<p>Brisbane-based developer <a href="https://www.apartments.com.au/developers/red-co">Red &amp; Co</a> has made a striking debut on the Gold Coast, officially unveiling its $250 million COMO development in Varsity Lakes, a lifestyle-driven residential project anchored by an extensive rooftop wellness and activity precinct.</p>

<p>Having recently launched to market, construction has already been fast-tracked by <a href="https://www.apartments.com.au/builders/5point-projects">5Point Projects</a>, ensuring momentum continues on what is set to become a landmark residential address for the growing Varsity Lakes community.</p>

<p>Located at 22 Lake Street, Varsity Lakes, <a href="https://www.apartments.com.au/new-apartments/como-varsity-lakes-22-lake-street-varsity-lakes-qld-4227">COMO</a> will comprise 156 apartments across 16 levels, comprising one-, two- and three-bedroom residences designed for modern living. However, it is the project’s rooftop amenity offering that sets COMO apart.</p>

<p>[smartcode_project:default project_id=135546 project_image_fid=363510]</p>

<p>Designed as a dedicated wellness and recreation hub, the rooftop will feature a 25-metre lap pool, fully equipped gymnasium, and multiple pickleball and paddleball courts - amenities rarely seen in boutique apartment projects.</p>

<p>Residents will also have access to a sauna and plunge baths, while landscaped gardens and relaxation zones will provide tranquil spaces overlooking sweeping panoramic views across the Gold Coast skyline.</p>

<p>The rooftop precinct has been designed to function as the social and wellness heart of the development, encouraging residents to embrace an active, balanced lifestyle within their own building.</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=135546 project_image_fid=363512]</p>

<p>Red &amp; Co director David Laverty said the amenity offering was central to the project’s design from the outset.</p>

<p>“Amenities were at the forefront of our decisions,” Laverty said.</p>

<p>“Buyers today are looking for more than just an apartment - they want a lifestyle that promotes health, connection and balance.</p>

<p>“The rooftop at COMO has been designed to be the epicentre of that lifestyle, with a suite of wellness and recreation facilities that are quite unique for a boutique development of this scale.”</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=135546 project_image_fid=363514]</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/bda-architecture">BDA Architecture</a>, the residences prioritise liveability, featuring spacious layouts, 2.7-metre ceilings and high-quality finishes throughout.</p>

<p>The development sits beside Bond University, placing residents within walking distance of education, retail and dining options within the vibrant Varsity Lakes precinct, including Robina Town Centre, Varsity Lakes Train Station and a range of leading schools.</p>

<p>[smartcode_project:default project_id=135546 project_image_fid=363511]</p>

<p>Laverty said the location was a key driver behind Red &amp; Co’s decision to bring the project to the Gold Coast.</p>

<p>“<a href="https://www.apartments.com.au/developments/varsity-lakes-qld-4227">Varsity Lakes</a> was a clear choice for us to invest in as it’s a lifestyle hub that seamlessly blends lakeside living with urbanity,” he said.&nbsp;</p>

<p>“Como will capitalize on this great location, delivering a project that not only creates premium homes, but a lifestyle defined by community, wellbeing, and connectivity.”</p>

<p>Red &amp; Co has delivered more than 500 apartments and townhouses across 26 projects in Brisbane in recent years, with COMO marking the company’s first major Gold Coast development.</p>

<p>[smartcode_project_cta:default project_id=135546]</p>


Joel Robinson

Red & Co unveils amenity-rich Como development in Varsity Lakes

<p>Gold Coast developer&nbsp;<a href="https://www.apartments.com.au/developers/big-projects">Big Projects</a> has secured approval for its second Mermaid Beach project.</p>

<p>The developer, currently selling <a href="https://www.apartments.com.au/new-apartments/the-frederick-mermaid-beach-2265-gold-coast-highway-mermaid-beach-qld-4218">The Frederick in Nobby Beach</a>, has secured approval for its next project just 1.5 kilomnetres up the road.</p>

<p>The new development, dubbed&nbsp;<a href="https://www.apartments.com.au/new-apartments/glenelg-residences-2462-2472-gold-coast-highway-mermaid-beach-qld-4218">Glenelg Residences</a>, has been designed by BDA Architecture and&nbsp;will have just under 100 apartments across an 11-storey building&nbsp;at 2462–2472 Gold Coast Highway, on the corner of Glenelg Avenue just under 300m from the future Mermaid Beach Light Rail stop.</p>

<p>The apartments, a mix of two- and three-bedrooms, will sit above a retail-focused ground plane and under extensive rooftop resident amenities.</p>

<p><img alt="Exclusive: Big Projects plot Mermaid Beach apartment development, Glenelg Residences" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screen%20Shot%202024-06-11%20at%209.55.04%20am.png?VersionId=z6NV4izeuvhBSSVlY6vK6TPO1LxrFeaG" /></p>

<p>BDA said in its planning submission that the project is intended to support the area’s transition toward higher-density, mixed-use living. “This project offers the opportunity to generate appropriate higher-intensity development within the future Light Rail corridor of <a href="https://www.apartments.com.au/developments/mermaid-beach-qld-4218">Mermaid Beach</a>,” the submission noted.</p>

<p>At ground level, Glenelg Residences will include eight retail tenancies designed to activate the street frontage, complemented by a basement bar offering an additional hospitality element. Above, residents will have access to a rooftop amenity deck featuring an infinity pool, hot and cold plunge spas, day beds, and barbecue facilities.</p>

<p>The architectural approach adopts a restrained material palette of brick, textured concrete, and integrated landscaping, with cantilevered concrete frames and cascading planting intended to soften the built form. BDA described the design as aiming to create “a memorable sculptural mid-rise mixed-use building” that responds to both its coastal setting and urban context.</p>

<p><img alt="Exclusive: Big Projects plot Mermaid Beach apartment development, Glenelg Residences" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screen%20Shot%202024-06-11%20at%209.55.45%20am.png?VersionId=cpjIVBqcT_sujmo2UMWkVyLcQ7WGJHaQ" /></p>

<p>The approval comes as the City of Gold Coast continues to plan for significant population growth, with regional targets requiring more than 100,000 new high-density dwellings by 2046.</p>

<section data-scroll-anchor="false" data-testid="conversation-turn-36" data-turn="assistant" data-turn-id="request-WEB:55d7c6ac-8e6d-4881-ad49-0ed9bf66d1cc-17" dir="auto">
<p data-end="436" data-is-last-node="" data-is-only-node="" data-start="244">Big Projects, led by Matthew and John Barrett, is part of a growing cohort of developers that deliver construction in-house, providing a high level of confidence to prospective purchasers.</p>
</section>

<p>[smartcode_project_cta:default project_id=150260]</p>


Big Projects secures approval for Glenelg Residences in Mermaid Beach

<p>Sherpa Group is ramping up its investment in the southern Gold Coast by lodging a development application for <a href="https://www.apartments.com.au/new-apartments/flourish-viver-87-griffith-street-coolangatta-qld-4225">Flourish Viveré</a>, a new $350 million project in Coolangatta.</p>

<p>The move comes after the group’s $27 million acquisition of the 2,029 sqm site on the corner of Griffith and Warner Street, last year.</p>

<p>They will develop 194 apartments across a 26-storey tower, which will become Sherpa’s largest project to date.</p>

<p>Viveré will be the next chapter in the Flourish story, following closely behind Amargo, Oasis, and the Avenues in Palm Beach, as well as Symphony in Brisbane, all designed to deliver affordable housing in lifestyle-rich locations, giving locals a real chance to secure a residence close to the beachfront.</p>

<p>The HAL Architect-designed project will offer a diverse range of residences, from one-, two, and three- bedroom apartments to the premium Canopy range to luxury penthouses.</p>

<p><img alt="Vivere" data-entity-type="file" data-entity-uuid="c85f5a7e-a22f-4745-8def-400adb3c0b35" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-15%20at%209.53.43%E2%80%AFAM.png?VersionId=OY.chur3BPExn1exQ2q8clHqWnW_CaBi" /></p>

<p>“The Gold Coast is undergoing a period of immense growth, with more people drawn to the incredible<br />
lifestyle that’s available, leading to strong growth in property prices,” said Christie Leet, founder of Sherpa<br />
Group.</p>

<p>“Our goal at Sherpa is to ensure locals are not priced out of the market in prime locations, which is why we<br />
created the Flourish collection.</p>

<p>“Flourish Vivere will form the next chapter in our portfolio, and we are so excited to be lodging the DA, marking our first project in Coolangatta.”</p>

<p>A signature of the Flourish developments is the communal rooftop. Flourish Vivere will showcase a private resident’s lounge, outdoor dining with barbecues and pizza ovens, heated pool, fully-equipped gym, and a wellness centre with sauna and steam room.</p>

<p><img alt="Vivere" data-entity-type="file" data-entity-uuid="c09372cc-aae6-4458-af2e-f291bd19a5e5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-15%20at%209.53.49%E2%80%AFAM.png?VersionId=Sc_RLXl5jiff.tnadogXjQJ_WIpDjf3p" /></p>

<p>The project is strategically located to offer a walkable lifestyle, with the Strand shopping centre, cafes, restaurants, shops and the beach, all just a short stroll away.</p>

<p>“We have meticulously planned Vivere to build on the Flourish legacy, creating a truly special project,”&nbsp;Leet added.</p>

<p>“Wellness, lifestyle and community are at the forefront of every decision we make, and that has not<br />
changed for Vivere.”</p>

<p>With the DA now lodged with the Gold Coast City Council, Sherpa has moved quickly to secure LPS Group as the builder, offering buyers a level of certainty that is rarely seen in today’s market.</p>

<p>Sherpa has delivered 16 residential projects over the past seven years with a pipeline of $1 billion, with more under construction.</p>


Sherpa takes Flourish brand to Coolangatta, lays plans for Flourish Vivere 

<p>S&amp;S Projects is boosting its investment at Rainbow Bay to more than $1 billion after the prolific Gold Coast developer acquired a new site for $20.25 million and immediately laid plans for a new luxury apartment project in the sought-after precinct.</p>

<p>The site, which is the company’s fifth acquisition at Rainbow Bay in the past four years, will be home to the company’s largest project to date after delivering 3 sold-out projects and construction progresses on Radia worth a combined $215m.<br />
S&amp;S Projects is currently finalising plans for its latest strategic acquisition, a 1,518 sqm site located 209-213 Boundary Street in Coolangatta, with a development application expected to be lodged within weeks.</p>

<p>The luxury residential development will build on the company’s highly successful projects at Rainbow Bay, comprising Flow, Awaken, Esprit and Radia, with Radia currently under construction by Hutchinson Builders.</p>

<p>“We have been unflinching in our commitment to Rainbow Bay and the transformation we have helped drive in this incredible part of the Gold Coast, which is among the city’s most desirable residential locations,” said S&amp;S Projects founder and director Paul Gedoun.</p>

<p>“Our fifth project will reflect the best of what we have done so far to create a lifestyle precinct that is second to none.”</p>

<p>The latest development, which has yet to be named, is proposed to accommodate 88 luxury apartments in a design that will immerse residents in a unique wellness lifestyle that expands on the legacy of S&amp;S Project’s earlier developments at Rainbow Bay.</p>

<p>The development will feature an expansive rooftop garden and wellness centre with a resort- style pool, among a host of lifestyle amenities planned for residents.</p>

<p>“Rainbow Bay, with its beautiful, protected beach and alongside one of the world’s best surf breaks at Snapper Rocks, is the natural wellness heartland of the Gold Coast,” said Gedoun.</p>

<p>“We are taking every advantage to create a truly unique rooftop wellness experience with a natural feel for residents, offering stone features throughout and an underlying theme that emulates a botanical garden.”</p>

<p>The latest acquisition comes as S&amp;S Projects is at the completion of Esprit and construction continues on Radia, which are part of their significant portfolio undertaken by the company at Rainbow Bay since 2022.</p>

<p>The $215 million Radia, which comprises 38 apartments, is currently the flagship development by S&amp;S Projects at Rainbow Bay which is expected to be completed in 2027.</p>

<p>Jayde Pezet, of Pezet Matheson, which has managed sales and marketing for S&amp;S Projects across their Gold Coast portfolio, emphasised the developer’s commitment to continuous improvement and excellence.</p>

<p>“S&amp;S Projects continue to elevate the benchmark of luxury with each development," Pezet said.</p>

<p>“We have worked with S&amp;amp;S on their 4 other projects in Rainbow Bay and their approach reflects a team that is constantly learning, refining, and pushing the standard higher.</p>

<p>“Their hyper-local knowledge and deep expertise within the luxury property sector are what truly set them apart, allowing them to deliver projects that feel both globally sophisticated and authentically connected to their coastal environment”</p>

<p>S&amp;S Projects plans to officially launch its latest project at Rainbow Bay in the second half of this year.</p>

<p>“As we embark on our largest project yet, we have pulled out all stops to create another landmark development that truly reflects the relaxed southern Gold Coast lifestyle,” Gedoun added.</p>


S&S buys $20m Rainbow Bay site for fifth beachside apartment project

<p data-end="268" data-start="86">Japandi, an emerging design trend that combines Scandinavian functionality with Japanese rustic minimalism, remains relatively untested in Australia’s residential development market.</p>

<p data-end="545" data-start="270">As developers look to differentiate their projects and offer something distinct to buyers, Brisbane-based developer Lantona has embraced the hybrid style for its recently launched Toowong apartment project, <a href="https://www.apartments.com.au/new-apartments/koya-residences-6-josling-street-toowong-qld-4066">Koya Residences</a>, with early response to the design proving positive.</p>

<p data-end="1014" data-start="547">Lantona entrusted Red Door Architecture and interiors practice Luma Design Co with delivering the Japandi brief. The approach blends Japanese minimalism with Scandinavian functionality, emphasising warm, restrained interiors, natural materials and clean lines. Drawing on the Japanese concept of <em data-end="855" data-start="844">wabi-sabi</em> (beauty in imperfection) and the Scandinavian principle of <em data-end="922" data-start="915">hygge</em> (comfort and cosiness), it creates serene, uncluttered and sustainable living environments.</p>

<p data-end="1200" data-start="1016">These design principles are expressed throughout the Josling Street development, both in its exterior form and across the 40 one-, two- and three-bedroom residences within.</p>

<p data-end="817" data-start="541">[smartcode_project:default project_id=150787 project_image_fid=366229]</p>

<p>Koya reflects a deliberately scaled approach, with the five-storey form designed to align with the surrounding residential streetscape rather than dominate it.</p>

<p>“Koya is conceived as a building that sits comfortably within its surroundings. Every decision, from material selection to spatial planning, has been guided by long-term liveability and enduring relevance,” the developer said.</p>

<p>[smartcode_project:default project_id=150787 project_image_fid=366243]</p>

<p>Positioned within an established inner-west neighbourhood, the development sits near riverfront parklands and the Bicentennial Bikeway, while remaining within walking distance of Toowong Village and multiple public transport options connecting to the CBD, St Lucia and West End.</p>

<p>Lantona said the location was central to the project’s conception, pointing to Toowong’s balance of green space, transport access and proximity to major education institutions.</p>

<p>“<a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> combines river access, walkability, immediate CBD connection and a strong educational presence. That balance made it the obvious setting for Koya.”</p>

<p>[smartcode_project:default project_id=150787 project_image_fid=366230]</p>

<p>Communal amenity is concentrated on the rooftop, where a shared retreat will include a pool, dining areas and outdoor spaces oriented towards neighbourhood and city views. The design allows for both private use and small gatherings, extending the living environment beyond individual apartments.</p>

<p>Koya enters the market at a time when smaller-scale developments are becoming less common in established suburbs, with many recent projects in the suburb shooting for the sky.</p>

<p>In a nod of confidence,&nbsp;<a href="https://www.apartments.com.au/builders/brisbane-builders">Brisbane Builders</a>&nbsp;has already commenced construction on the building, which is slated for completion in early 2027. Keenan &amp; Byrne is marketing Koya.</p>

<p>[smartcode_project_cta:default project_id=150787]</p>


Japandi-inspired Koya Residences launch in Toowong

Recession

<p>The extended lockdown across greater Sydney could be the catalyst for another Australian recession, according to experts surveyed in this month&rsquo;s Finder RBA Cash Rate Survey.&nbsp;</p>

<p>All 40 experts and economists that weigh&nbsp;in on future cash rate moves and other issues relating to the state of the economy, expect&nbsp;a rate hold for this month.</p>

<p>With greater Sydney set to be in lockdown until at least the end of August, the majority of experts who weighed in* (63%, 19/30) believe that the lockdowns could see Australia enter another recession.&nbsp;</p>

<p>Nearly 2 in 5 (38%, 8/21) of economists think that it could take as little as another two months in lockdown for the recession to hit.&nbsp;</p>

<p>Graham Cooke, head of consumer research at Finder, said all eyes will be on the length of Sydney&rsquo;s lockdown.</p>

<p>Close to half of respondents who responded (43%, 12) think that Australia&rsquo;s response to the pandemic has hurt its international reputation.&nbsp;</p>

<p>[smartcode_project:default project_id=7363 project_image_fid=41840]</p>

<p><strong>Uncertainty returns for employment and wage growth&nbsp;</strong></p>

<p>While positivity towards both wage growth and employment surged in July, August saw both of these economic indicators dip significantly.&nbsp;</p>

<p>Cooke said it was no surprise that the latest Covid developments had driven sentiment into the ground.&nbsp;</p>

<p>&ldquo;Last month, we saw positivity towards wage growth spike to its highest point since our survey began. While this has seen a sharp decrease, it&rsquo;s employment that&rsquo;s seen the biggest dip, dropping from 71% in July to 29% in August.&quot;</p>

<p>&ldquo;Positive economic sentiment overall has dropped to 14% in August, down from 28% last month,&rdquo; Cooke added.&nbsp;</p>


All 40 experts and economists surveyed expect a rate hold for this month.

jordan_55689

Experts warn extended Sydney lockdown could lead to another recession: Finder

<html><body>
<p>EXPERT OBSERVER</p>
<p>More carnage overnight with US stocks down another -10 per cent again in early trade to smash into the circuit breakers, with the Dow Jones shedding -36 per cent in less than a month, before a late rally.</p>
<div id="post-body-2582528096951691734" class="post-body entry-content">
<p>The oil price (WTI) was down at nearly $20 at one stage, before a bouncing to $22, nestling in at the lowest level since the early 2000s...so there are some value plays emerging there.</p>
<p>But overall, cash is king at the moment while stock market valuations continue to mean revert.</p>
<p>This risks sounding like a broken record, but it bears repeating that overall US stocks are still far too expensive given the outlook, and could yet fall another -30 per cent even from here (if things got really bad they could go much lower).</p>
<p> </p>
<div class="separator"><img src="https://1.bp.blogspot.com/-lq18M1eZhts/XnKhiiXFqbI/AAAAAAAA0vY/zUHAiE2ggegAqwyOYEAT9qR84VyY8a3tQCNcBGAsYHQ/s640/CAPE.jpg" width="640" height="308" data-original-height="526" data-original-width="1090"></div>
<span id="goog_1039971940"></span><br><div><em>Source: Shiller PE</em></div>
<br>Don't forget that previously healthy earnings are about to be decimated, with JPM forecasting US GDP to shrink by 4 per cent in Q1 and 14 per cent in Q2.<br><br>I can't watch another fund manager video demanding that you stay fully invested with them.<br><br>It's time to step away from the noise and remember the <a href="https://lowrateshighreturns.com/2020/03/16/applying-the-8-timeless-principles-in-a-bear-market/" target="_blank">8 timeless principles</a>!<br><br>The <a href="https://lowrateshighreturns.com/2020/01/04/maximising-your-long-term-wealth-with-the-kelly-criterion/" target="_blank">Kelly criterion</a> demands that you keep cash aside and live to fight another day - especially when markets are as overvalued as they have been - as better opportunities will always come around in the future.<br><br>Remember Rule #1: don't lose money.<br><br>The Aussie market stock index may catch a bid after a European stimulus announcement this morning.<br><br>This is Lagarde's own 'whatever it takes' moment, but the ECB promising no limits to its commitment to the Euro, and another massive asset purchase programme.<br><br>Still on the balance of probabilities the Aussie index increasingly looks likely to hit late 2009 levels this week in the 4,800s range this month.<br><br>This is a swift and brutal lesson in the importance of <a href="https://lowrateshighreturns.com/2019/12/29/the-magic-of-rebalancing/" target="_blank">rebalancing</a> and keeping cash aside for future opportunities arising, with a decade of price gains erased in about 20 trades.<br><br>Buy and hold at all times has been mistaken at times as a panacea or even a religion, but it's not; you need and do whatever it takes to keep yourself around to capitalise on the opportunities.<br><strong><span style="text-decoration: underline;"><br></span></strong><strong>'Whatever it takes' moment</strong>
<p> </p>
<p><span style="text-decoration: line-through;">A historic</span> <span style="text-decoration: line-through;">An historic</span> A momentous day ahead for Australian financial markets.</p>
<p>The Reserve Bank is set to make a landmark announcement at 2.30pm Sydney time, with Governor Lowe lined up to speak thereafter at 4pm.</p>
<p>Lowe will likely discuss an emergency cut in the official cash rate to 0.25 per cent, central bank purchases of government bonds, the ongoing conducting of repo operations, and other measures to ensure that credit continues to flow to households and businesses. </p>
<p>Global cases of the coronavirus continue to increase at this stage, suggesting that a serious disruption to the global economy lies squarely ahead, although <em>known</em> cases in Australia remain relatively low at this stage. </p>
<p> </p>
<p class="separator"><img src="https://1.bp.blogspot.com/-PpQcwNO9df0/XnKlqpCKgHI/AAAAAAAA0vg/zHXvgYR03PYK6i4HO-HDdOhrRudmyWKYACNcBGAsYHQ/s640/CV.jpg" width="640" height="388" data-original-height="503" data-original-width="828"></p>
<p>Daily new cases hit fresh highs yesterday (the February 12 spike was a data collation or measurement issue).</p>
<div class="separator"><img src="https://1.bp.blogspot.com/-QesSeFEsy4A/XnKs4AK_b6I/AAAAAAAA0vo/i5BTQupD2EEaQuoc-z-AD4xeoeGEq6pVACNcBGAsYHQ/s640/Cases.jpg" width="640" height="342" data-original-height="482" data-original-width="897"></div>
<br>The biggest surge in cases lately has been in Italy, with 35,713 cases and 2,978 deaths recorded to date.<br><br><strong>Recession ahead</strong><br><br>Major bank economists see the Aussie unemployment rate rising to 7 to 8 per cent (not that you can really forecast in the present environment), while the government's initial stimulus package probably isn't enough to save the economy from printing negative growth for both the first and the second quarter of the year.  
<p>This would lock in Australia's first recession in three decades. </p>
<p>Recent years been characterised by the Reserve Bank 'leaning against' asset prices and continually undershooting the inflation target, with persistently slow growth in wages and living standards.</p>
<p>Nobody could've predicted the great trifecta of drought, bushfires, and a global pandemic, of course, but the economy was already running well below potential before these shocks. </p>
<p>At this stage all we have is mostly anecdotes about the likely state of the economy, but so many of them reflect sharp drops in revenue, income, commissions, and profits, that this is no time for half measures.</p>
<p>Markets will be looking for a 'whatever it takes' pledge and from Lowe, and the use of unlimited monetary ammunition until things stabilise.<br><br>Anything less than that will be brushed aside in the savage market conditions.<br><br>From the government's perspective infrastructure programs and tax cuts aren't going to cut it.<br><br>What's needed is putting cash into the hands of households and small businesses today...to prevent the R from becoming a D.<br><br>They'll write books about all this next year; it's been a momentous month. </p>
<p><strong>PETE WARGENT</strong><em> is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em></p>
</div>
</body></html>

j.ballantyne1990-6AQqhLzZaK

Infrastructure programs and tax cuts won't be enough: Pete Wargent

<html><body>
<p class="post-title entry-title">EXPERT OBSERVER </p>
<div>GDP growth was estimated at a seasonally adjusted -0.3 per cent for Q1, leading to the inevitably mind-numbing 'recession we had to have' headlines.<br><br>Over the year GDP growth slowed to +1.4 per cent. </div>
<div> </div>
<div>Q1 could yet be revised up, of course - especially the very significant negative drag from inventories - and therefore the technical definition of a recession may yet be avoided. </div>
<div> </div>
<div>However, given that GDP growth in Q2 will clearly be severely negative this is largely semantics.</div>
<div> </div>
<div class="separator"><img src="https://1.bp.blogspot.com/-Pt_Gww_Reuc/XtgnFuMgFeI/AAAAAAAA2HQ/vLAGeFkHn3M9QOwI61ZNNpoOjf5yT5T5ACNcBGAsYHQ/s640/A1.jpg" width="640" height="372" data-original-height="804" data-original-width="1381"></div>
<p class="post-body entry-content"><br>Nominal GDP growth over the year is floundering again.<br><br></p>
<div class="separator"><img src="https://1.bp.blogspot.com/-ZfLhyXG8ULc/XtgnF37tlzI/AAAAAAAA2HU/Mx852eP3OhEMtJBOxcGwPqRhzAM8SiTUQCNcBGAsYHQ/s640/A2.jpg" width="640" height="362" data-original-height="794" data-original-width="1401"></div>
<p class="post-body entry-content"> </p>
<div>Real net national disposable income, as a proxy for living standards, has been fairly flat over the past six months. </div>
<p class="post-body entry-content"> </p>
<div class="separator"><img src="https://1.bp.blogspot.com/-NKWTgSUhZQs/XtgnF3i7aWI/AAAAAAAA2HY/CLQfAtv0DaM99MRoKMCyFkKHUTr-cnZfgCNcBGAsYHQ/s640/A3.jpg" width="640" height="368" data-original-height="804" data-original-width="1394"></div>
<p class="post-body entry-content"><br>And the terms of trade have held up well to date, well above the long-run average.<br><br></p>
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<p class="post-body entry-content"> </p>
<div>Meanwhile, the interest payable on dwellings continues to fall, now down to the lowest level since 2009 despite the dramatic increase in the dwelling stock over that time.</div>
<p class="post-body entry-content"> </p>
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<p class="post-body entry-content"> </p>
<div><strong><span style="text-decoration: underline;">Stimulus mixed</span></strong></div>
<div> </div>
<div class="separator"> </div>
<div>With the Reserve Bank fading quietly into the background, the government must now do the heavy lifting with its fiscal stimulus.</div>
<div> </div>
<div>The Aussie dollar has accordingly soared back towards US 70 cents, in turn slowing the adjustment process. </div>
<div> </div>
<div>The terms of the $688 million renovation stimulus missed the mark completely, leaving such a skinny cohort of prospective qualifying applicants that the government needn't have bothered with it. </div>
<div> </div>
<div>Essentially you must own a house and undertake an expensive renovation within the next few months, but without having a high income (while a whole heap of renovation options are excluded): </div>
<div> </div>
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<div>
<br>Perhaps some retirees might qualify for a grant, and maybe a few young homeowners with wealthy parents.<br><br>
</div>
<div>The terms of the HomeBuilder grant scheme for <em>new</em> homes are far better targeted, and will undoubtedly be a net positive for the industry. </div>
<div>
<br><strong>PETE WARGENT</strong><em> is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em>
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GDP headed down, recession all but locked in: Pete Wargent

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<div>The Australian National Accounts recorded that real GDP growth came in at a seasonally adjusted -0.5 percent for the third quarter and +1.8 percent for the year. </div>
<div> </div>
<div>Oops.</div>
<div> </div>
<div>This was the first negative quarterly result for GDP since the Queensland flood-affected quarter of March 2011, and only the fourth such result since Australia's last recession in 1991. </div>
<div> </div>
<div>With a negative contribution of -0.2ppts net exports were a drag on growth this time around, and there was a big drop in public capital expenditure (for a contribution of -0.5ppts) after a surge of government investment last quarter, summarily in helicopters, healthcare, and hepatitis drugs.</div>
<div> </div>
<div>Household consumption contributed 0.3ppts to growth this quarter, but there wasn't much joy elsewhere. </div>
<div> </div>
<div><a href="/images/2016/12/08/GDP1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
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<div class="separator"> </div>
<div>With downward revisions to previous quarters, this takes annual GDP growth all the way down to +1.8 percent. </div>
<p><a href="/images/2016/12/08/GDP1-1.jpg" target="_blank">Click to enlarge</a></p>
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<div class="separator"> </div>
<div>Nominal GDP fared somewhat better, growing by +0.5 percent in the quarter, and by +3 percent over the year.</div>
<p><strong><span style="text-decoration: underline;">Income boost</span></strong></p>
<div>It's often been pointed out that in a country such as Australia with its volatile bulk commodity prices, real GDP isn't always an ideal measure of how things are tracking. </div>
<div> </div>
<div>In this quarter, for example, there was a large +4.4 percent jump in the terms of trade, meaning that the index is now up by +1.4 percent over the past year. </div>
<div> </div>
<div>Given that the terms of trade index has been falling since Q3 2011, this is hugely welcome news!</div>
<p><a href="/images/2016/12/08/GDP3.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="/images/2016/12/08/GDP3.jpg" alt=""></div>
<div class="separator"> </div>
<div>Behind the scenes, of course, commodity export volumes have been ramping up over time.</div>
<div> </div>
<div>Thus while real GDP contracted, real gross national income, real gross disposable income and real net national disposable income all rose to record highs in the September quarter, and we can expect to see further gains in Q4. </div>
<p><a href="/images/2016/12/08/GDP5.jpg" target="_blank">Click to enlarge</a> </p>
<div class="separator"><img src="/images/2016/12/08/GDP5.jpg" alt=""></div>
<div class="separator"> </div>
<div>In real terms, gross national income increased by +0.9 percent over the quarter and +3.2 percent over the year. </div>
<div> </div>
<div>Essentially, then, this this quarter has been the mirror image of the dynamics we've seen in previous quarters, shifting to strong income growth and weaker GDP growth.</div>
<div><strong><span style="text-decoration: underline;">Two-speed</span></strong></div>
<div> </div>
<div>Research by SGS Economics and Planning has shown that Sydney and Melbourne have beendominating economic growth, while many regional economies are presently running slower as they adjust to life post-resources boom. </div>
<div> </div>
<div>State final demand was very weak in Western Australia at -3.8 percent as capex continues to work through its decline. </div>
<div> </div>
<div><a href="/images/2016/12/08/GDP4.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2016/12/08/GDP4.jpg" alt=""></div>
<div> </div>
<div>At the industry level, construction was the biggest loser, contracting by -3.6 percent, and swiping some -0.3ppts from GDP growth. </div>
<div> </div>
<div>Compensation of employees grew by +1.3 percent over the quarter and a positive +3.1 percent over the year, while the household savings ratio ticked down to 6.3 percent. </div>
<div> </div>
<div>I'll look at the impact on household incomes and expenditure in a separate post. </div>
<p><strong><span style="text-decoration: underline;">The wrap</span></strong></p>
<p>After 100 consecutive quarters without a recession, the economy posted a negative GDP result for the third quarter, but real national income measures surged to a record high.   </p>
<div>Whether or not we experience a technical recession next quarter is open for debate, but it looks to be unlikely based on the recent growth in retail spend. </div>
<div>
<br>Overall, strong public investment figures in the first half of the year masked a softening underlying trend in growth in the economy. </div>
<div> </div>
<div>An annual GDP growth figure of +1.8 percent feels much more in line with the metrics we've seen elsewhere, including low employment and wages growth, soft inflation, and a budget in deficit. </div>
<div>
<br>If hours worked are said to be the best measure of the health of the economy, then the conclusion is clear: the economy stuttered in the first half of 2016, although there was at least a moderate improvement of +0.5 percent in Q3. </div>
<div> </div>
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<div> </div>
<div>In the face of an obviously weaker result, a key question for the government now is whether it uses low yields to borrow and invest in infrastructure, as the Reserve Bank doesn't sound particularly keen on cutting the cash rate too much further!</div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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A recession looks unlikely: Pete Wargent

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<p><span>Mike Tyson is quoted as saying, "everyone has a game-plan until you get punched in the face”.</span></p>
<p><span>So, how do we take this true to life and memorable analogy and personalize it to our business? I spilled my coffee due to convulsive laughter, when I first heard this.</span></p>
<p><span>Like many sides of our personal makeup we, as human beings, personalize or internalize and emotionally invest in what we create and believe in.</span></p>
<p><span>In this particular post, I will look at how we can recession proof “protect” our brand as we move into 2016 - a year with many unknowns when it comes to the survival of real estate agents and their offices, independent or mainstream.</span></p>
<p><span>I'm talking about building a defensive wall that won’t allow adversaries an inch of space but don’t forget, your inner voice can also work against you.</span></p>
<p><span> Yes, you too can punch yourself in the nose and sabotage your business.</span></p>
<p><span>I’m no expert, to say the least; so I called on the experience and expertise of my good friend and brand mentor, Anthony Carroll, from Yellowsneakers to help explore the idea of recession proofing my brand.</span></p>
<p><span>Anthony best explains the relevance and relationship between recession proofing our business and branding with a simple question:</span></p>
<ul>
<li><span>How relevant is your brand when it comes to your purpose and your customers needs? All the elements of your brand should radiate out from your “purpose”.</span></li>
</ul>
<p><span>Unravelling purpose is not just about having an idea, it is about solving a problem and engaging an audience.</span></p>
<p><span>A purpose is a solution to a problem that your target audience can't solve on their own. Your solution should therefore fit the problem but also be delivered in a way that is unique and different to what your competitors offer.</span></p>
<p><span>Staying true to your purpose is KEY to surviving and recession proofing your business.</span></p>
<p><span>The basic principles, on how we build a strong defensive wall, is sometimes forgotten. Most brands with no essence or belief, in other words purpose, will fail. Fail to be noticed and fail to engage the audience it needs to survive.</span></p>
<p><span> A strong brand on the other hand, can weather many storms:</span></p>
<ul>
<li><span>Product failure</span></li>
<li><span>PR fallouts</span></li>
<li><span>Corporate scandal</span></li>
<li><span>Dips in market share</span></li>
</ul>
<p><span>Therefore, the strength of your brand can be gaged by your commitment to its purpose. The purpose that underlines your daily and constant decision making and reason to stay motivated and focused.</span></p>
<p><span>A good example of a brand weathering a PR fallout is the LiveStrong brand started by Lance Armstrong.</span></p>
<p><span>Because of its strong underlying purpose: Lifestyle choices, healthier eating and so on, the brand continues flourish despite the Tour-de-France doping scandal that Lance Armstrong was at the centre of.</span></p>
<p><span>Lance had to step down from the organization he founded and distance himself completely. However, as a result the brand remains relevant in the eyes of its audience.</span></p>
<p><span>People will forgive human frailty and it’s been shown that the more human or personable the brand is, the more supportive people become of the brand.</span></p>
<p><span>More recently, we can look at the VW emissions scandal. Sales for VW and Audi have actually increased. While it might be too early for sales to be affect, yet it will be interesting to see how VW survives this scandal.</span></p>
<p><span>So what happens when we have a kick-ass brand? More people engage with the brand as soon as they understand its core purpose.</span></p>
<p><span>Reflecting on the industry I’m presently engaged in and as I re-read this post, I find myself asking the following questions:</span></p>
<ol>
<li><span>Will the main real estate brands remain true to the nature, the purpose of their founders? or Will they continue to lose the respect of both employees and clients?</span></li>
<li><span>Will the New Year 2016, usher in new real estate brands created by disillusioned employees of some of the more established brands?</span></li>
</ol>
<p><span>No matter what industry you are in and particularly if you are about to launch with a new brand; I do hope these thoughts have been of help.</span></p>
<p><span>I leave you with this thought: never underestimate small beginnings, remain true to your purpose and your brand will make the impact you aimed for.</span></p>
<p><span> </span></p>
<p><em><span>EDWIN ALMEIDA</span> is licensee in charge of <a href="https://www.just-think.com.au/" target="_blank">Just Think Real Estate</a>.<a href="https://www.just-thin.com.au/"><br></a></em></p>
<p><em>He is also the creator of <a href="https://www.youtube.com/user/JustThinkProperty" target="_blank">Oz Real Estate.TV</a> and a presenter for <a href="https://propertyinvestingvault.com/" target="_blank">propertyinvestingvault.com</a>.</em></p>
<p><span> </span></p>
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Recession proof your real estate business: Edwin Almeida

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<p class="Body">The latest doomsday forecasts for Australian real estate call to mind the shameful history of overseas spruikers and local economists in getting it spectacularly wrong on house prices.</p>
<p class="Body">There’s nothing new in individuals with ulterior motives (usually seeking publicity for a seminar tour, new business venture or a book launch) getting acres of free mileage by predicting our markets will collapse. The <em>60 Minutes</em> debacle is merely the latest.</p>
<p class="Body">I note that the nation’s worst forecaster of property trends, academic Steve Keen, has publicly admitted recently that he got it “hopelessly wrong” with his price forecasts. It’s about time - Keen famously predicted in 2008 that Australian house prices would fall 40% in 2009. Prices rose that year and in the years since Keen has rehashed his predictions in various guises with different time frames but with the same result – he’s been wrong every time. Now he has written a column for <em>Business Spectator</em> which says: “I was hopelessly wrong on house prices. Ask me how.”</p>
<p class="Body">But Keen has lots of company at the bottom when it comes to faulty forecasting, sometimes perhaps for dodgy reasons.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">One of the worst examples was US doomsday specialist Harry S Dent who came to Australian in 2011 for a seminar tour and sought (and received) publicity by predicting our home values would fall 40% in 2012. He advised Sydney owners to “sell their excess real estate”. We all know how well that forecast worked out.</p>
<p class="Body">But Dent was back in Australia two years later for another lucrative seminar tour and again went to the media for some free mileage. He said house prices would crash “some time in 2014”, with values falling at least 27% in Sydney and Melbourne. The market made a fool of him again.</p>
<p class="Body">Given the state of Australia media, I have no doubt that if Dent shows up again next year, he will make the same style of prediction and will be handed another round of massive national publicity.</p>
<p class="Body">Many others have come to our shores and used the Armageddon formula of generating publicity for their venture.</p>
<p class="Body">Little-known US spruiker Jorgan Wirsz suddenly became well-known in 2012 by forecasting a “bloodbath” in Australian real estate, with home values tipped to fall 60% in 2013. He also said land values would drop 90%.</p>
<p class="Body">Think for a moment what that means. He was suggesting that residential land in Australia would be almost worthless. Nothing remotely like has ever occurred in the history of the world, not even in the worst basket-case economy post-GFC. But Australian media chose to give these ridiculous claims credibility. And of course they were subsequently shown to be nonsense.</p>
<p class="Body">There have been many others, including another US spruiker called Jeremy Grantham who claimed in 2010 that the “Australian housing bubble” would burst that year.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">There also have been plenty of local commentators, mostly economists who don’t understand the dynamics of Australian real estate, who have forecast significant declines.</p>
<p class="Body">Morgan Stanley’s Gerard Minack said in August 2010 that property was 40% over-valued and the bubble was about to burst.</p>
<p class="Body">AMP’s Shane Oliver, who regularly calls it wrong on real estate prices, claimed in 2005 that homes were grossly over-valued and there would be no growth anywhere in Australia for the next decade. Those 10 years have come and gone, and I have to ask: How did that one work out for you, Shane?</p>
<p class="Body">Oliver was in the media again in June 2012 claiming that house prices were “over-valued’ and “chronically weak” and were heading for “a sharp fall”. Ooops, again.</p>
<p class="Body">Commonwealth Bank chief Ralph Norris said in November 2011 that the sovereign debt crisis in Europe had put Australian house prices at risk.</p>
<p class="Body">Prosper Australia claimed in August 2011 that Melbourne was about to experience “a US-style property crash with price falls of 30%”. (Those who suggest Australia must decline because it happened in the US appear to be unaware that US markets dropped for clear reasons, and those circumstances don’t exist in Australia.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">Michael Power of Investec declared in September 2012 that Australian house prices would fall by up to 20% by the end of 2014.</p>
<p class="Body">The <em>Herald Sun</em> ran the headline “Prices could fall as higher interest rates bite” based on comments by CommSec’s Craig James. (This notion that rising interest rates means a market crash is quite prevalent, but there is historical evidence to support the idea.)</p>
<p class="Body">Citibank economist Josh Williamson said in June 2013 that house prices would peak in March 2014 and fall thereafter. Propell National Valuers put out a media release in June 2014 declaring the end of the Sydney boom and, around the same time, Morgan Stanley analyst Malcolm Wood also called the end for Sydney, saying:” If you’re an investor, you’ve missed the boat.”<span style="line-height: 1.3em;"> </span></p>
<p class="Body">Fringe dweller Leigh van Onselen, who has a lifetime of raging against real estate, stated in February 2012 that the “slow melt” in Australian house prices would continue.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">Another guerilla-style opponent of all things real estate, Kris Sayce, shouted in March 2011 that “the value of your home could fall 61% the minute interest rates start rising”.</p>
<p class="Body">The list goes on. And there’s a clear pattern. Since the start of the 21<sup>st</sup> Century, claims of markets collapsing, bubbles bursting and prices disintegrating have been an almost weekly occurrence. Journalists never seem to tire of doomsday stories.</p>
<p class="Body">They’ve all been wrong. And they’ve been wrong for clear reasons. Australia is not in recession, it does not have high unemployment, we don’t have a vast oversupply of dwellings nationwide and our banks don’t lend recklessly. We would need all of those circumstances to fall into alignment, as they did in the US around the time of the GFC, before our property markets would be in danger.</p>
<p class="Body"><em>Property Observer</em> would welcome a response from any of those named to give the context on their call.</p>
<p class="Body"><em>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></em></p>
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Company at the bottom for faulty market forecasters: Terry Ryder

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<p><span>As the Sydney real estate markets start drawing the curtains on what has been a highly entertaining 2015 year it’s interesting to note some are framing 2016 as the recession year. </span></p>
<p><span>However before we start nailing that coffin we need to look at what possibly may cause a recession and then look for what may avert a recession. Naturally there are many that opt for the let’s wait and see option although I’m of the opinion that we won’t see a technical recession.</span></p>
<p><span>Yes in some areas property prices are falling and in many other areas property prices are still performing well. Just last week we set (nearly doubled) the all-time record price for a <span>Cammeray waterfront</span>.  This week a developer released Chatswood Place, a $300 million boutique style development, and in just three hours set a new suburb record as well as securing $160 million in off the plan sales. This is the very same investment market which many were believing was well and truly finished.</span></p>
<p><span>Last week the Australian Bureau of Statistics (ABS) revealed that business investment spending in the September quarter had fallen 9.2 %. This quarterly result was the worst in the 28 year history of the survey of business investment. The ABS also released the GDP growth which identified growth of 0.9 % thanks to the highest exports in 15 years, an increase in consumer spending and of course the much publicised housing boom more particularly in apartment construction.</span></p>
<p><span>We also need to note that Treasury has cut the nation’s potential economic growth rate to 2.75 % down from 3.25 %. This follows three consecutive years of below – trend economic growth where the elephant in the room is the decline in mining.</span></p>
<p><span>Now for that beaming light at the end of this tunnel of misery – enter the very cashed – up NSW government. Unlike the vast majority of state and territory governments NSW has an overflow of coin and it’s all going into the biggest infrastructure spend in the state’s history. Over the next four years the NSW government has allocated a staggering $70 billion infrastructure spend which is unprecedented. This in itself will singularly underpin the Sydney housing market given nothing stimulates the markets and consumer confidence like a massive infrastructure spend.</span></p>
<p><span>The breakdown is $38 billion to be spent on new transport projects which will also include the second harbour tunnel, North West rail link, South East Light rail, Sydney CBD and WestConnex. The Transgrid lease which brought in a record $10,258 billion is still to be allocated although it has been confirmed that these monies will also be directed into new infrastructure projects.</span></p>
<p><span>Following the federal government crackdown on illegal foreign real estate acquisitions in Australia the Significant and Premium Investor Visas have been running at full – speed. It will be very interesting to see the next set of figures and whether there has been a significant spike in applications since the crackdown. The low Australian dollar is also enticing many offshore purchasers and expats and this is now a very strong emerging market within the Sydney real estate markets.</span></p>
<p><span>So when one takes the time to actually look at what is going on I find myself (as do many others) not too worried about this so called recession. The last recession was 25 years ago and they aren’t very nice but when you have a state government pouring $70 billion into the NSW economy it would appear that NSW has more Zoom than Gloom. </span></p>
<p><span>To further highlight this the NSW government just appointed Lucy Turnbull (the PM’s wife) as chair of the NSW government’s newly created Greater Sydney Commission. The sole purpose of the Greater Sydney Commission is to stop the infighting at local councils and to speed up developments across the city although I still see councils incompetency as an on – going hurdle.  I’m reliably informed that the premier will hand his greater Sydney Commission special powers and the councils will not like what’s in-store.</span></p>
<p><span>Of course not everybody will be convinced but then again, that all adds to the theatre of debate. When the 2016 property markets kick off I’m of the view that the areas within a 15 kilometre radius of the CBD will do very well. But expect more than a few to tell a different tale.</span></p>
<p><span><strong>MOSMAN – 2088</strong></span></p>
<p><span>• Number of houses on the market this time last year – 103</span></p>
<p><span>• Number of houses on the market last week – 65</span></p>
<p><span>• Number of houses on the market this week – 55</span></p>
<p><span>• Number of apartments on the market this time last year – 66</span></p>
<p><span>• Number of apartments on the market last week – 60</span></p>
<p><span>• Number of apartments on the market this week – 51</span></p>
<p><span><strong>CREMORNE – 2090</strong></span></p>
<p><span>• Number of houses on the market this time last year – 13</span></p>
<p><span>• Number of houses on the market last week – 15</span></p>
<p><span>• Number of houses on the market this week – 11</span></p>
<p><span>• Number of apartments on the market this time last year – 25</span></p>
<p><span>• Number of apartments on the market last week – 18</span></p>
<p><span>• Number of apartments on the market this week – 17</span></p>
<p><span><strong>NEUTRAL BAY – 2089</strong></span></p>
<p><span>• Number of houses on the market this time last year – 10</span></p>
<p><span>• Number of houses on the market last week – 8</span></p>
<p><span>• Number of houses on the market this week – 8</span></p>
<p><span>• Number of apartments on the market this time last year– 42</span></p>
<p><span>• Number of apartments on the market last week – 33</span></p>
<p><span>*Number of apartments on the market this week – 30</span></p>
<p> </p>
<p><em><span>ROBERT SIMEON</span> is a director of </em><em><a href="https://www.rwm.com.au/" target="_blank" title="RWM" rel="nofollow">Richardson Wrench Mosman and Neutral Bay</a> </em><em>and has been selling residential real estate in Sydney since 1985. <br>He has also been writing real estate blog </em><em><a href="https://www.rwm.com.au/news/" target="_blank" title="Virtual Realty News" rel="nofollow">Virtual Realty News</a> </em><em>since 2000. </em></p>
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Some framing 2016 as the recession year: Robert Simeon

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<p>EXPERT OBSERVER</p>
<div id="post-body-2344560504014387325" class="post-body entry-content">
<div>Just to add to all the other woeful data released today, the preliminary index of commodity prices was down by -3.5 per cent in November, following on from a substantially (downwardly) revised -6.6 per cent decline in October. </div>
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<div>Productivity figures released today were the worst in at least 25 years, and you can follow much of the other underwhelming news <a href="https://jamesfostermacro.blogspot.com/" target="_blank">here</a>. </div>
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<div>The Reserve Bank of Australia meets on Tuesday and the Board will need to work its way through a barrage of dire figures, including the ongoing nosedive in dwelling construction.</div>
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<br><div>Futures markets are unsurprisingly pricing further easing, with the economy, inflation, and wages growth all so mired in the doldrums.</div>
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<div>The question the Board will need to consider is: what exactly would waiting until February achieve?</div>
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<em><span>PETE WARGENT</span> is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em><span> </span>
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Is a recession brewing? Pete Wargent

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<div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Australia is officially out of a recession.</span></div>
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<div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The Australian Bureau of Statistics (ABS) advised that the nation's Gross Domestic Product – or GDP – rose 3.3 per cent in the September quarter.</span></div>
<div class="styles__Container-sc-1ylecsg-0 goULFa"><span> </span></div>
<div class="styles__Container-sc-1ylecsg-0 goULFa"><span>CommSec's Craig James called it a "Christmas miracle."</span></div>
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<p>It was the strongest quarterly growth since the March quarter 1976. </p>
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<div class="styles__Container-sc-1ylecsg-0 goULFa"><span>However t<span>hroughout 2020 Australia's GDP has fallen 3.8 per cent.</span></span></div>
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<div class="styles__Container-sc-1ylecsg-0 goULFa"><span>A technical recession is defined as two consecutive quarters in negative growth.</span></div>
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<div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The three months to June saw the nation's GDP shrink by seven per cent, the biggest drop since records began in 1959.</span></div>
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<div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The previous quarter to March saw Australia's GDP fall by 0.3 per cent.</span></div>
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<div class="styles__Container-sc-1ylecsg-0 goULFa"><span><span>The market had been predicting that the economy would grow 2.5 per cent in the September quarter. Westpac had forecast three per cent growth.</span></span></div>
<div class="styles__Container-sc-1ylecsg-0 goULFa"> </div>
<div class="styles__Container-sc-1ylecsg-0 goULFa">"The key dynamic of the covid recession and the re-opening of the economy relates to the restrictions on the movement of people and on travel, with the closure of the borders," Westpac economist Andrew Hanlan said.</div>
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<p>"Consumer spending plunged by 12.5% in Q2 reflecting the reduced opportunities for people to spend.</p>
<p>"As restrictions were eased, consumers returned to the shops in greater numbers and consumer spending rebounded by 7.9% in Q3 (providing the upside surprise to our forecast).</p>
<p>"Another key feature of this recession has been the massive income transfer from the government to households and businesses – on an unprecedented scale."</p>
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Australia is officially out of recession after 3.3 per cent rise in GDP in the September quarter

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<p class="legacy"><strong><span style="color: #333333; font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12.15999984741211px;">EXPERT OBSERVER</span></strong></p>
<p class="legacy"><span style="color: #333333; font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12.15999984741211px;">It became official on Wednesday. The Australian economy is in recession for the first time in nearly three decades.</span></p>
<p>And the drop in economic activity is unprecedented. GDP fell 7% in the June quarter. The previous biggest post-war fall in Australia was 2% in June 1974.</p>
<p>But Treasurer Josh Frydenberg noted that in March he was told the June quarter contraction might be 20%. In Britain it was.</p>
<p>Bookkeeping aside, the question that matters is how to fight this recession.</p>
<p>Answering it requires an understanding that it is a different type of recession to those we’ve seen before.</p>
<p>As I pointed out <a href="https://theconversation.com/vital-signs-covid-19-recession-is-different-and-we-need-more-stimulus-to-deal-with-it-141037" target="_blank">earlier this year</a> the recessions some of us grew up with in the early 1980s and 1990s were “business cycle” recessions.</p>
<p>They happened because the economy overtook its inbuilt speed limit and pushed up inflation. To curb it, central banks pushed up interest rates, pushed them up too far and choked off investment and spending, sending economic activity backwards.</p>
<h2>A recession like no other</h2>
<p>In 2020 we face a different sort of shock.</p>
<p>COVID-19 has hammered economic activity, even more so in countries such as the United States where it has run out of control.</p>
<p>Many of the opportunities we used to have to spend money (such as airlines, theatre tickets and cafe meals) simply haven’t been there.</p>
<p>They’ll come back when things return to closer to normal, perhaps though the wide deployment of a vaccine.</p>
<p>But we might not spend as we used to.</p>
<p>Some people, out of work or on shorter hours won’t have the capacity to spend. Others will want to rebuild their savings.</p>
<p>And others who have been saving big might decide to keep doing it.</p>
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<p><strong>Household saving ratio</strong></p>
<p><a href="https://images.theconversation.com/files/355997/original/file-20200902-22-yq9rjf.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/355997/original/file-20200902-22-yq9rjf.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> </p>
<p><em><span class="attribution"><span class="source">ABS Australian National Accounts</span></span></em></p>
<p>Australia’s household saving ratio surged to 19.7% in the June quarter.</p>
<p>It’s a peak not reached since 1974 at a time when there was much less of an age pension and superannuation, no Medicare and surging unemployment. In other words, its at a height not reached since people really needed to save.</p>
<p>The Bureau of Statistics says that if household income from all sources including early access to super was counted, the ratio is even higher. Its estimate of what it calls the “household experience savings ratio” is 24.8%.</p>
<p>That means households saved an extraordinary one in every four dollars that came through their doors in the June quarter, up from mere percentage points a few quarters earlier.</p>
<p>Much of it would have been what economists call <a href="https://www.propertyobserver.com.au/https://academic.oup.com/qje/article/132/3/1427/3071924?casa_token=NaR4tX3aSioAAAAA:5a0tN7y4nXtjvyxhO1tit2wcRHuU-NmyYeUJD2Md_gw6wnoLrLkYAwfNWxBE4XkYCfTVh4NeLIfL4rQ" target="_blank">precautionary saving</a>, understandable given how much of the future is uncertain.</p>
<h2>There’s such a thing as too much saving</h2>
<p>But what if this extraordinarily high saving rate lasts beyond the point it is understandable, as it did in Japan.</p>
<p>As with Japan in the 1990s when saving soared, real interest rates are negative. We are so <a href="https://web.mit.edu/krugman/www/japtrap" target="_blank">keen to save</a> we don’t need a financial return.</p>
<p>There were signs of it worldwide, well before the pandemic. President’s Clinton’s Treasury Secretary Larry Summers referred to it as <a href="http://larrysummers.com/2016/02/17/the-age-of-secular-stagnation/" target="_blank">secular stagnation</a>, a term first coined in the 1930s.</p>
<p>Saving more than we are prepared to invest shrinks economic activity. It creates unemployment which itself creates uncertainly, prodding people to save still more than they invest.</p>
<p>It’s one of the reasons worldwide economic growth is low, interest rates are low, and inflation is low.</p>
<p>During the pandemic the government is spending more than A$100 billion on measures such as JobKeeper and JobSeeker.</p>
<h2>If we won’t spend, out government will have to</h2>
<p>Post pandemic it might have to keep spending big on physical and social infrastructure – things such as major projects and better aged care and health care.</p>
<p>If we won’t spend big again, it’ll have to. It’ll need to get the economy’s long term growth rate back up to 2%, or even the <a href="https://treasury.gov.au/speech/the-macroeconomic-context" target="_blank">near 3%</a> the Treasury thinks it is capable of.</p>
<p>It’ll require a lot. </p>
<p>Australia used to have one of the lowest company tax rates in the developed world, now we have one of the highest. We tax labour income too much and consumption too little. And we have a hopelessly out of date and absurdly complex industrial relations system.</p>
<p>Each of those things are a handbrake on economic growth.</p>
<p>This is an unusual recession and an unusually deep one.</p>
<p>Digging our way out will require us to at first contain and defeat the virus, and then spend like Keynes and <a href="https://www.afr.com/policy/economy/we-can-spend-like-keynes-and-cut-taxes-like-friedman-20200728-p55g2s" target="_blank">cut taxes like Friedman</a>.<img src="https://counter.theconversation.com/content/145484/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;"></p>
<p><span><a href="https://theconversation.com/profiles/richard-holden-118107" target="_blank">Richard Holden</a>, Professor of Economics, <em><a href="https://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a></em></span></p>
<p>This article is republished from <a href="https://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/vital-signs-how-do-you-fight-a-recession-without-precedent-145484" target="_blank">original article</a>.</p>
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