49f0c343-4d16-4108-b5e8-f1f6a279230e

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="ci cl"><p>The volume of construction work posted a 0.4 per cent drop in the third quarter, a fall of 7 per cent over the year, according to the latest ABS figures.</p><p>The seasonally-adjusted estimate for total construction work completed fell 0.4 per cent to $50.8 billion in the September quarter.</p><p>Engineering construction was the main drag on total activity, recording a 0.2 per cent fall to $21.1 billion in the September quarter, down 9.6 per cent for the year.</p><p>Residential construction fell by 3.1 per cent, down 10.1 per cent over the year, with falls recorded in all states but Victoria. </p><p>But with lending indicators showing improvement, Housing Industry Association economist Angela Lillicrap says this suggests that “the decline in residential construction will not continue”.</p><p>And while residential construction has dragged, it&#x27;s good news for non-residential construction posting an increase of 4 per cent. </p><p>Lillicrap also added that the boost in infrastructure spending announced by state and federal governments in this year’s budgets had not yet been seen given the decline in engineering and construction work for the period.</p><p>“This begs the question where and when is the infrastructure spending going to occur?” Lillicrap said.</p><p>BIS Oxford Economics economist Nicholas Fearnley said it expects public sector activity to fall further this year, largely driven by the winding up of the NBN rollout. </p><p>“This is despite an expected turnaround in roads construction, with a number of high profile projects, such as WestConnex – Stage 3b and the Western Harbour Tunnel &amp; Beaches Link, set to kick off over the next 12 months,” Fearnley said. </p><p>Nationally, growth in new construction as a share of the population is falling, according to CBA economist Gareth Aird.</p><p>“On our calculations the decline in residential construction is taking place at a time when the excess supply of dwellings is relatively small,” Aird said.</p><p>“This means that it won’t be long until the excess supply has been eroded. Our estimates point to an undersupply of housing from late‑2020. In time this should put downward pressure on vacancy rates and upward pressure on rents and dwelling prices.”  </p></div></div></div>

The volume of construction work posted a 0.4 per cent drop in the third quarter, a fall of 7 per cent over the year...

Residentiallandqueensland

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><strong>Residential lot production in Sydney, Melbourne and South-East Queensland has been recorded to be around its peak in the 2017-2018 cycle and will begin to fall away as Australia experiences increasing headwinds in the housing market.</strong></p><p>BIS Oxford Economics senior manager Angie Zigomanis, who authored the company’s Outlook for Residential Land 2017 to 2022 report series, said that the forecast downturns in the eastern state centres were likely to be moderate.</p><p>New supply in these markets has been more pronounced in the apartment sector, with markets continuing to experience a deficiency of detached house stock that is likely to continue to underpin demand. </p><p>[Related reading: <a href="https://theurbandeveloper.com/articles/australian-construction-climbs-again-in-november">Australian Construction Climbs Again in November</a>]</p><p>Nonetheless, new housing demand has still risen to high levels. Sydney was estimated to have recorded its highest level of residential land production over 2016-17. Lot production in Melbourne peaked in 2014-15 but has remained close to this peak in the subsequent two years.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/shutterstock_655860517.jpg" width="1000"/></picture><div></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p></p><p>Similarly, the Brisbane, Gold Coast and Sunshine Coast markets have been experiencing a moderate upturn since 2013-14 after an extended period of weakness.</p><p>“Steady price growth in houses in the initial stages of the housing construction upturn improved land price affordability and shifted some demand from the established house market, to the new house and land market,” Zigomanis said.</p><p>“This not only encouraged a greater percentage of home purchasers to opt for a new house over an established one, but also established house owners to sell up and upgrade to a new, larger house.”</p><p>In contrast to the strength of the eastern state capitals, the Adelaide land market softened considerably in line with weak population growth and a subdued local economy. Lot production in 2016-17 was well below its peak and there are few key economic drivers on the horizon. Meanwhile, the Perth market continued to struggle both in absorbing the declines in mining investment and in broadening its economic base.</p><p>“Most markets saw house price growth outpace land price growth through the early stages of the upturn, which improved the value proposition for a new house,&quot; Zigomanis said.</p><p>“That said, land prices have now largely caught up and this gap will have narrowed, making new housing less attractive.”</p><p>The BIS Oxford Economics forecasts for land availability:</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/lasf.png" width="901"/></picture><div></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p></p><p>[Related reading: <a href="https://theurbandeveloper.com/articles/opinion-melbournes-apartment-market-forecast-not-bleak">Melbourne&#x27;s Apartment Market Forecast Not So Bleak]</a></p><p>Land production in Sydney was estimated at 11,300 lots in 2016-17 – its highest level in the past 25 years. Meanwhile, the house and land price growth through the upturn saw affordability diminish, as evidenced by rising net outflows of population from Sydney. This is expected to see lot production begin to ease back from 2017-18.</p><p>Record population growth has been the main driver of demand for new houses and land in Melbourne, while in Brisbane, a further rise was forecast in 2017-18, before significant oversupply in the Brisbane apartment market plays through to demand for new housing.</p><p>An expected softening in house price growth over 2017-18 and 2018-19 is expected to play through to land prices, which in turn will make it more difficult for developers to maintain margins as construction costs continue to escalate.</p><p>Together with recent solid rises in land prices making affordability more challenging, and strong construction alleviating some of the undersupply pressures, most markets are expected to experience an easing in lot production in the next two-to-three years.</p><p>The downturn in new dwelling supply will eventually see a rising deficiency re-emerge in most markets. Together with an expected acceleration in economic growth by the turn of the decade, this will underpin rising demand through the next cycle.</p></div></div></div></div></div>

building approvals


<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>In the latest positive economic <a href="https://theurbandeveloper.com/articles/sydney-home-prices-set-to-pick-up-8pc-in-2020">indicator</a> of a turnaround in Australia’s property markets, building approvals rebounded in September, led by apartments with a volatile 16.1 per cent jump for the month.</p><p>New housing approvals recorded a 7.6 per cent improvement, and while attached dwelling approvals—flats, townhouses and apartments—posted the largest monthly increase, it is expected to be short-lived with approvals still trending downward. </p><p>Total approvals remain 21.1 per cent lower than the same time last year, and apartment approvals have fallen by 44 per cent to 46,110 in 2018-19—the lowest since 2012-13. </p><p>The decline is even more stark for buildings of 20-storeys or more which have nearly halved in the 2018-19 financial year, falling from 19,369 approvals to 10,467. </p><p>Since the peak of the apartment approval boom in 2015-16, low to mid-storey apartment approvals—four to eight levels—have declined 37.1 per cent, while mid-storey apartments of nine to 19-levels have recorded a 43.4 per cent fall. </p><p>The lag between approvals and construction can stretch out to as much as 18 months, which means it is still too soon to confirm that we have passed the <a href="https://theurbandeveloper.com/articles/housing-approvals-at-lowest-levels-since-the-introduction-of-gst-">bottom of the cycle</a>, HIA chief economist Tim Reardon points out.</p><p>“But this result is another indication that the market is stabilising,” Reardon said.</p><p>Related: <a href="https://theurbandeveloper.com/articles/melbourne-apartment-supply">Constrained Supply Sparks Rosier Outlook for Developers</a></p><h2><strong>Apartment approvals, ABS</strong></h2></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/0620c95f-53ac-41fe-8aef-40d4e86437e3.png" width="1112"/></picture><div><span style="align-content:center;opacity:0.8">▲ Apartments approved by number of storeys, Australia - 2004/05 to 2018/19. ABS</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>Detached housing figures increased 2.7 per cent compared to the previous month, but approvals for the September quarter remain considerably lower than a year earlier.</p><p>HIA’s new <a href="https://theurbandeveloper.com/articles/new-home-sales">home sales figures</a> showed an uplift for the second month in a row, with improving house prices, low interest rates and an easing in mortgage serviceability guidelines helping the residential market regain its footing.</p><p>“However, it is not until June quarter next year that these measures are expected to drive sustained growth in dwelling approvals,” BIS principal economist Tim Hibbert said. </p><p>On a state by state basis, Queensland made the largest improvement with a 19.6 per cent jump in approvals, with Victoria (3.3 per cent), South Australia (16 per cent) and Tasmania (3. 4 per cent) all recording jumps in September.</p><p>Queensland apartment approvals recorded the largest peak-to-trough fall, with only 2,427 high rise apartments approved in 2018-19—a 76 per cent decrease from its 2015-16 peak of 10,111 apartment approvals. </p></div></div></div></div></div>

In the latest positive economic indicator of a turnaround in Australia’s property markets, building approvals rebounded in September.

berejiklian

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>NSW premier Gladys Berejiklian has announced significant reforms to the state’s planning system which has been “held back by a handful of loud voices and too much red tape”.</p><p>In an address to the Committee for Economic Development of Australia on Wednesday the premier pledged to deliver “the simplest and most effective planning system in Australia”.</p><p>The push for reforms come amid high-profile development rejections and widespread criticism with the state predicted to become the slowest growing economy in the country.</p><p>According to BIS Oxford Economics forecasts, the state&#x27;s annual growth rate in GDP and employment for the financial years from 2022 to 2025 in NSW will be 2.1 and 0.8 per cent respectively.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/79dfccc2-f424-4e10-bc2e-4d629db2e79e.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ The NSW Independent Planning Commission has rejected the Star casino’s plans for a 220-room hotel and luxury apartment tower in Pyrmont.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>Last week the state’s independent planning commission rejected Star Entertainment Group&#x27;s <a href="https://theurbandeveloper.com/articles/star-casinos-529m-pyrmont-tower-refused">$529 million hotel in Pyrmont</a> after years of delays amid community objections.</p><p>Berejiklian&#x27;s reforms now intend to “supercharge” the development cycle in order to “create jobs and boost the economy” while new creating new hubs across NSW to “ensure people can live in communities close to their work.”</p><p>“The current system does not give investors certainty—some planning proposals are taking years to determine and there are too many layers of bureaucracy—which is unacceptable,” Berejiklian said.</p><p>“Our state can’t be held back by a handful of loud voices and too much red tape.”</p><p>Berejiklian signalled for a renewed and efficient development phase for both big and small projects across the state, including increasin­g and simplifying developer contributions to pay for ­infrastructure.</p><p>The premier also said the government would “preserve our heritage, create beautiful new public places, and promote good design” while increasing transparency, reduce assessment timeframes and make e-planning mandatory for metro councils.</p><p>Berejiklian believes e-planning—the ability to lodge development applications online—will hold both the state government and councils to account over applications.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/70759db2-d74c-4c55-a339-0bd654bfe562.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ Growth in GDP and employment across NSW is projected to start slipping in the 2020 financial year.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>Planning and public spaces minister Rob Stokes said the reforms would be introduced to the planning system over the coming months to fast-track projects in high growth areas.</p><p>“This is about demystifying and restoring confidence in the planning system so we can get on with the job of delivering fantastic new places right across NSW.”</p><p>“We have already made significant changes to the planning system over the past few years and these changes will keep driving our state forward.”</p><p>Berejiklian has continued to work to the rollout of the massive $69 billion capital expenditure bill over the next four years which includes funding for various metro rail projects linking the north-western outer suburb of Rouse Hill with the northern suburb of Chatswood and on to Sydney&#x27;s south-west.</p><p>The government is also is planning to spend $14 billion on the western harbour tunnel and beaches link, to connect Sydney northern beaches with the city and ease congestion.</p><p>Berejiklian&#x27;s forthcoming reforms will not require new legislation, with Berejiklian needing just five cross-benchers to get bills through.</p></div></div></div></div></div>

Berejiklian has announced major plans to reform the state’s planning system.

f12a0171-1515-4f61-8786-c759cf6bac49

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><strong>With Generation Y set to move into the &quot;family-forming&quot; stage of life over the next decade, the composition of demand for new dwellings will change.</strong></p><p>And apartments that meet the needs for growing families and downsizers will drive demand and create opportunity for developers, reveals economic forecaster BIS Oxford Economics. </p><p>Despite forecasting solid demand for units, townhouses and apartments over the next decade, BIS warns growth in demand for apartments will slow. </p><p>“At the moment, a lot of apartment stock that’s been built has been investment driven, constructed primarily for tenants,” BIS senior manager of residential property Angie Zigomanis told <em>The Urban Developer</em>.</p><p>“But the next round, we expect dwellings to have more amenities, and built for long term owner-occupiers. </p><p>“Whether its savvy developers or savvy purchasers, the market will shift towards unit and apartments that are going to be attractive to the owner-occupier market not just to investors. Because that is where the value will be.” </p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><blockquote><p><b>As Generation Y gets older, then this provides an opportunity for developers in all capital cities to meet this demand. The boom in multi-unit dwelling construction has up until now been investment-driven, with design being geared toward Generation Y renters living as singles, couples without children. </b></p>--BIS Oxford Economics</blockquote></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/62bde918-4c77-45c9-add5-20e3e13a2383.jpg" width="709"/></picture><div><span style="float:right;opacity:0.8">Supplied</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p></p><p><strong>In need of the missing middle: apartments and townhouse lifestyle</strong> </p><p>As gen Y transition into the next life stage, coupling up and multiplying, Zigomanis says many will be looking to purchase a dwelling, most likely larger such as a detached house, townhouse or family friendly apartment and not necessarily in the suburbs as practiced by earlier generations. </p><p>“It’s likely rising house prices and decreasing housing affordability in the most desirable locations in the capital cities are causing an increasing trade-off for some couples and family buyers, with many seeking smaller and more affordable dwellings to remain close to their desired location.”</p><p>Creating further demand for mid-sized dwellings in established desirable locations, is the downsizing cohort.</p><p>The report notes that strong demand for downsizer- friendly dwellings could swell. </p><p>“The percentage of households leading into retirement (50-to 64-year olds) that have a mortgage increased from 20 per cent in 1996 to 42 per cent in 2016, with a corresponding fall in the share that fully own their home,” the report said. </p><p>“Unless occupants elect to remain in the labour force (after retirement age), there will be an increasing number who are likely to sell out of their dwelling upon retirement to move into a lower priced smaller dwelling to reduce their debt,” Zigomanis said. </p><p>BIS suggests that many will prefer units and townhouses over apartments. </p><p>“These same smaller dwellings in established areas are likely to also be attractive to some of the growing Generation Y families.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/40b8de23-d4b8-4c1d-ae7b-08bcd1020f34.jpg" width="724"/></picture><div></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p></p><p>“If there is inadequate demand in these locations for new infill unit development, there is likely to be greater pressure on house prices, as houses on suitable larger lots become sites for townhouse development,” Zigomanis said. </p><p>BIS anticipates rising demand for smaller dwellings by Gen Y over the next decade across all capital cities, although it will be most prominent in Sydney, and to a lesser extent Melbourne.</p><p>In Brisbane, Adelaide and Perth, householders are more likely to live in a detached house once they enter their late 30s and 40s, with strong demand for new separate houses is likely to continue.</p></div></div></div></div></div>

Apartments that meet the needs for growing families and downsizers will drive demand and create opportunity for developers.

Knight Frank has released its latest Brisbane CBD office report

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Brisbane&#x27;s office market has continued to strengthen, as mega-leasing deals continue to drive the vacancy rate in the Queensland capital down.</p><p>According to the latest research from Knight Frank, the improving economic environment pulled the vacancy rate down to 11.9 per cent, its lowest in seven years, and down from 14.6 per cent a year ago.</p><p>Brisbane&#x27;s CBD market has experienced three consecutive six month periods of positive net absorption achieved, settling back into a more standard growth-based pattern of demand.</p><p>The state&#x27;s economic growth, which has been bolstered by more than $12 billion earmarked for major project infrastructure over the next decade, is expected to moderate to 2.1 per cent for 2019 before improving slightly to 2.2 per cent for 2020.</p><p>The Brisbane CBD leasing market remains in the recovery phase with positive leasing enquiry and above trend net absorption.</p><p>Effective rental growth continued with prime and secondary effective rents growing by 1.2 per cent and 5.6 per cent year-on-year respectively to July 2019.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/eb9c2c82-2a91-465b-82ed-e7db55c684b6.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ The largest recent office space commitment in 2019 remains the decision by Rio Tinto to take 20,000sq m in the Midtown Centre development, expected to be completed by July 2021. Image: Fender Katsalidis</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>Investment volumes in the CBD office market are high, sitting at $2.86 billion over the year to September, roughly $1 billion higher than the corresponding period one year earlier.</p><p>Unsurprisingly, the balance between domestic and offshore buyers has flipped in the 2019 calendar, with offshore purchasing only representing 17 per cent of transactions compared with 73 per cent in 2018.</p><p>“Compressing by 23 basis points over the past year, Brisbane CBD yields are starting to move more in line with the Sydney and Melbourne CBDs,” Knight Frank partner Ben McGrath said.</p><p>“This has seen the yield gap between Sydney and Brisbane close from a recent high of 147 basis points in July 2017 to the current 95 basis points — below the 10-year average of 99 basis points.”</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/9aebba67-b098-4342-aef7-8cd371e5ec92.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ Brisbane&#x27;s population is growing so fast - more than 2.3 million people now, with Greater Brisbane tipped to hit six million in under 30 years.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>Driving this demand in Brisbane&#x27;s resource-centred market are the public sector, professional services, education, construction, engineering and a resurgence from the mining sector, as well as an influx from global and Australian &quot;co-working&quot; organisations.</p><p>Co-working and serviced office tenants are also contributing directly to net absorption, accounting for 6 per cent of total leasing activity in 2018 and 2019, with WeWork continuing to <a href="https://theurbandeveloper.com/articles/co-working-giant-wework-expands-into-brisbane">expand its Brisbane CBD footprint</a>.”</p><p>While co-working operators will provide a buffer of sorts for the sub-leasing market, these changing conditions will also pose a challenge for the sector that has grown rapidly in recent years</p><p>The finance and insurance industry accounted for 26 per cent of tenant activity over 2018 and 2019 due to the Suncorp pre-commitment to <a href="https://theurbandeveloper.com/articles/mirvac-continues-office-push-breaking-ground-on-brisbanes-healthiest-tower">80 Ann Street</a>, followed by government and public administration at 22 per cent, and resources and energy at 10 per cent.</p><p>Forecast employment growth is expected to be a standout in 2019 with the Brisbane region to record 25,000-plus more jobs in the core office-based industries, according to BIS Oxford Economics.</p><p>“While 2020 is expected to be lower, the coming five years will average 10,500 office based jobs per annum,” Knight Frank partner Jennelle Wilson said.</p><p>Supply of new CBD office space will get a boost in 2020, with the expected completion in late 2019 of Shayher Group&#x27;s Brisbane Quarter 300 George Street building, which will add a further 47,700sq m – equivalent to 2.4 per cent of current stock – to the market.</p><p>Vacancy is expected to tick slightly upwards to reach 12.5 per cent in January 2020.</p></div></div></div></div></div>

  Queensland's economic growth is expected to moderate to 2.1 per cent for 2019 before improving slightly to 2.2 per cent for 2020.       

Brisbane City1

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><strong>Despite increasing demand for prime Brisbane office space by tenants inciting </strong><a href="https://theurbandeveloper.com/articles/brisbane-office-vacancy-set-to-moderate-in-positive-market-"><strong>forecasts of an office market recovery</strong></a><strong> a new report has suggested Brisbane’s office market is unlikely to pick up pace until early 2020. </strong></p><p>Economic forecaster BIS Oxford Economics said tenants are focusing on efficiencies over expansion of space with a preference for downsizing, while co-working space operators fill the remaining gaps in the office space market.</p><p>The BIS report, Brisbane Commercial Property Prospects 2018-28, maintains Brisbane’s office market recovery will be slow, with “flight to quality” offerings expected to absorb demand first. </p><p>Despite the <a href="https://theurbandeveloper.com/articles/qsuper-and-charter-hall-ink-long-term-lease">shuffling of tenants</a> within Brisbane’s office market, BIS senior project manager Christian Schilling said net absorption has been minimal.</p><p>“Those (tenants) that are moving are committing to less space than they had before,” Schilling said.</p><p>Suncorp, the Australian Taxation Office and the Queensland Government are among major tenants currently on the hunt for new space, reportedly not planning to take on additional space according to Schilling.</p><p>Queensland’s <a href="https://theurbandeveloper.com/articles/qsuper-and-charter-hall-ink-long-term-lease">largest superannuation fund QSuper </a>announced on a 15-year long-term lease at Charter Hall’s Brisbane Square Tower on Monday.</p><p>Related reading: <a href="https://theurbandeveloper.com/articles/cromwell-sees-increasing-demand-for-space-at-brisbane-cbd-tower">Cromwell Sees Increasing Demand for Space at Brisbane CBD Tower</a></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/24d1b479-7f11-4561-a6fc-763dacda2c9c.jpg" width="1023"/></picture><div><span style="align-content:center;opacity:0.8">Shayher Group recently lost out to Charter Hall for a major leasing deal, with QSuper opting to take out 17,000sq m of space at Charter Hall’s Brisbane Square Tower. Pictured: Shayher’s Brisbane Quarter </span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>Brisbane’s prime office vacancy rate was more than 12 per cent at the beginning of this year, with a recent CBRE office market report crediting Queensland’s improving economic conditions as bolstering business confidence, jobs growth and subsequent tenant activity. </p><p>The report anticipated that Brisbane’s prime office vacancy rate to fall to 8.9 per cent by the end of the year. </p><p>Schilling said Brisbane’s CBD market remains over-supplied, with particular concern due to out-of-cycle construction.</p><p>“At this point in the rental cycle, development should not be feasible,” Schilling said. </p><p>“The CBD market remains over-supplied and Brisbane continues to have some of the highest leasing incentives in the country – averaging 35 per cent to 40 per cent depending on the grade of space.</p><p>“For building owners, that means significant capital expenditure on lease renewal and an effective rent that is some 60 per cent (or $400 per square metre for A-grade space) below 2008 levels.”</p><p>Recent inner-city developments vying for major leases include Shayher Group’s <a href="https://theurbandeveloper.com/articles/shayher-group-appoints-multiplex-for-brisbane-quarter">under construction 42-storey Brisbane Quarter tower</a> (47,700sq m) Charter Hall and Investa’s <a href="https://theurbandeveloper.com/articles/charter-hall-investa-lodge-650m-office-tower-in-brisbanes-golden-triangle-">360 Queen Street</a> (52,000sq m), Mirvac’s <a href="https://theurbandeveloper.com/articles/mirvac-ditches-student-accommodation-for-ann-st-office-tower">new scheme at Ann Street</a> (58,000sq m), QIC’s <a href="https://theurbandeveloper.com/articles/qic-consolidates-four-sites-for-major-brisbane-development-">four-building project at Mary Street </a>(38,000sq m) ISPT’s Regent Tower (42,000sq m) and AsheMorgan’s <a href="https://theurbandeveloper.com/articles/transformation-of-brisbane-midtown-precinct-approved---">Midtown Centre </a>(39,000sq m).</p><p>Meanwhile a recent Knight Frank Brisbane fringe office market overview expects Brisbane’s fringe office markets to show a sustained recovery from late 2018, along with an improvement in effective rents.</p></div></div></div></div></div>

Despite increasing demand for prime Brisbane office space by tenants inciting  forecasts of an office market recovery  a new report has suggested Bris

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<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><strong>The size of the current downturn is larger than the previous nine, with new figures forecasting a peak-to-trough decline of 30 per cent in residential construction. </strong></p><p>While the magnitude of the downturn is not out of step with previous cycles, the projected 30 per cent fall in residential commencements — about 70,000 dwellings — is the biggest in the building activity data recorded since the mid-1970s. </p><p>In comparison to recent residential construction downturns, BIS principal economist Timothy Hibbert says the current downturn is larger than the average 25 per cent decline. </p><p>“The last time there was a comparable slowdown in relative terms was 2000 to 2001, which with the help of government stimulus, was quite short-lived.” </p><p>BIS expect residential commencements to bottom out at 161,000 dwellings in 2019-20. </p><p>With dwelling commencements recording a larger-than-expected 16 per cent fall in the fourth quarter of 2018, UBS economists are equally bearish about the downturn. </p><p>In a recently released UBS note, analysts maintained their forecast of a 170,000 drop in residential commencements in both 2019 and 2020. </p><p>Related: <a href="https://theurbandeveloper.com/articles/housing-values-record-sharper-decline-than-apartments-moodys">Expect Sharp Correction, Further Falls in 2019: Moody’s</a></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/1b768ef7-b80f-456d-80df-d555a946ed3b.png" width="2792"/></picture><div></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>BIS said a standout feature of the current downturn for total dwellings was the higher starting point — about 20 per cent higher than any prior peak.</p><p>“At 229,500 dwellings in 2017-18, it sits about 40,000 dwellings above any prior peak,” Hibbert said.</p><p>And while the anticipated slowdown in private houses is consistent with other downturn cycles in terms of pace and direction, the downturn for apartments and townhouses is more significant. </p><p>“From a peak of 105,600 dwellings, it takes nine quarters to fall 46,700 or 44 per cent to 58,900 dwellings.</p><p>“The 1980 to 1983 downturn is the only one to have posted a larger percentage decline (-54 per cent).”</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/a8b67eb9-bce9-4a50-9f33-9537ed24a19f.jpg" width="960"/></picture><div><span style="align-content:left;opacity:0.8">Rider Levett Bucknall’s crane index showed a strong jump in Melbourne crane numbers, with a 40 per cent rise since March 2018. </span><span style="float:right;opacity:0.8">Supplied.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>It is not all doom and gloom however, with official building figures for the month of February showing an <a href="https://theurbandeveloper.com/articles/approvals-for-apartments-rose-a-whopping-64pc-abs">unexpected surge in multi-unit approvals</a> and non-residential figures recording a 9 per cent rebound thanks to infrastructure spending.</p><p>Meanwhile, Rider Levett Bucknall’s crane index showed a <a href="https://theurbandeveloper.com/articles/sydney-construction-drops-but-melbourne-peaks">strong jump in Melbourne crane numbers</a>, with a 40 per cent rise since March 2018. </p><p>Melbourne crane numbers reached beyond 200 for the first time, with the residential sector dominating the skyline with 148 cranes across 69 suburbs. </p></div></div></div></div></div>

The size of the current downturn is larger than the previous nine...

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<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>First home buyer loans hit the highest rate since 2009 with 10,086 commitments made in December.</p><p>The First Home Loan Deposit Scheme is expected to further boost this result from the latest Australian Bureau of Statistics report.</p><p>First home buyers accounted for 30.2 per cent of all owner-occupier commitments excluding refinancing with NSW recording 2,423 home loan commitments, Queensland 1,846 while Victoria had 3,589.</p><p>Owner-occupiers drove the demand for new home loans in December with commitments up 4.4 per cent to $19.64 billion.</p><p>Owner-occupier commitments rose 5.1 per cent compared to investors at 2.8 per cent for the month-on-month data.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><table><thead><tr><th>Seasonally Adjusted</th><th>December $b</th><th>Month % Change</th><th>Year % Change</th></tr></thead><tbody><tr><th>Housing</th><th>19.64</th><th>4.4</th><th>14.0</th></tr><tr><th>Owner-Occupier</th><th>14.20</th><th>5.1</th><th>17.9</th></tr><tr><th>Investor</th><th>5.44</th><th>2.8</th><th>4.9</th></tr></tbody></table></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><sup><sub>ABS December 2019 New Loan Commitments </sub></sup></p><p>ABS chief economist Bruce Hockman said first home buyer activity was subdued earlier in 2019 before picking up.</p><p>“Strong growth in the value of new loan commitments for housing during the second half of 2019 has seen the series increase 20.7 per cent from the most recent low point in May 2019,” Hockman said.</p><p>“New loan commitments for owner occupier housing was the predominant driver of this growth, up 22.8 per cent since May 2019.</p><p>“The value of new loan commitments for investor housing, while tracking upward over the past six months, remained down on the March 2017 peak.”</p><p>BIS Oxford Economics principal economist Tim Hibbert said they expect first home buyer demand to rise in March quarter 2020.</p><p>“Price growth in Sydney and Melbourne continues to run strong, with Australia’s other major cities starting to join the party,” Hibbert said.</p><p>“With property turnover on the up, the outlook for total housing loan demand looks strong for 2020.”</p><p>REIA president Adrian Kelly said the value of loans for housing continued to be positive.</p><p>“The finance commitments for December reflect a continuing interest and boost in confidence in all buyer segments of the real estate market at the close of 2019,” Kelly said.</p><p>“With the introduction of the First Home Loan Deposit Scheme in January 2020 we can expect a pick up in the January figures as well.”</p></div></div></div></div></div>

First home buyer loans hit the highest rate since 2009 with 10,086 commitments made in December

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<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Subdued building conditions look set to continue over coming months, as cost pressures, lagging approvals and lending curbs weigh heavily on the construction sector. </p><p>Despite the widely-<a href="https://theurbandeveloper.com/articles/housing-market-bottom-coming-closer-cbre">reported</a> boost in market sentiment, new lending and construction health figures have shown that it may take some time for a market turnaround.</p><p>Soft approvals continue to weigh on apartment <a href="https://theurbandeveloper.com/articles/construction-downturn-slows-in-march-apartment-building-the-weakest-sector">building</a> which recorded its 14th consecutive decline, while lending remains in deep contraction — down 17.3 per cent year-on-year.</p><p>The monthly performance of construction <a href="https://theurbandeveloper.com/tags/Performance%20of%20Construction%20Index">index</a>, published by the Ai Group and HIA, revealed that construction had fallen at its steepest rate in six and a half years in May. </p><p>HIA economist Tom Devitt points out that it is still too soon to see the improvement in sentiment translate “on the ground”.</p><p>“With major banks set to pass on most of the RBA’s <a href="https://theurbandeveloper.com/articles/rba-cuts-to-record-lows-so-how-will-the-cash-rate-cut-impact-the-property-market">rate cut</a> to borrowers, it will be interesting to note whether any post-election glee translates to a lift in new orders in June.”</p><h2><strong>Home loans ease, ‘developer’ loans collapse </strong></h2><p>Another cause for concern is the continued easing in lending figures for residential construction; ABS figures for April showing a 5.2 per cent decline in the number of loans to owner-occupiers financing the construction of new homes.</p><p>“Softer lending in this segment is consistent with the drop in new detached house sales in the major east coast markets over recent months,” HIA senior economist Geordan Murray said. </p><p>Investor lending remained soft — down 2.2 per cent in April and 26 per cent over the year — while loans to first home buyers edged up to their highest share of total loans since 2012.</p><p>UBS economists, led by George Tharenou, estimate that volatile “developer” or commercial loans plummeted 44 per cent over the year.</p><p>“If this fall continues, it would be very worrying for construction,” Tharenou said. </p><p>“Even if loans rebound 10 per cent from July, housing credit growth would still slow toward 3 per cent year-on-year.</p><p>“Looking forward we still see headwinds of tight credit, [m]eaning we don’t expect a sharp reflation of housing in the near-term.” </p><p>Over the month of April, total loans ticked up a better than expected 0.2 per cent.</p><p>BIS’ Maree Kilroy is among the chorus of economists predicting further <a href="https://theurbandeveloper.com/articles/rba-flags-cut-to-interest-rates">rate cuts</a> before the year’s end, which she expects will “materialise positively” in the lending data.</p><p>“The recent RBA rate cut combined with the imminent easing of APRA serviceability guidelines is a positive for dwelling investment. </p><p>“This will materialise in the lending data for established dwelling loans in another three to six months.”</p><p>As for property <a href="https://theurbandeveloper.com/articles/auction-clearance-rates-lift-yet-home-prices-continue-to-fall">clearance rates</a>, fewer properties were taken to auction over the long weekend, disrupting the improving trend in auction results. </p><p>The subdued activity returned a preliminary clearance rate of 51.3 per cent, down from last week’s 58 per cent. </p></div></div></div></div></div>

Subdued building conditions look set to continue over coming months.

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<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><strong>More than $130 billion has been wiped off the value of Australia’s homes in the December quarter, according to the latest ABS data. </strong></p><p>Sydney’s property price decline is now more acute than during the global financial crisis. </p><p>Sydney property prices fell 3.7 per cent in the December quarter, while Melbourne property prices recorded their fourth consecutive quarter of falls, declining 2.4 per cent.</p><p>Economic forecaster BIS Oxford Economics said house prices in Sydney and Melbourne are falling at a faster rate than historical benchmarks. </p><p>The period of decline in Sydney and Melbourne since late 2017 has been much shorter than the longest downturn duration, with BIS economist Angie Zigomanis pointing out that the current downturn <a href="https://theurbandeveloper.com/articles/the-anatomy-of-australias-housing-downturn-bis">may have at least another year to run</a>.</p><p>Perhaps more surprisingly, Melbourne is <a href="https://theurbandeveloper.com/articles/slowing-housing-market-sees-most-capital-city-values-fall-below-their-peak-corelogic">falling at a much faster rate</a> than Sydney.</p><p>At 15 months into Melbourne’s downturn, values have fallen 9.6 per cent compared to a decline of 8.2 per cent 15 months into Sydney’s downturn.</p><p>Melbourne’s largest previous house price slump was 10 per cent in the early-90s recession — between 1989-92 — which, at 36 months, is much longer than the current downturn. </p><p>Related: <a href="https://theurbandeveloper.com/articles/private-developers-to-face-settlement-issues-ubs">Private Developers Facing Settlement Issues: UBS</a></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><hr/></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><h2><strong>ABS residential property price index</strong></h2></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>• The value of Australia’s 10.3 million dwellings fell 5.1 per cent over the year.<br>• Over the December quarter, Property prices fell in Sydney (3.7%); Melbourne’s (2.4%); Brisbane (1.1%); Perth (1%); Darwin (0.6%) and Canberra (0.2%).<br>• Adelaide (+0.1%)and Hobart (+0.7%) were the only capital cities to record an increase in values.<br>• The mean price of dwellings in Australia is now $651,100. </p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><hr/></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><h2><strong>Significant uncertainty as house price falls worsen: RBA</strong></h2><p>The RBA has indicated that they will <a href="https://theurbandeveloper.com/articles/rba-moves-to-neutral-stance">move to cut interest rates</a> when the labour market deteriorates, adding wind to the sails of the ever-growing camp that the central bank will cut interest rates twice this year. </p><p>Australia’s rapidly declining house prices are weighing on household spending and growth, with RBA members pointing to developments in the labour market as “particularly important” to Australia’s economic outlook. </p><p>RBA said it would continue to monitor the outlook carefully.</p><p>“Given that further progress in reducing unemployment and lifting inflation was a reasonable expectation, members agreed that there was not a strong case for a near-term adjustment in monetary policy,” the RBA minutes said.   </p><p>Capital Economics economist Ben Udy said the bank is placing a lot of weight on the labour market and providing hints that it is moving toward cutting interest rates.</p><p>“If the unemployment rate does start to tick up before long as we anticipate, the Bank will probably start to cut interest rates fairly quickly,” Udy said. </p><p>However, the bank did note that in other developed economies slower labour markets and upward pressure on wages had not necessarily translated into materially higher inflation.</p><p>The board met March 5. </p><p></p></div></div></div></div></div>

More than $130 billion has been wiped off the value of Australia’s homes in the December quarter, according to the latest ABS data.

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<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><strong>Construction on Australia’s road infrastructure is expected to continue its growth in 2018 but could hit a trough in later years as governments turn their focus to rail projects.</strong></p><p>According to BIS Oxford Economics’ Road Construction in Australia 2018 to 2032 report, national road construction activity will reach a historical high of over $20 billion in this financial year, representing a 15 per cent increase on the previous year and the end of an upswing in road construction driven by public investment.</p><p>The recent growth in activity has primarily come from major projects underway in New South Wales and Queensland, most notably WestConnex, NorthConnex and Pacific Highway upgrades in NSW, and the Gateway Motorway and upgrades to the Bruce and Warrego Highways in Queensland.</p><p>Related reading: <a href="https://theurbandeveloper.com/articles/commercial-construction-to-bolster-residential-downturn">Commercial Construction to Bolster Residential Downturn</a></p><p>This activity has led to a rise in an acceleration of road construction costs, particularly in the “high-demand” states where BIS forecasted costs will exceed three per cent per year nationally over the next two years, representing the fastest rate of cost growth since the mining investment boom.</p><p>“High levels of federal government roads funding, combined with rising state government investment in substantial infrastructure projects – in some cases turbocharged by asset leases – has driven a 27 per cent real increase in publicly-funded road construction since 2015,” BIS associate director of construction, maintenance and mining Adrian Hart said.</p><p>“The roads sector has been at the front end of the recovery in public infrastructure investment, particularly in New South Wales. </p><p>Related reading: <a href="https://theurbandeveloper.com/articles/melbourne-metro-set-to-open-ahead-of-schedule-">Melbourne Metro Set to Open Ahead of Schedule</a></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/498b9ba2-2f09-4140-b04b-22bd726acbd8.jpg" width="1278"/></picture><div></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>“Combined with rising costs and other competing demands on state governments, we expect there to be little room for further increases in real roads construction spending after FY18.”</p><p>Hart said the next round of infrastructure projects would focus more on rail.</p><p>BIS said that the current level of growth would not be sustained beyond 2018 as federal and state governments turn their focus to rail projects over the coming years, and as rising costs to deliver projects begin to bite into roads funding.</p><p>A growing pipeline of rail projects looks to be the primary focus for governments across Australia. 2017 saw the new Western Australian Labor Government follow its Victorian colleagues by cancelling a planned road in favour of directing funding towards rail projects. </p><p>Major rail projects expected to ramp up over the next five years include Inland Rail, and urban rail projects in Sydney, Perth, Melbourne, Brisbane and Canberra.</p></div></div></div></div></div>

Construction on Australia’s road infrastructure is expected to continue its growth in 2018 but could hit a trough in later years as governments turn t

BIS OXFORD ECONOMICS