Boutique development and construction firm <a href="https://www.apartments.com.au/developers/hsn-property-group">HSN Property Group</a> is the latest to seek a new apartment development through the NSW Government's&nbsp;Housing Delivery Authority.

They've filed a State Significant Development Application for a nine-storey building across nine consolidated lots on <a href="https://www.apartments.com.au/new-apartments/2-16-spencer-street-rose-bay-nsw-2029">Rose Bay's Spencer Street</a>, just 400m from the centre of the affluent suburb.

“The site’s location and context make it well suited to support a more diverse and sustainable residential offering in the area,” the developer stated in community consultation materials.

&nbsp;

The plans are for 54 apartments, 14 of which will be dedicated to affordable housing. There will be a mix of two- and three-bedroom apartments.

The proposal aims to contribute to housing diversity in the Woollahra Local Government Area while taking advantage of recent Low and Mid-Rise Housing Reforms introduced under the NSW Housing SEPP, according to the Scoping Report prepared by Urbis.

The architecture, led by <a href="https://www.apartments.com.au/architects/mhn-design-union">MHNDU</a>, reflects a "contemporary design approach sensitive to the character of Rose Bay." Communal amenities will include a wellness area with a pool and sauna, a gym, a wine lounge, and landscaped spaces with barbecue facilities.&nbsp;

“The proposed development will offer a suite of premium communal amenities designed to enhance resident wellbeing, foster social connection, and promote a healthy lifestyle,” the project team notes in its public materials.

Three levels of basement parking are planned, and EV charging facilities will be included, aligning with sustainability and transport objectives. A comprehensive traffic study is underway to assess and manage local impacts.

With 54 apartments, the proposal by HSN will be one of the largest developments in Rose Bay for decades. It tops the 50 apartments soon to launch by Orosi on <a href="https://www.apartments.com.au/new-apartments/the-avenue-rose-bay-1-the-avenue-nsw-2029">The Avenue</a>, near the Royal Sydney Golf Club.&nbsp;

Joel Robinson

First look: HSN plans Spencer St, Rose Bay apartment project

Lendlease’s Barangaroo South precinct is officially complete, marking the culmination of a 15-year urban regeneration project that has revitalised Sydney’s harbourfront.&nbsp;

In 2009, the NSW Government’s Barangaroo Delivery Authority appointed <a href="https://www.apartments.com.au/developers/lendlease-development">Lendlease</a> as developer to transform what was once an inaccessible container port on the western edge &nbsp;of Sydney’s CBD into one of the city’s most thriving mixed-use destinations. Today, Barangaroo South is home to more than 1,800 residents, 23,000 workers, 95 retailers and welcomes 33,000 visitors each day. The precinct stands as an international benchmark for large-scale urban regeneration.&nbsp;

International Towers Sydney, the three flagship commercial buildings at the centre of &nbsp;Barangaroo South, together with engineered timber buildings Daramu House and &nbsp;International House, attracted major corporate tenants from the outset, including Westpac, &nbsp;PwC and KPMG, who are still there today. These workplaces remain some of the most &nbsp;sought after in Sydney’s CBD with over 95 per cent occupancy– a testament to the appeal of world-class, modern infrastructure alongside the precinct’s dining and entertainment that &nbsp;are a drawcard for businesses.&nbsp;

One Sydney Harbour, the three luxury residential towers designed by world-renowned architect Renzo Piano, has achieved more than $4 billion in sales since its launch in 2019, while setting new Australia property price records. This includes the three-level penthouse that crowns Residences One which sold for more than $141 million in 2019 – the most expensive individual residential property ever sold in Australia. &nbsp;

[smartcode_project:default project_id=139801 project_image_fid=349150]

Barangaroo South is also Australia’s first mixed-use carbon-neutral development, an accolade achieved through energy-efficient and innovative infrastructure, including a district cooling plant with a harbour water heat rejection system, a recycled water &nbsp;treatment plant, onsite solar and an embedded electricity network.

The precinct has maintained its Climate Active Carbon Neutral certification since 2019, affirming its &nbsp;reputation as the gold standard in large scale, sustainable urban renewal. Additionally, its &nbsp;world leadership status has been validated by the Green Building Council of Australia’s &nbsp;6 Star Green Star Communities recertification (Pilot v.2).

[smartcode_project:default project_id=139801 project_image_fid=349157]

First Nations cultural values were embedded throughout the planning and delivery of the project. The precinct honours Barangaroo, a prominent First Nations woman, through its &nbsp;name. Public art, street names, and design elements across the precinct reflect and &nbsp;celebrate First Nations cultures and connections to Country.&nbsp;

The project's completion positions Barangaroo South as a legacy urban transformation delivered through long-term partnerships and world-leading urban regeneration and placemaking capabilities. &nbsp;

[smartcode_project:default project_id=139801 project_image_fid=349154]

Tony Lombardo, Group CEO Lendlease, said&nbsp;Barangaroo South represents one of the most significant urban regeneration projects in Australia.

"[It] demonstrates what can be achieved through an ambitious vision, innovative placemaking, long-term commitment and strong partnerships. The precinct has changed the face of Sydney's waterfront, established new benchmarks &nbsp;for sustainable development, and provided a model for urban regeneration that continues &nbsp;to inform our approach to creating places that deliver long-lasting value.”&nbsp;

Tom Mackellar, CEO Development Lendlease, said&nbsp;Barangaroo South has reconnected the city to its harbour in a way that seemed unimaginable 15 years ago and turned it into a thriving precinct where people can live, work and gather on the harbour’s edge.&nbsp;

“This precinct is the result of countless contributions, led by the NSW Government who set the ambition, supported by investment partners who believed in Lendlease’s vision, imagined by architects and designers, shaped by consultants and artists, and brought to &nbsp;life by our dedicated construction teams. &nbsp;

“What we’ve created here is more than buildings – it’s the best of placemaking, sustainability, arts and culture and quality design. Barangaroo South has become an integral part of Sydney that will serve our city and economy for generations.”

Staff Writer

Barangaroo South’s 15-year transformation of  Sydney’s waterfront officially complete

CBE Asia Pacific has lodged plans for a prominent corner site in Fitzroy North, with a proposal that integrates state-significant affordable housing alongside heritage adaptation and new retail.

The application covers a consolidated 2,024 sqm parcel at 201–215 Queens Parade and 6–12 Dummett Crescent. The site includes the heritage-listed Former Clifton Motor Hill Garage, fronting Queens Parade, and vacant land to the rear abutting Dummett Crescent.

According to planning documents prepared by proUrban, the proposal seeks approval for a 12-storey residential building comprising 98 apartments, including a component of affordable housing, over a ground floor retail podium integrated within the heritage structure. Approximately 780 sqm of retail space will occupy the ground floor, while residents will have access to over 850 sqm of communal amenity.

The built form presents as two connected volumes: a 12-storey tower addressing Dummett Crescent and a five-storey volume fronting Queens Parade, the latter consistent with a separate Heritage Victoria permit granted in 2023. The tower reaches a maximum height of 38.26 metres, with upper-level setbacks of 14 metres from the western boundary to reduce visual bulk. A 1.5-metre footpath widening is proposed to Dummett Crescent Lane.

Parking is provided across four basement levels, accessed via Dummett Crescent, with a total of 142 car spaces and 143 bicycle spaces.

The architectural response by <a href="https://www.apartments.com.au/architects/cht-architects">CHT Architects</a> is framed by a need to reconcile new density with a sensitive heritage overlay. The Former Clifton Motor Hill Garage, identified as a place of State heritage significance, will retain its key façades, with demolition and reconstruction limited to approved elements.

As noted in the Heritage Impact Assessment, the proposal remains consistent with the Heritage Victoria permit, which allows "partial demolition, reconstruction and new works, involving the construction of a five-storey multi-use development and three basement levels".

Affordable housing has been embedded into the proposal under Clause 53.23, with specific apartment allocations aimed at enhancing housing diversity within the Queens Parade Activity Centre.

"The proposal is generally consistent with the relevant policy objectives and the intent of the Yarra Planning Scheme," proUrban states in its planning assessment, citing its alignment with strategic documents including Plan Melbourne and Victoria’s Housing Statement.

CHT Architects' plans emphasise a tiered design that acknowledges the site's varied interfaces—from the elevated Heidelberg Road ramp reserve to the recently built Clifton Views aged care facility to the north-east.

CBE Asia Pacific has not been previously active in this precinct, but the project joins a wave of higher-density residential proposals along the Queens Parade corridor, spurred by Melbourne’s broader push to increase affordable housing in well-connected inner-urban areas.

The site benefits from direct access to the Queens Parade tram corridor and proximity to Clifton Hill Station (approximately 200 metres), as well as green open spaces including Mayors Park and Raines Reserve. Clifton Hill Primary School and the Queens Parade retail village lie within walking distance.

First look: CBE Asia Pacific plans 100-apartment Jenkin House on Queens Parade, Fitzroy North

ALT Pasta, one of Melbourne’s most beloved inner-city pasta bars, has been confirmed as one of the first tenancies for the highly anticipated <a href="https://www.apartments.com.au/new-apartments/comme-prahran-182-194-commercial-road-prahran-vic-3181">Comme Prahran</a> development, marking an exciting next chapter for the cult favourite as it prepares to expand into the heart of <a href="https://www.apartments.com.au/developments/prahran-vic-3181">Prahran</a>.

Fresh off being named National Best Italian Restaurant at the 2025 Restaurant &amp; Catering Hostplus Awards for Excellence, ALT continues to solidify its reputation as a quietly confident leader in Melbourne’s dining scene. Lauded for its reinterpretation of Italian pasta through a Korean and Japanese lens, the restaurant has grown into a staple since opening three years ago, and its new Prahran outpost will only deepen its local impact.

“From the very beginning, ALT has been about respect - for tradition, for ingredients, and for the process,” shares Mino Han, ALT’s founder, a Korean-Australian chef whose vision is shaped by cultural duality and craftsmanship.&nbsp;

“We’re not trying to reinvent the wheel, just make something beautifully familiar, feel quietly special,” added Han.

[smartcode_project:default project_id=108413 project_image_fid=353585]

Positioned at the entrance to Comme Prahran and directly opposite the iconic Prahran Market, the new venue will celebrate the interplay between casual comfort and elevated detail. Designed in collaboration with Rooftop Architecture, the same team behind ALT’s flagship city location, the space will mirror the neighbourhood’s laid-back energy while staying true to the brand’s understated refinement.

Diners can expect a frequently changing menu that takes advantage of the market’s daily produce, along with set menu offerings exclusive to this location. A distinctive chef’s table and open kitchen format are also in the works, allowing guests to experience ALT’s signature intimacy and transparency in a new light.

ALT Prahran won’t replace the original venue; rather, it complements it.

“Our city site is like our heritage bottle; it’ll age gracefully. Prahran is where we’ll play, explore new ingredients, and bring something special to the community,” Mino notes.

[smartcode_project:default project_id=108413 project_image_fid=353584]

For Comme Prahran, a boutique development by Leeka that blends heritage with multi-dimensional wellness, ALT Pasta’s arrival signals a meaningful addition to its vision of cultural connection, food-first living, and local engagement.

“Being part of Comme is more than just opening a second venue. It’s about contributing to a neighbourhood with character, history, and a strong sense of community. That’s something we deeply relate to,” says Mino.

Sustainability and cultural identity are deeply embedded in the ethos of ALT. From ingredient sourcing to interior design, the new location will reflect both environmental mindfulness and a spirit of inclusion, embodying the values of Melbourne’s diverse, forward-thinking culinary scene.

Comme Prahran is scheduled for completion in late 2027, with ALT Pasta expected to be among the first tenancies to open its doors shortly after.

[smartcode_project_cta:default project_id=108413]

National best Italian restaurant ALT Pasta to open at Comme Prahran, bringing refined familiarity to Melbourne’s culinary heart

National BEST Italian restaurant ALT Pasta to open at Comme Prahran

&nbsp;Boutique development and construction firm Ryser has filed plans for its debut apartment building.

Ryser, founded by Jonthan Ryan and Wil Prosser, has sought to develop <a href="https://www.apartments.com.au/new-apartments/sorelle-4a-fern-place-woollahra-nsw-2025">Sorelle</a>, 28 new apartments at 4a Fern Place, Woollahra.

The&nbsp;750 sqm site on the edge of Bondi Junction falls within the Grafton Precinct Heritage Conservation Area, though it is currently vacant and not identified as a contributory item.&nbsp;

<a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> has been commissioned to design Sorelle, creating an eight and a nine-storey building with six apartments dedicated to affordable housing to support essential workers&nbsp;under the NSW Government’s low and mid-rise housing policy.

The dwelling mix includes 12 one-bedroom units, six one-bedroom affordable units, six two-bedroom units, and four three-bedroom residences.<img alt="4A Fern Place, Woollahra." data-entity-type="file" data-entity-uuid="86626941-772d-49c5-8d31-a8e42f44cdcc" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Fern%20bldg%20st.png?VersionId=tWIzXYX9gD60nP1L3..Z0BFbY5mafb36" />

According to the planning documents submitted to the Woollahra Council, the development responds to the complex interface of heritage fabric and urban infrastructure with two mid-rise residential buildings oriented to the north and designed to capitalise on sweeping views over Sydney Harbour and Bellevue Hill.&nbsp;

“The proposal aims to hero some of the brick detailing of Woollahra, celebrating the existing datums of Fern Place, whilst embracing the strong verticals of the Holy Cross Church and Bondi Junction with a nod to the historic iron works and iron rich soils of the area,” Woods Bagot noted in their Design Report.

&nbsp;

Only three car parking spaces are proposed, alongside 33 bicycle bays, in a move that leverages the site's proximity to Bondi Junction train station, just 400 metres away.

Architecturally, the material palette incorporates Corten steel and face brickwork to reference the site’s industrial past and local geological character. Landscaping features include a communal garden bridging the two buildings at ground level, landscaped setbacks to protect visual privacy, and a small corner park intended to soften the public interface.

<img alt="4A Fern Place, Woollahra." data-entity-type="file" data-entity-uuid="f71766d6-aa14-44df-9bc5-42f91890fd4a" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Fern%20bldg%20rear.png?VersionId=uh7u1rJ6NJF5OqyRs9iNJcy6R9ssgaXU" />

Ryser said Sorelle "brings together the best of both worlds, the intimacy of village life with the amenity and luxury of modern design."

The developer said the project marks the first of three developments they will be announcing shortly, a key step in their&nbsp;evolution as a builder-developer delivering meaningful, high quality urban outcomes across Sydney.

The expectation is the Woollahra LGA will become popular for developers with the signal from the NSW Government they will deliver&nbsp;<a href="https://www.apartments.com.au/developments/sydney-nsw" target="">Sydney</a>’s first new heavy rail station in more than a decade – enabling up to 10,000 new homes by rezoning land around&nbsp;<a href="https://www.apartments.com.au/developments/woollahra-nsw-2025" target="">Woollahra</a>&nbsp;and&nbsp;<a href="https://www.apartments.com.au/developments/edgecliff-nsw-2027" target="">Edgecliff</a>&nbsp;stations.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/next-stop-woollahra-train-station-delivering-up-to-10-000-new-homes-in-the-heart-of-sydney">Next stop Woollahra train station - delivering up to 10,000 new homes in the heart of Sydney&nbsp;</a>

First look: Ryser plans two apartment buildings on Woollahra, Bondi Junction border

Petrol

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Significant land banking and value are set to be unlocked due to the major changes to Sydney's public transport and road network system.
Opportunities are likely to be added along major arterials across the city.
CBRE's Victor Sheu told SMH that the new WestConnex tunnel project would divert traffic flow and commuters from the M4, unlocking greater commercial opportunities in the city’s Inner West.
“Service stations are already among the most sought after commercial assets, with properties secured by five – ten year leases achieving record tight yields," Sheu said.
"This is further exemplified by the severe shortage of commercial investment properties readily available to satisfy the growing investment mandate across Sydney at present."
“With 16 service stations located along Parramatta Road, the current changes to the city’s infrastructure network present attractive investment and land banking opportunities – with these properties underpinned by strong underlying land values as well as long term leases for immediate income.”
Sheu said changes in the city’s transport network – coupled with the rise of sustainable energy – could prompt further changes in the service station sector.
“With more leading vehicle manufacturers taking a step towards alternate energy sources, introducing both hybrid and fuel-free models, there is likely to be decreased demand on petrol – and subsequently the stations that service them."
“Given service stations are currently trading at a market peak, we expect owners to look at reassessing the use of these assets – either looking at alternative commercial uses or expanding the service station model to incorporate more of a food and beverage element.”
Caltex has already expanded its service beyond the traditional service station offering, having recently partnered with breakfast cafe ‘The Foodary’.
“With service stations traditionally located on high exposure sites, there is a huge opportunity to expand the service station model to capitalise on the shifting business environment with a food and beverage component,” Sheu said.
“We’re likely to see more service stations adopt this strategy, in addition to some owners looking at re-evaluating their assets all together to maximize value.”
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j.ballantyne1990-6AQqhLzZaK

Sydney’s changing road network fuels major changes to service station market

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MAB Corporation has sold a state-of-the-art service station and convenience store complex on Melbourne's West Gate Freeway for $22.5 million, the largest sale of a petrol station anywhere in Australia for more than 10 years.
The sale reflects a 5.5 percent yield.
The property was sold by Savills Chris Jones, Clinton Baxter and Ben Hegarty, in conjunction with Dawkins Occhiuto's Andrew Dawkins and Walter Occhiuto.
They said the marketing campaign generated strong international and local interest, with the purchaser a Melbourne based private investor.
 
"In addition to numerous local bids, we also generated multiple offers from Asia and Europe, with purchasers particularly driven by the property’s enviable and unique position on the West Gate Freeway, one of Australia’s busiest roads," Chris said.
"It was an opportunity that rarely comes to market and unlikely to be repeated given the dearth of similar sites and properties offering such strong locational advantages."
Clinton said investor interest was also driven by the state-of-the-art facility and the first rate tenancy profile offering stable long-term cash flow.
"The property offered investors a brand new state-of-the-art facility with maximum depreciation benefits to complement the strong income from A-grade tenants Shell, Hungry Jacks and Red Rooster."
"It really ticked all the boxes of a superb commercial investment,’’ he said.
The property at 62 Cook Street, Port Melbourne was constructed and opened earlier this year.
Walter Occhiuto said the property was sold subject to leases to Viva Energy Australia (Shell/Coles Express), Hungry Jack’s and Red Rooster on 15 year terms, for a total net income of $1.41 million.
The brand new complex comprises nearly 700 sqm of buildings, 1200 sqm of canopy and 57 parking spaces on a large 10,000 sqm site.
 
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MAB’s West Gate sells for $22.5 million

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GUEST OBSERVER
According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell 3 cents per litre to 113.9 cents per litre in the week to April 24.
The national average wholesale (terminal gate) unleaded petrol price stands at 102.4 cents per litre, down 1.5 cents per litre on a week ago and still up 6.7 cents a litre on the lows set in mid-February.
The petrol figures have implications for retailers, especially petrol marketing groups.
What does it all mean?
The latest data on petrol prices confirms that - contrary to popular belief and media reports – pump prices do not tend to rise ahead of a long weekend. Motorists enjoyed the cheapest petrol ahead of ANZAC Day in 11 years, with the national average price falling by 3 cents a litre.
As always, competitive factors, the discounting cycles and variable lags between wholesale and retail prices determine how capital cities and regional centres fare. But at present the key driver of pump prices is the variations in the discounting cycle across the capital cities. In Sydney, prices have been falling for 18 days and in
Melbourne prices have been falling for almost four weeks, with petrol at around $1.08 a litre in both capital cities.
Brisbane prices have been falling for a fortnight and are closer to $1.14 a litre. Adelaide prices spiked a week ago and have started to drift lower. Adelaide motorists would benefit by holding off from filling up the family vehicle.
Not only have global oil prices eased in the past week but the Aussie dollar has held up relatively well – ensuring that any saving in regional oil prices should get passed through to the bowser within the next fortnight.
In the short term, oil production disruptions in Kuwait and speculation of a further lift in potential supply by major oil producers will keep oil markets volatile. CBA commodity analysts expect oil to potentially drift to US$30-35 a barrel in the near term.
Importantly cheap fuel continues to keep inflation contained and the Reserve Bank will keep an implicit easing bias in play over the next six months.
<a href="/images/2016/04/27/Screen%20Shot%202016-04-27%20at%209.57.20%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/27/Screen%20Shot%202016-04-27%20at%209.57.20%20AM.png" alt="">
What do the figures show?
Petrol prices
According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell 3 cents per litre to 113.9 cents per litre in the week to April 24. The metropolitan petrol price fell by 4.9 cents to 113.6 cents per litre while the regional price rose by 0.9 cents to 114.5 cents per litre.
The national average Australian price of diesel petrol fell by 0.2 cents to 111.8 cents per litre in the week to April 24. Last week the metropolitan price fell by 0.3 cents to 110.6 c/l, while the regional average price was down 0.1 cents to 112.8 c/l.
Average unleaded petrol prices across states and territories over the past week were: Sydney (down 9.3 cents to 108.5 c/l), Melbourne (down 6.2 cents to 111.5 c/l), Brisbane (down 7.8 cents to 118.9 c/l), Adelaide (up 6.7 cents to 124.4 c/l), Perth (up 1.2 cents to 111.5 c/l), Darwin (down by 0.3 cents to 115 c/l), Canberra (down 0.7 cents to 115.9 c/l) and Hobart (unchanged at 117.4 c/l).
Today the national average wholesale (terminal gate) unleaded petrol price stands at 102.4 cents per litre, down 1.5 cents per litre on a week ago and still up 6.7 cents a litre on the lows set in mid-February. The terminal gate diesel price stands today at 98.5 cents a litre, up 0.2 cents a litre over the week.
Last week the key Singapore gasoline price rose by US$1.75 or 3.2 per cent to US$56.10 a barrel. However prices eased yesterday to US$55.30 a barrel. In Australian dollar terms the Singapore gasoline price rose by $2.13 a barrel (0.2 per cent) to $72.61 a barrel or 45.7 cents a litre. Yesterday prices eased to $71.73 a barrel or 45.1 cents a litre.
MotorMouth records the following retail prices for capital cities today: Sydney 108.1c; Melbourne 107.5c; Brisbane 113.7c; Adelaide 119.4c; Perth 120.5c; Canberra 107.5c; Darwin 113.8c; Hobart 117.8c.
What is the importance of the economic data?
Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory's metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
<a href="/images/2016/04/27/Screen%20Shot%202016-04-27%20at%209.59.05%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/27/Screen%20Shot%202016-04-27%20at%209.59.05%20AM.png" alt="">
What are the implications for interest rates and investors?
Lower oil prices may add further downward pressure on energy stocks and increase volatility across sharemarkets. However cheap fuel is a positive for a number of sectors including transport and logistics.
Filling up the car with petrol is the single biggest weekly purchase for most families. So the savings being reaped at the petrol bowser are serving to boost discretionary spending in areas such as cafes, restaurants and takeaway outlets.
Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>
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jchancellor-FAypfDUnLy

Cheapest ANZAC Day petrol in 11 years: CommSec's Savanth Sebastian

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GUEST OBSERVER
The headline CPI lifted 0.4 percent in Q4 compared to Westpac’s and the market’s 0.3 percent forecast. The annual rate is reported as 1.7 percent/yr compared to 1.5 percent/yr in Q3.
The core measures, which are seasonally adjusted and exclude extreme moves, rose 0.5 percent/qtr on par with the market’s expectation (Westpac was slightly higher at 0.6 percent/qtr). In the quarter, the trimmed mean gained 0.57 percent while the weighted median lifted 0.47 percent. The annual pace of the average of the core inflation measures is now 2.0 percent from 2.1 percent in Q3 (Q3 was revised from 2.2 percent).
<a href="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%202.51.51%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%202.51.51%20PM.png" alt="">
Of note in Q4 was some signs of pass through from a weaker AUD in the stronger than expected rise in clothing &amp; footwear (1.6 percent/qtr). However, in the quarter this was more than offset by the weaker than expected print from housing (0.1 percent/qtr). 
The March quarter brings solid “knowns” but many ‘unknowns’ linger.
 The March quarter will bring the usual inflationary pressure from health and education. We also see meaningful seasonal increases in tobacco. Another solid known is the significant offset from the fall in automotive fuel prices. But, as always, a large number of unknowns remain. We don’t have access to a lot of the data the ABS uses and, in many cases, it is not possible to replicate the survey process the ABS uses causing many small errors along the way. We use many alternative sources and surveys to guide our forecasts but in the end a large part of the forecast remains a judgement call.
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<img src="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%202.53.44%20PM.png" alt="">
Automotive fuels are again a significant negative.
One of the most obvious events in the last few quarters has been the extreme volatility in the pump price of automotive fuels. From a peak at the start of the quarter of $1.20/l, the pump price fell to a low of $1.04/l by the end of February before finishing the quarter around $1.12/l. In terms of the quarterly averages, we forecast that the price of automotive fuels will fall around 11percent producing a significant —0.39ppt drag on the CPI. Fuel is again the most significant negative we have found for the December quarter CPI.
<a href="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%202.57.22%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%202.57.22%20PM.png" alt="">
We have noted before that the fall in Australian pump prices has lagged behind the Australian dollar price of Singapore gasoline. But at the end of the March quarter there was a lift in the AUD value of Singapore gasoline that was not reflected in the pump price. We previously had wondered if Australian prices had room to fall further, even with no additional fall in Singapore prices, as the spread returned to more normal levels. For now, at least, that spread has been normalised by rising Singapore prices.
Fruit &amp; vegetables set to be a modest drag.
This quarter our forecast for a 3 percent rise in vegetable prices is more than offset by the 7 percent fall in fruit prices. All up the 2.4 percent fall in fruit &amp; vegetable prices will provide a 0.07ppt drag on the CPI.
There are the usual seasonal rises in cereal products, pork and food additives. However, we are careful to contrast the ongoing price discounting we are seeing in the very competitive groceries space against the ongoing pass through of the weaker AUD to import foodstuffs. Our forecasts see food &amp; non-alcoholic beverages contribute less than 0.1ppt to the CPI.
<a href="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%202.58.30%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%202.58.30%20PM.png" alt="">
Seasonal rise in tobacco prices.
There is no indexing of tobacco in the March quarter but historically this quarter has tended to see strong rises anyway. We have taken the view that there is a clear risk of a strong rise in tobacco prices again this March quarter. We also note that the Inflation Gauge also reported solid price rises for tobacco in Q1.
Holiday travel costs will be reversed in Q3.
Holiday travel was a touch stronger than expected in Q4 following on from a weaker than expected print in Q3. So it would be tempting to put in a softer than usual forecast for Q1 but BITRE (Bureau of Infrastructure, Transport &amp; Regional Economics) data on best price economy airfares is pointing to just a modest decline, as good as flat. So with the Inflation Gauge highlighting some modest gains in domestic holiday travel we have pencilled in a 2percent rise in domestic holiday costs, added to the small 0.5percent rise in international holidays. The rise in international holidays is due to the trickle through impact of the depreciation of the AUD offsetting the usual out of season discounting.
Dwelling prices have moderated.
Dwelling prices have been very volatile of late. Melbourne dwelling prices were particularly volatile in 2015 but as the year ended we were surprised by a 0.2percent decline in Sydney dwelling prices - the softest print since Q4 2011. Just as we saw in Melbourne in 2014, we don’t expect this to be repeated and, in fact, a bit of a bounce 
Sydney dwelling prices is very likely.
Westpac is expecting dwelling prices to hold their more modest pace in Melbourne and Brisbane with the mix of outcomes in the other cities pointing to a 0.6percent gain in Q4.
Housing overall makes a positive contribution of 0.11ppts.
Rents are expected to remain on a very benign path with a gain of just 0.3percent (was 0.2percent in Q1 so there are downside risks to this forecast) with modest gains in other housing costs and utilities.
AUD depreciation will have a modest impact.
We also expect to see more, if still modest, pass through of the inflationary impact of the AUD depreciation. This will appear as a moderation to the usual seasonal discounting of household contents and services; our forecast for a 0.7percent fall follows on from a 0.6 percent rise in Q4 and an average fall of 1.1 percent in the previous three March quarters. We also expect to see more modest than usual discounting for clothing &amp; footwear, –1.1 percent/qtr compared to –2.5 percent/qtr in the last three March quarters.
Overall seasonality tends to be negative in Q1.
Despite the usual seasonal rise in pharmaceutical, heath services and education in Q1, the ABS now reports Q1 with a seasonal negative as our seasonally adjusted estimate, using the current ABS seasonal factors for March 2016, is 0.1ppt stronger at 0.5 percent than our headline CPI forecast. In fact rounding hides the full impact of the seasonal adjustment, 0.15ppts at two decimal places. Seasonal discounting in clothing &amp; footwear and household contents are now having a greater impact on seasonality in the survey than the annual price resetting in administrative prices.
There is an important caveat however: the ABS conducts concurrent seasonal re-analysis and the revisions to the seasonal factors can sometimes be quite significant. As such, we caution that we can’t be sure what the ABS will estimate as the seasonal impact in Q1. This matters as the components of the CPI are seasonally adjusted before they are trimmed for the core measures. As such, revisions to the seasonal factors can impact not just the current estimate of core inflation but also historical estimates.
<a href="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%203.04.07%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/19/Screen%20Shot%202016-04-19%20at%203.04.07%20PM.png" alt="">
Core inflation to remain at the bottom of the band, just.
Westpac is forecasting the average of the core measures to rise 0.6percent in Q4 with the annual pace holding flat at 2.0percentyr.
Traded goods &amp; services are forecast to fall 1.3 percent/qtr moderating the annual pace to 0.7 percent/yr from 0.8percentyr; non-traded prices are also forecast to rise 1.2 percent/qtr lifting the annual pace to 2.5 percent/yr from 2.3 percent/yr. Non-traded prices remain the key source of inflationary pressures with the focus still on housing and recreation.
Risks balaced for headline, downside for core.
A seasonally soft March quarter is a recent phenomena that emerged during the time of a very robust AUD which appears to have inspired greater post-Christmas sales discounting. This March, we are expecting some modest pass through from the weaker AUD but falling petrol prices and modest gains in housing costs will keep the lid on both headline and core inflation. While the Melbourne Institute Inflation Gauge points to a robust Q1 CPI print, we acknowledge downside risks to our core inflation forecast as core inflation has recently tended to surprise us on the soft side. 
 
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Justin Smirk is ‎senior economist, Westpac Group and can be contacted <a href="https://www.westpac.com.au/about-westpac/westpac-group/" target="_blank">here</a>.\
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