’, ahead of the Great Recession in 2008. Harking back to earlier days, there was a strong belief in Australia in the 1960s that the Keynesian prescription of active demand management, using fiscal policy, had solved the macroeconomic problem of that time. This was before significant recessions in the 1970s, 1980s, and 1990s. These accounts proved to be hubris.
Australia will almost certainly have a recession at some point. However, what is clear is that over the past 26 years, the volatility of Australia’s economy has been much lower than at any other time in the country’s history and most other countries experiences. This is worth studying. Australia has managed to dodge a number of global shocks, including: avoiding a recession during the Asian financial crisis in 1997/1998, the IT bubble of 2000, and the Global Financial Crisis of 2008/2009. Australia also avoided having a recession at the end of a housing credit and price boom in 2002/2003, during a drought of the early 2000s and at the end of the recent mining investment and commodity price boom, which peaked in 2011/2012.
Part of it has been luck. Australia’s geography has become a blessing. What Australian historian, Geoffrey Blainey, famously described in 1967 as a ‘tyranny of distance’ from Western markets has become the ‘power of proximity’ as global growth has shifted towards Asia. Australia has also been fortunate to have a large stock of high-quality resources, such as iron ore, coal, and gas that have been in high demand.
However, it is not all luck. A strong rule of law has helped. While many other large mining economies, with weaker institutional foundations, have suffered from the ‘resources curse’, Australia has managed to benefit from its large resource endowment. Market reforms in the 1980s and 1990s, including the floating of the Australian dollar, made the economy more flexible and better able to deal with global shocks. There may be lessons for other countries. Although the Global Financial Crisis raised questions about the ability of market-based systems to deliver widespread benefits, Australia stands out as a successful market-based economy.
Good economic management has also played a role. An independent central bank with a clear mandate to flexibly target inflation has proved to be an appropriate institutional arrangement for a medium-sized commodity-producer. The RBA has adeptly managed the cycle maintaining on- target inflation and financial stability and deserves significant credit for the long boom.
There have also been challenges. In recent times it has proved difficult to run balanced budgets, with the federal budget approaching its tenth consecutive year of deficit, despite the earlier boost to national income from the mining boom. Economic reform has also proved difficult, particularly of the tax system, which is becoming increasingly inefficient. Housing supply, energy, and climate policy also need reform and policymakers ought to continue to focus on ramping up infrastructure investment. The lack of reform may, itself, be a consequence of the long boom as policymakers and voters may have become complacent. It would be disappointing to think that Australia might need a recession, with all of its damaging effects to the economy and communities, in order to motivate reform.
Eventually, Australia’s long boom will end. The trigger will most likely be a negative shock from overseas. A sharp downturn in Asia, when one arrives, would prove harder for Australia to deal with than the Global Financial Crisis, which was centred on the developed world. Australia’s high levels of household debt would be likely to exacerbate any downturn.
Australia needs reform to support productivity growth and prepare for the next downturn. The priority should be fiscal reform, which leads to sustained budget surpluses. Measures should include, shifting the tax mix towards more efficient taxes, such as consumption tax, and cutting back on public spending commitments that do not deliver strong economic returns.
If there is one clear lesson from the long boom it is that Australia has benefited from a key part of the policy apparatus that is used for managing the cycle and securing the economy – the Reserve Bank of Australia – being independent from the political process. With this in mind, policymakers ought to consider ceding more authority for reform of other policy areas, such as transport and social infrastructure, energy and tax policy, to independent agencies. This could involve making recommendations by agencies such as the Productivity Commission, Infrastructure Australia, or Australia’s Parliamentary Budget Office, more binding. While politically challenging, the government could consider setting up an independent fiscal authority, akin to the RBA, but aimed at managing fiscal spending and taxation decisions.
As the global economy finally recovers from the lingering effects of the financial crisis, now is the time to focus on reform. It is clear that reform would help if the longest boom is to continue.
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Paul Bloxham is the <a href="https://www.about.hsbc.com.au/hsbc-in-australia/management-team" target="_blank">chief economist</a> of Australia and New Zealand for HSBC.
 
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Australia’s longest boom: How Australia did it and can it keep growing?

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GUEST OBSERVER
 
At this low level of the cash rate it seems that the hurdle for cutting further is very high.
One aspect of this is that the exuberant housing market remains a concern.
Another aspect is that despite the recent surprising fall in Q3 GDP, the RBA still expect GDP growth to pick up to an above trend pace of ‘around 3 percent over the next couple of years’ and for inflation to pick up to above 2 percent in 2017.
We agree with these forecasts and see the RBA on hold through 2017 before lifting the cash rate in 2018.
The RBA kept its cash rate steady today at 1.50 percent, as expected by 27 of 28 economists in the Bloomberg survey.
Just prior to the decision the market was pricing a 4 percent chance of a 25bp cut and a 15 percent chance of a 25bp cut by May.
The RBA seemingly has very little appetite to even consider cutting the cash rate further, with today’s statement not even describing it as an option.
Part of the reasoning is that the current low cash rate is already delivering a housing price boom in Sydney and Melbourne and there are increasing concerns about the exuberance of these housing markets.
It is also worth keeping in mind that Governor Lowe had already told us in a speech in November 2016 that cutting rates further may not be in the ‘public interest’ if it further boosted household debt even if it got inflation back to target more quickly.
The hurdle for a rate cut at this point in the cycle is clearly very high.
While we see the financial stability concerns as a key factor that kept the RBA on hold today, we also note that the central bank’s own take on the global and local economies remains quite positive.
On the global economy, the statement noted that growth in China had been stronger over the second half of 2016, that global business and consumer confidence had generally picked up and that inflation rates had generally moved higher.
It also stated that the recent lift in commodity prices was boosting Australia’s national income.
On the local economy, the statement (which was the first public comment from the RBA on the Q3 GDP numbers) suggested that the fall in GDP in Q3 was due to ‘temporary factors’ and that ‘reasonable growth’ was expected in Q4.
More importantly, the central bank re-affirmed that the RBA is still forecasting growth to pick up to an above trend pace of ‘around 3 percent over the next couple years’.
At the same time, it still sees inflation lifting back to the target band.
Focus will now shift to a speech the Governor is scheduled to deliver on 9 February and the official statement, due to be published on 10 February.
<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. 
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