<a href="https://www.apartments.com.au/developments/broadbeach-qld-4218">Broadbeach</a> offers plenty of reasons to live vertically, but moving from a substantial family home into an apartment can expose the compromises of high-density living. Privacy, room for guests and usable living space tend to matter more when an apartment is intended as a permanent home rather than an occasional coastal base.

A typical residential floor at <a href="https://www.apartments.com.au/new-apartments/the-eveleigh-broadbeach-7-9-surf-parade-broadbeach-qld-4218">The Eveleigh</a>, on Surf Parade,&nbsp;contains just four apartments. The 94-residence development by <a href="https://www.apartments.com.au/developers/hirsch-faigen">Hirsch &amp; Faigen</a> is predominantly made up of expansive three-bedroom homes, with a limited collection of half-floor penthouses above.

Across the apartment floors, <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> has used the relatively limited number of residences to give each home greater access to natural light and outlook. Living spaces extend towards full-height glazing, while a series of bay windows frame selected views across the Pacific Ocean, city and hinterland rather than treating the building edge as a continuous wall of glass.

&nbsp;

[smartcode_project:default project_id=149670 project_image_fid=360965]

“The apartment floors deliver a collection of homes that embrace controlled outlook via a series of bay windows deliberately framing moments of view,” Rothelowman Director Kim Lowman said.

From outside, those projecting forms contribute to the tower’s faceted profile. Strong horizontal and vertical elements establish its proportions, while the changing position of the sun alters the light, shadow and reflection across the façade throughout the day.

The same attention moves inside the apartments, where the material palette combines warm timber, natural stone, metallic detailing and softer curved forms. Kitchens sit within the main living zone, with stone island benches, integrated joinery and European appliances, before the living areas extend towards the glazing and the outlook.

&nbsp;

[smartcode_project:default project_id=149670 project_image_fid=360981]

Three genuine bedrooms provide room to accommodate family and guests, while two secure car spaces and storage address some of the practical considerations that can become more noticeable when moving from a larger home. Feedback from the display suite has centred on the warmth and restraint of the interiors, with buyers commenting that the residences feel like homes rather than conventional coastal apartments.

A limited collection of half-floor penthouses occupies the upper levels, increasing the scale of the living spaces and adding private balconies and elevated finishes. From this position, the outlook extends between the ocean and hinterland.

Outside the private residences, The Eveleigh separates its shared spaces between the podium and rooftop. The podium is centred on wellness, with subtropical landscaping surrounding a swimming pool and pool terrace, yoga garden, private gymnasium, sauna and hot and cold plunge facilities. Landscaped retreats and pavilions provide additional places to sit away from the main recreation areas.

&nbsp;

[smartcode_project:default project_id=149670 project_image_fid=360966]

Higher in the building, a rooftop pavilion and private dining suite sit alongside resident lounge, barbecue and outdoor dining areas, opening towards panoramic views across the ocean, city and hinterland.

“Buyers are no longer just looking for an apartment, but a lifestyle where they can relax, reset, and enjoy a balanced way of living,” Hirsch &amp; Faigen Director of Sales Matt George said.

Interest to date has come from established owner-occupiers and interstate lifestyle purchasers, including buyers planning a future move to the Gold Coast. Many are coming from larger homes and want to reduce ongoing maintenance without giving up space for family and guests, privacy, two car spaces or the ability to entertain at home.

&nbsp;

[smartcode_project:default project_id=149670 project_image_fid=360969]

Much of that daily life can also take place beyond the building without requiring a drive. Kurrawa Beach and Pratten Park are an easy walk from Surf Parade, while Pacific Fair, Oracle Boulevard, The Oasis, restaurants, cafés, entertainment and public transport are also within walking distance.

The Eveleigh is Hirsch &amp; Faigen's fourth Gold Coast development since entering the market in 2021, following The Hemingway at Palm Beach, The Emerson at Kirra and Yves at Mermaid Beach. Each of the preceding projects sold out before completion.

“Broadbeach had been on our radar throughout our time operating on the Gold Coast,” the developer said. “Following our projects in Palm Beach, Kirra and Mermaid Beach, Broadbeach represented the natural next step for the business.”

The Surf Parade site brought together proximity to the beach, protected coastal outlooks and walkability to dining, shopping and recreation. Hirsch &amp; Faigen also identified the street as an emerging premium residential address, with enough separation from Broadbeach's busier destinations to retain a quieter environment at home.

The Eveleigh is now under construction by Maxcon, with completion forecast for mid-2028. Three-bedroom residences are currently available from $2.87 million.

[smartcode_project_cta:default project_id=149670]

Joel Robinson

The Eveleigh brings house-like apartments to Broadbeach

A long-stalled Campbelltown development site is back in play, with new plans for 139 apartments set to supersede a mixed-use scheme approved almost a decade ago but never built.

The new proposal for 28 Cordeaux Street would deliver 116 market and 23 affordable apartments in a part 14-storey building, bringing a substantial new project into a Campbelltown market where new apartment supply remains limited.

Plans have been filed over the 3,092 sqm corner site at Moore-Oxley Street, around 600 metres from Campbelltown Railway Station and the city-centre retail core.

The site already carries a mixed-use residential approval dating to 2016. Doroch Architects has now been engaged on a larger replacement scheme, which is progressing as a State Significant Development Application following a Housing Delivery Authority determination in August 2025.

The apartment mix comprises 39 one-bedroom, 72 two-bedroom and 28 three-bedroom residences. Two-bedroom apartments make up just over half of the project, while three-bedroom homes account for 20 per cent.

<img alt="First look: New 139-apartment plans revive long-stalled Campbelltown city centre site" data-entity-type="file" data-entity-uuid="136dd5b9-3791-4da6-9e31-76f533f5b4de" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Campbelltown%20da2.png?VersionId=LgOSy9nwf5u.MGswBBwaGGxuX8QpHSl_" />

Of the 139 apartments, 23 will be delivered as affordable housing under the in-fill affordable housing provisions of the Housing SEPP. The affordable component represents 15 per cent of the residential gross floor area and will be managed by a registered Community Housing Provider.

Doroch has sought to break the scale of the building into two distinct elements, with a masonry podium of around four storeys establishing the street edge before the residential tower steps back above.

The corner position has shaped that approach. Cordeaux Street faces toward the commercial and civic centre, while Moore-Oxley Street leads into the lower-scale residential neighbourhood to the south, and the design verification report describes the site as "bridging the commercial core to the north and established residential areas to the south."

The podium will be expressed predominantly in face brick, while the upper levels shift to brushed and grooved concrete cladding with darker metal detailing. Recessed sections, deep balcony edges and landscaping break down the upper form, with an approximately 11.8-metre setback to the northern boundary addressing the adjoining St Peters Anglican School.

<img alt="First look: New 139-apartment plans revive long-stalled Campbelltown city centre site" data-entity-type="file" data-entity-uuid="c8b3d2d3-c561-4bfc-a5d9-a68c0c10dac1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Campbelltown%20da1.png?VersionId=AeAEyJU02Gk2k5noUj2StziCvdQ7fW4B" />

Campbelltown has been starved of new residential developments in the last decade.

The only other notable development set to come to market this year is ALAND's Queen Square, a mixed-use precinct on over two hectares that will comprise apartments above a vibrant ground-level retail and hospitality dining precinct.

First look: New 139-apartment plans revive long-stalled Campbelltown city centre site

First Look: Sherlock Construction pitches apartments for low-rise Deception Bay

Queensland builder-developer MAYD has revealed the first look at its major North Kirra beachfront development, lodging amended plans that reduce the number of apartments and increase the proportion of larger residences.

The project is planned across a substantial 4,742 sqm amalgamated site spanning seven lots at <a href="https://www.apartments.com.au/new-apartments/2-6-pacific-parade-bilinga-qld-4225">2-6 Pacific Parade</a> and 27-33 Golden Four Drive in Bilin​ga, directly opposite Nor​th Kirra Beach.

<a href="https://www.apartments.com.au/developers/mayd-group">MAYD</a> secured the site for $32.5 million in 2025, in what was one of the Gold Coast's largest property transactions of the year.

The development will be delivered across two stages, with the first stage carrying an estimated gross realisation value of around $360 million.

The latest amendments seek to reduce the overall apartment count and shift the project further toward the owner-occupier market, with larger residences designed for buyers wanting considerably more space than traditionally offered in a beachfront apartment.

The residential mix will include townhomes, oversized two-bedroom apartments, substantial three-bedroom residences and four-bedroom homes.

MAYD has appointed Cera Stribley to lead the architecture and interiors, with the Melbourne-based design practice drawing on the beachfront setting through a series of ocean-facing terraces and heavily landscaped balconies.

Strong horizontal forms and curved balconies will define the exterior, with subtropical landscaping integrated throughout the building to soften the built form and increase the connection between the residences and the beachfront.

The project will also include an extensive collection of resident wellness and lifestyle facilities, continuing the broader shift across the Gold Coast's luxury apartment market toward larger homes supported by resort-style amenity.

<img alt="MAYD" data-entity-type="file" data-entity-uuid="d1bcbb05-e659-4b47-8bd4-1e595315e2ad" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%202.05.03%E2%80%AFPM.png?VersionId=jj0XEud1X1DuLt7_KyElhjMdZGOXmLHP" />

MAYD Founder Todd Mould said North Kirra was increasingly appealing to buyers attracted to the more established, lower-density character of the southern Gold Coast.

"North Kirra presents one of the most compelling luxury residential opportunities currently emerging in Australia, combining absolute beachfront with the character and authenticity that buyers are increasingly seeking, and the same sense of tight-knit community that defined Burleigh and Currumbin perhaps 10 or 15 years ago," Mould said.

"With Gold Coast Airport on its doorstep, it also offers a level of accessibility that broadens its appeal across almost every market demographic."

The project comes as the southern Gold Coast continues to attract an increasing share of high-end apartment development and buyer activity.

Kirra in particular has emerged as one of the region's more tightly held beachfront markets, with its relatively low-density character, established surf and hospitality scene and proximity to Gold Coast Airport differentiating it from the higher-density markets further north.

Mould said those characteristics had informed the approach MAYD and Cera Stribley had taken to the project.

"We've worked closely with Cera Stribley to create a vision that is deeply connected to its surroundings," he said.

"Inspired by the coastline itself, the architecture has been shaped around space, privacy and resort-style living, creating a collection of homes that reflects the next generation of luxury on the southern Gold Coast."

MOTIV Managing Director Carly Cottam, who has been appointed to market the project, said buyer attention had continued to move south along the Gold Coast.

"Purchasers who may once have defaulted to Broadbeach, Main Beach or Surfers Paradise are increasingly recognising the value of a genuine beachfront location that offers lower density, strong amenity and a more established sense of community," Cottam said.

"Kirra has a powerful combination of growing demand and genuine scarcity. Beachfront supply is inherently constrained, the area remains relatively low density, and buyers are increasingly placing a premium on locations that feel established, uncrowded and authentic rather than heavily developed."

Cottam said the proximity to Gold Coast Airport was also proving increasingly important for interstate and second-home buyers.

"Being minutes from Gold Coast Airport makes it particularly compelling for interstate buyers, frequent travellers and second-home purchasers who can access an authentic coastal lifestyle almost immediately after stepping off a flight."

The acquisition takes MAYD's active development portfolio to more than $500 million, with the North Kirra project representing one of its largest undertakings to date.

MAYD is targeting an early 2027 launch.

First look at MAYD's North Kirra mixed-use precinct

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Castle Hill, the longtime hub of the Hills District, has been one of the major beneficiaries of Sydney's Metro expansion, with improved connectivity helping drive continued population growth, development and buyer demand across the Hills District.

But despite that growth, the suburb has seen relatively few major new apartment projects brought to market over the past 18 months.

Hills District developer Reve Group is looking to fill that gap with <a href="https://www.apartments.com.au/new-apartments/nova-r-ve-castle-hill-2-garthowen-crescent-castle-hill-nsw-2154">Nova Rêve</a>, a major new mixed-use precinct on the corner of Garthowen Crescent and Old Castle Hill Road, a short walk from Castle Hill Metro Station and Castle Towers.

[smartcode_project:default project_id=152737 project_image_fid=377679]

The project will comprise three residential towers alongside a hotel, restaurants, cafes and a skybar, more than 1,600 sqm of ground-floor retail and almost an acre of landscaped gardens.

It represents the largest project undertaken by Reve Group, the development arm of the Kassis family, which has been building across the Hills District for more than 30 years through Kassis Homes.

[smartcode_project:default project_id=152737 project_image_fid=377675]

Nova Rêve also represents a significant step up from the family's first apartment development, Grand Rêve, which was delivered nearby on Garthowen Crescent.

Grand Rêve introduced larger, house-like apartment layouts and premium inclusions including Wolf and Sub-Zero appliances to the Castle Hill market.

Nova Rêve takes that approach to a precinct scale, combining the residential component with hospitality, retail and substantial public and resident landscaping.

[smartcode_project:default project_id=152737 project_image_fid=377685]

Reve Group Managing Director Sam Kassis said the project reflected the family's three decades of building in the Hills, which has evolved from trophy homes on quarter-acre blocks to larger-scale apartment development.

"Grand Rêve was our first apartment project here and it showed us what this pocket of Castle Hill could be. Nova Rêve is the refinement of that idea: not just apartments, but a place the whole suburb can use," Kassis said.

A key part of that approach is the hotel, which has been designed to operate as an amenity for the wider Castle Hill community rather than solely hotel guests.

It will include restaurants, cafes, skybars and all-day dining, alongside conference and event facilities catering to business functions, community groups and private events.

At ground level, more than 1,600 sqm of shops and cafes will open onto the surrounding streets and landscaped areas.

Almost an acre of gardens designed by Land and Form Studios will run through the precinct, incorporating pathways, seating, barbecue areas and children's play spaces.

[smartcode_project:default project_id=152737 project_image_fid=377680]

Reve Group's Romio Georges said creating an active ground plane had been central to the planning of Nova Rêve.

"There are gardens with pathways, barbecues, seating and play areas, shops and cafes opening onto the street, and a hotel with restaurants and a skybar that anyone in Castle Hill can walk into," Georges said.

The project's elevated position on one of Sydney's highest ridgelines will also provide apartments with outlooks toward the Sydney skyline, surrounding parkland and the Blue Mountains.

More than 80 per cent of the apartments will occupy corner positions, with Turner responsible for both the architecture and interiors.

&nbsp;

[smartcode_project_cta:default project_id=152737]

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</main>

Nova Rêve arrives as Reve Group bets on Castle Hill's next growth phase

Share Price

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ANZ reported an interim cash profit of $3.4 billion for the half, an improvement of 23 percent - the prior year result having been hit by write-downs - but missing market expectations of a $3.5 billion result. 
The group's net interest margin was only impacted to a very small extent by funding costs, but did decline nevertheless.
ANZ announced rate hikes on investor and owner-occupier loans last week, with steep increases of up to 40bps on interest-only products (but some cuts being applied to principal and interest mortgages).
Over the next year we can expect to see lenders forcing borrowers away from interest-only loans as I looked at in more detail here. 
This isn't the place for a detailed review of the ANZ interim financials, but below I'll take a quick look at the home loan portfolio. 
ANZ's 90+ day home loan delinquencies have been relatively contained to date in the Australia division, though they have tracking at somewhat higher levels than seen in recent years. 
<a href="https://www.propertyobserver.com.au/images/2017/05/04/ANZ1.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/04/ANZ1.jpg" alt="">
A closer look at the portfolio performance for the Australia division reveals the concerning rate of deterioration in home loans that are 90 days past due in Western Australia.
Since 2013 home loans that are 90 days past due in the state have risen sharply from as close to zero as you will see across a loan book towards 1.4 per cent of home loans. 
<a href="https://www.propertyobserver.com.au/images/2017/05/04/ANZ2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/04/ANZ2.jpg" alt="">
Queensland has typically had a higher rate of delinquency than elsewhere since severe flooding in the state in 2010-11. 
Now more than half a decade on the flood-related delinquencies have mostly either been impaired or resolved, but loans that are 90 days past due remain higher than elsewhere in Australia due to the very poor economic conditions in many parts of regional Queensland.
Vacancy rates are also elevated in Perth and many parts of regional Western Australia and Queensland, a knock-on impact from the end of the resources construction boom.
The ANZ share price took a knock from yesterday's results, dropping by 2.12 percent by the close to $32.25. 
Genworth Mortgage Insurance (ASX: GMA) dropped 4.19 percent to $3.20 yesterday, having been down by 7 percent in early trade. 
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/">blogger</a>.
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx">Four Green Houses and a Red Hotel</a>.
 
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pwargent-M4siyDbqQY

WA home loan portfolio deteriorating: Pete Wargent 

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EXPERT OBSERVER
Good morning and thank you for the opportunity to speak here. Today, I want to talk about long-term developments in the Australian equity market.
Equities are important for the Australian economy. Today, the equity market is one of Australia's largest financial markets. The total value of companies listed here is a bit under $2 trillion; as you can see in Graph 1 this is more than 100 per cent of GDP. This has not always been the case: the equity market has rapidly grown as a share of GDP over the past 20 years. Before the 1960s, the government bond market was by far the most important financial market in Australia.<a id="r1" href="https://www.rba.gov.au/speeches/2018/sp-so-2018-12-13#fn1"> </a>
<div class="image-graph">
<div class="title">Graph 1</div>
<img src="https://www.rba.gov.au/speeches/2018/images/sp-so-2018-12-13-graph1.gif" alt="Graph 1: Australian Financial Markets">
</div>
Equities are also an important part of Australians' retirement savings. While most people don't own shares directly, anyone with superannuation usually holds equities indirectly through their fund's investments. Payments from listed companies, in the form of dividends and share buybacks, were worth almost $100 billion dollars in the past twelve months. By way of comparison, this is equivalent to about 5 per cent of household income.<a id="r2" href="https://www.rba.gov.au/speeches/2018/sp-so-2018-12-13#fn2"> </a>
Listed companies employ a substantial number of people and many of Australia's well-known companies are listed on the stock exchange. This doesn't mean that the performance of the stock exchange is the same thing as the performance of the economy. But by understanding developments affecting listed companies, we can gain timely insights into what's happening in the economy more broadly.
And, the Reserve Bank pays close attention to the equity market in particular because it is a transmission channel for monetary policy. When interest rates go down, share prices tend to increase, and this increases the wealth of households who hold those equities. Higher share prices, in turn, make it relatively cheaper for companies to issue shares, allowing them to expand.
Today I would like to take a step back and look at the Australian equity market through a longer-term lens. I will focus on returns of equities and the composition of the equity market through time. I will conclude with some observations on price to earnings ratios. Many of the graphs and numbers in this presentation draw, in part, from historical datasets compiled by staff at the RBA. These data – like all historical data – should be interpreted with some caution. Nonetheless, we think that they are of a sufficient quality to provide some useful insights and we will soon make them more widely available to interested researchers.
So how do the returns on equity investments compare to other financial assets in Australia? The return on equity includes gains from both share price changes (or ‘capital gains’) and dividends paid out. Graph 2 shows cumulative returns on financial assets from $100 invested in 1900, adjusted for inflation. Over the long run, equities have been worth much more to investors than other investment options: they have returned about 5 percentage points more than long-term bonds on average each year. This accumulates to a very large amount of money over a long period of time. If you had put $100 into the equity market in 1900 in a portfolio that tracked the stock market index, you would have over $100,000 today after adjusting for inflation; this is more than 100 times what you would have earned from a Government bond or a bank deposit. Perhaps more relevant to our own investment decisions, if you had put $100 into the equity market when you were 20 years old, given average returns it would have been worth more than $1,000 when you retired at age 65. If you had invested it in government bonds, it would have been worth only a quarter of that.
<div class="image-graph">
<div class="title">Graph 2</div>
<img src="https://www.rba.gov.au/speeches/2018/images/sp-so-2018-12-13-graph2.gif" alt="Graph 2: Cumulative Real Returns">
</div>
But investing in the equity market comes with risk. The equity market is more volatile than many other markets: average volatility in the returns generated by equities in Graph 2 is double that of bonds. This means that at any point in time, investors get a return that can be very different from the average return. Developments such as the global financial crisis have emphasised this. In the middle of the financial crisis, share prices fell by around 50 per cent. If you had a superannuation portfolio based on equities, the value of your retirement funds would have declined significantly, and remained lower for quite some time. If you were in, or close to, retirement, you may have had to lock in some of these lower share prices. This emphasises the value of a diversified portfolio but also the importance of taking a longer-run view on the equity market.
There are of course different sorts of companies on the stock exchange, and you might expect that they would provide different return profiles. This is true for some: companies like utilities, for example, generally have more bond-like properties (and so are quite correlated with bond prices). At the same time, returns in broader sectors have been remarkably similar over the past century. You can see this in Graph 3 which shows the cumulative returns on equities in three broad sectors over the past 100 years – the Reserve Bank often looks at the broad sectors resources, financials and ‘others’. Indeed, the average annual returns over that period across the three sectors have been within ½ percentage point of each other. Of course, resources stocks have been a bit more volatile, in part reflecting their exposure to volatile commodity prices.
<div class="image-graph">
<div class="title">Graph 3</div>
<img src="https://www.rba.gov.au/speeches/2018/images/sp-so-2018-12-13-graph3.gif" alt="Graph 3: Total Return Indices">
</div>
What about compared with overseas? Graph 4 shows the average annual returns on stocks in Australia, the United States and the United Kingdom since 1900. (The total return is the dividends – the red bars – and the capital gains – the blue bars – taken together.) At around 10 per cent, the average annual returns are very similar. The pattern is not much different if you look at capital gains and dividends separately.
<div class="image-graph">
<div class="title">Graph 4</div>
<img src="https://www.rba.gov.au/speeches/2018/images/sp-so-2018-12-13-graph4.gif" alt="Graph 4: Total Return On Equities Since 1900">
</div>
Over shorter periods there is more divergence, as you can see in Graph 5. In particular, over the past 25 years Australian stock prices have gone up a bit less than the rest of the world, particularly the United States, as you can see in the blue bars in Graph 5. But Australian companies pay high dividends, due in part to the specific tax treatment they receive; I am referring to franking credits, which were initially introduced in 1987. Taking this into account, Australian stocks have generated above-average returns (the combined red and blue bars) over the past 25 years.
<div class="image-graph">
<div class="title">Graph 5</div>
<img src="https://www.rba.gov.au/speeches/2018/images/sp-so-2018-12-13-graph5.gif" alt="Graph 5: Total Return on Equities Since 1993">
</div>
Let's have a closer look at the companies that make up the Australian securities exchange (or, abbreviated, the ASX). Graph 6 compares the concentration of the stock exchange for different countries. The bars show what share of the total market capitalisation is accounted for by the top 10 companies. On this metric, the ASX is quite concentrated in large companies, with the top 10 companies accounting for a bit less than half of the market capitalisation of the ASX.
<div class="image-graph">
<div class="title">Graph 6</div>
<img src="https://www.rba.gov.au/speeches/2018/images/sp-so-2018-12-13-graph6.gif" alt="Graph 6: Largest 10 Companies' Share of Total Exchange">
</div>
You will notice that the countries with the larger concentrations (on the right-hand side of the graph) tend to be smaller economies. Among similar-sized exchanges, the level of concentration seen at the ASX is not unusual. It means, however, that an investor in a market capitalisation-weighted portfolio of equities is exposed to developments in a smaller set of companies.
This concentration has been a feature of the Australian stock exchange throughout its existence. In fact, it has been largely the same set of companies that have comprised most of the universe of Australian stocks over its history. Graph 7 tries to illustrate this point. The top panel takes all companies listed at the ASX (weighted by market capitalisation) and then distributes them according to the year the company (or its immediate predecessor) was founded. The purple section marks companies that are currently in the top 100 companies of the ASX. The bottom panel does the same aggregated across a number of developed economies. What stands out, is that for the ASX there are a lot of high purple bars on the left hand side of the panel, that is a lot of the top 100 companies are old and they are large in terms of market capitalisation. In fact, the average listed Australian company when weighted by market capitalisation is about 100 years old. This makes our listed companies, on average, substantially older than those in the United States or Japan (which make up a large share of the graph in the bottom panel). But it is comparable to the United Kingdom, France and Germany, although stock exchanges there existed several hundred years before ours.
<div class="image-graph">
<div class="title">Graph 7</div>
<img src="https://www.rba.gov.au/speeches/2018/images/sp-so-2018-12-13-graph7.gif" alt="Graph 1: Listed Companies by Founding Date">
</div>
A striking number of large, still-existing Australian companies were founded in the 1800s, in many cases before the existence of stock exchanges in Australia. These are mostly the predecessors of the banks and mining companies, which have their origins in colonial banks and 19th century mining booms, respectively. By contrast, very few large public Australian companies have been founded in the past 50 years (and many of the large listings, such as the Commonwealth Bank of Australia and Telstra, have been privatisations). In this respect, Australian markets are something of an outlier globally.
That said, the stock exchange has not been completely static over the past century, and there have been substantial compositional shifts at times. Graph 8 shows the ASX shares of the three large sectors – financials, resources and ‘others’ – through time.<a id="r9" href="https://www.rba.gov.au/speeches/2018/sp-so-2018-12-13#fn9"> </a>
<div class="image-graph">
<div class="title">Graph 8</div>
<img src="https://www.rba.gov.au/speeches/2018/images/sp-so-2018-12-13-graph8.gif" alt="Graph 8: Equity Market Sectors">
</div>
The resources sector (in orange) has tended to expand and contract with mining booms and commodity prices. During the mining boom of the 2000s, the share of the stock market capitalisation accounted for by resources companies doubled over a period of about five years: at their peak, resources companies made up about a third of the ASX 200. But this pales in comparison with the experience of the late 1960s boom, where the resources sector was worth at its peak in 1970 around 65 per cent of the exchange by market capitalisation. Of course, resources booms tend to be followed by busts, and so the large share shrunk within a few years. On average, the resources sector has a larger weight on the stock exchange than it has in the real economy.<a id="r11" href="https://www.rba.gov.au/speeches/2018/sp-so-2018-12-13#fn11">[11]</a> This could reflect that financing mines can be a speculative, risky investment; equity can be a more attractive way to finance such investment, allowing investors (with a matching risk appetite) to share in the potentially large upside without saddling the company with large debt repayment obligations if the resources discovery (and the associated revenue) disappoints.
The ASX is bank-heavy and the financial sector (in blue) more broadly makes up about a third of the exchange by market capitalisation: almost exactly the same share as it did 100 years ago. But, in fact, through most of the 20th century the sector was quite small, reflecting the regulation following the Great Depression, and only regaining its historical share in the 1980s and 1990s. The sector has also diversified quite a lot since its early days, with diversified financials and insurance companies accounting for a much larger share than they used to.
Other sectors (in green) have reflected changes in the industry composition of the Australian economy over the past 100 years. The rise and fall of manufacturing was reflected on the exchange, with manufacturers frequently featuring in the top 10 companies through the 1940s and 50s; most of these have since delisted. A company that ferried people across Sydney Harbour was in the top 50 companies on the exchange for decades, until its business model was disrupted by the construction of the Harbour Bridge. More generally in the transportation sector, ferries, steamships and railroads have largely been replaced by road infrastructure and air travel. On the other hand, some sectors played a significant role in the economy but not on the stock exchange. Agriculture, forestry and fishing is one example, which for the first half of the 20th Century accounted for up to 30 per cent of GDP, but has rarely featured in much size on the stock exchange.
More generally, the size of the equity market relative to GDP – one measure of capital market development – has fluctuated around about 100 per cent of GDP over the past two decades. This is broadly in line with the markets of other developed economies. Australian companies have continued to raise capital on the stock market, and the number of listed companies has continued to increase, albeit a bit more slowly of late. All this suggests that equities remain an important source of funds for Australian companies in a wide range of industries.
Finally, I would like to touch on valuations. In the global low-interest environment of recent years, some commentators (including the Reserve Bank) have raised the prospect that this has led to a ‘search for yield’ by global investors, where they bid up the price of risky assets and thus increase the risk of a sharp correction down the road. One simple way of measuring this for the equity market is a price-to-earnings ratio, shown here in Graph 9 for both Australia and the United States. By this measure, Australian equities are not showing signs of heightened valuations.
<div class="image-graph">
<div class="title">Graph 9</div>
<img src="https://www.rba.gov.au/speeches/2018/images/sp-so-2018-12-13-graph9.gif" alt="Graph 9: Price-to-earnings Ratios">
</div>
This graph also emphasises that, in the long run, share prices are driven by fundamentals, that is, company profits or ‘earnings’. The Australian share market will likely be dominated in the future by companies able to sustain profit growth over long periods of time, as it has been in the past. This may be the current large listed companies, many of whom have managed to play a role in Australia's listed equity market for a very long period of time, as I discussed. Or it may be others.
Some of the points I've discussed today are unlikely to change. The stock market will most likely remain both an important source of funds for Australian corporates, and an investment vehicle for Australian households and foreign investors. Equities will be more volatile than safer assets, but will very likely yield higher returns over the long term, and the composition of the market will continue to broadly reflect the structure of the real economy.
Thank you.
Marion Kohler is the RBA's <a id="r*" href="https://www.rba.gov.au/speeches/2018/sp-so-2018-12-13#fn*"></a>Head of Domestic Markets Department.
To read the original article <a href="https://www.rba.gov.au/speeches/2018/sp-so-2018-12-13" target="_blank">click here</a>.
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