RBA starts the year off with a rate hike

By Dr Shane Oliver, Head of Investment Strategy and Chief Economist, AMP

The RBA’s decision to hike rates to 3.85% was no surprise with it being about 70% factored in by the money market and 22 of the 28 economists surveyed by Bloomberg expecting a hike.

Key points

• The RBA hiked its cash rate by 0.25% to 3.85% as widely expected in response to inflation running above target.  

• Its commentary was cautious and hawkish with inflation now expected to stay above target for longer even with assumptions for two more rate hikes and the stronger $A.

• We thought it was a close call and leaned to a hold. But having hiked we expect the RBA to hold for the remainder of the year as we see underlying inflation as having peaked in the September quarter and falling back to target.

• Valid concerns about capacity constraints though are likely to keep the risk of a further rate hike high.

• The best thing government can do to help alleviate this is to lower the level of public spending.
   

Introduction

The RBA’s decision to hike rates to 3.85% was no surprise with it being about 70% factored in by the money market and 22 of the 28 economists surveyed by Bloomberg expecting a hike. We thought that the RBA should and (wrongly as it turned) thought it would hold but we also saw it as a very close call. The decision means that the RBA has already reversed one of the only three rate cuts we saw last year, which of course followed 13 rate hikes seen in 2022 and 2023. Once passed on to mortgage holders it will leave mortgage rates around levels prevailing 13 years ago. Of course, it should also mean a slight rise in bank deposit rates.

Source: Bloomberg, AMP

The decision to hike largely reflected the increase in annual inflation through the second half last year with quarterly trimmed mean (or underlying) inflation rising to 3.4%yoy and monthly trimmed mean inflation at 3.3%yoy, which is well above the 2-3% inflation target and was above the RBA’s forecast for 3.2%yoy. This has led the RBA to conclude that the economy has less spare capacity than it previously thought.

Governor Bullock’s press conference comments basically reinforced these concerns and indicated caution regarding the outlook leaving the door wide open for further interest rate hikes if needed.

Consistent with its decision to hike the RBA now sees inflation staying above target for longer, despite assuming a higher $A and two more rate hikes the RBA now sees underlying inflation staying higher for longer and not really getting back to the midpoint of the inflation target until June 2028. This reflects its revised assessment that the economy has more capacity pressures than previously assessed – compared to say back in August last year when it saw inflation around target even with two or three more cuts! Of course, as the lagged impact of the forecast growth slowdown flows through inflation could conceivably fall below target in 2028-29 but that’s a long way off.

Source: RBA, AMP

We expect the RBA to leave rates on hold

There is an old saying that rate hikes are like cockroaches – if you see one there is likely to be another! However, we lean a bit more optimistic and expect this to be a case of one and done:

• Monthly trimmed mean inflation has progressively trended lower from 0.47%mom in July to 0.23%mom in December and slowed from 1%qoq in the September quarter to 0.9%qoq in the December quarter. 

Source: Macrobond, AMP

• We still expect underlying inflation to fall back to target this year.

• Business surveys show output price indicators around levels consistent with the inflation target – see the pink & purple lines in the next chart.

Source: NAB, Bloomberg, AMP

• Consumer spending is likely to take a hit as we have swung quickly from rate cuts to hikes as mortgage stress likely remains high.  For mortgage holders - who are far more responsive in their spending decisions to changes in their disposable income than outright homeowners - the RBA’s 0.25% hike will mean that their interest payments will start going back up again. For someone with a $660,000 average new mortgage this will mean roughly an extra $110 in interest payments a month or an extra $1300 a year. This will likely dent spending, particularly as expectations will now be for more hikes. Sure those relying on bank deposits will be better off but household debt in Australia is almost double the value of household bank deposits.

• The rise in the Australian dollar is a defacto monetary tightening that will help lower imported inflation.

That said, the risks are still skewed on the upside for the cash rate if domestic demand growth continues to strengthen adding to concerns about the economy bumping into capacity constraints and if inflation does not fall as we expect.

On balance we expect to see the cash rate remain at 3.85% for the remainder of the year, and we see money market expectations for two more rate hikes as being a bit too much.

The key to watch for what happens next year will be the monthly inflation data. Another move in March seems unlikely given that the RBA has just moved but March quarter CPI data to be released in late April, ahead of the RBA’s May meeting will likely be key. If it shows a further cooling in trimmed mean inflation as we expect then the RBA will likely hold.
 

How can government take pressure off inflation?

Whether it was a hold or a hike, inflation has proven more sticky than expected a year ago. Pressure to deal with this has largely fallen on the RBA but Australian governments could make life a lot easier for it. Government is contributing to the strength in inflation in Australia in two ways. First, prices for items administered by government or indexed are rising around 6%yoy, well above the 2.9%yoy price rises for items in the market sector of the economy. So governments should be looking for ways to lower this.

Second, and more fundamentally while public spending growth slowed to around 1.4%yoy in the September quarter, that followed many years of 4% plus growth which left public spending around a record 28% of GDP. As Governor Bullock noted, aggregate demand includes public and private spending. So high levels of public spending as a share of the economy are constraining the recovery in private spending that can occur without seeing the economy bump up against capacity constraints, which flows through to higher prices. So, the best thing that Australian governments can do to help bring down inflation would be to cut government spending back to more normal levels which would free up space for private sector growth without higher inflation. Lower public spending will also help boost productivity by freeing up resources for the more productive private sector which should help lower inflation longer term.

Source: ABS, AMP

The bottom line on rates    

While the return to rate hikes on the back of inflation running above target is disappointing, I can understand the RBA’s desire to get back on top of it and avoid perceptions that its tolerant of high inflation. As they say “a stitch in time saves nine.” Looking forward we are confident that underlying inflation will continue to fall back to target and so see the RBA remaining on hold for the remainder of the year, even though the risks are on the upside. The best thing Federal and state governments can do is to quickly reduce the level of public spending to free up more space for private sector spending.
 

Implications for the economy and financial markets

For the economy the implications from the RBA’s rate hike with talk of more to come are as follows:

• Somewhat weaker economic growth from later this year. 

• A bigger slowdown in home price growth – we were assuming home price growth this year of 5-7% but with rate hikes its possible we now see falls. Sure home prices rose in 2023 despite rate hikes but that was because immigration surged. Roughly speaking each 0.25% rise in mortgage rates knocks about $10,000 off how much a person on average earnings can borrow to buy (and hence pay for) a home.

• The $A is likely to continue to rise as the gap between Australian and US interest rates widens further.

Source: Bloomberg, AMP

All up this could have a dampening impact on the Australian share market’s relative performance this year although I still expect it to have a reasonable year as profits rise after three years of falls.

This article was republished with permission by AMP. Read the original article here.

We know how to cool our cities and towns. So why aren’t we doing it?

By A/Prof. Elmira Jamei, Associate professor, Victoria University

Last week, Victoria recorded its hottest day in nearly six years. On Tuesday, the northwest towns of Walpeup and Hopetoun reached 48.9°C, and the temperature in parts of Melbourne soared over 45°C. Towns in South Australia also broke heat records.

This heatwave is not an outlier. It is a warning shot.

These weather conditions rival the extreme heat seen in the lead-up to the 2019–20 Black Summer, and they point to a future in which days like this are no longer rare, but routine.

What makes this summer so confronting is not just how hot it has been, but this: Australia already knows how to cool cities, yet we are failing to do it. Why?

Urban heat is not inevitable

Cities heat up faster and stay hotter than surrounding areas because of how they are built. Dense development, dark road surfaces, limited shade, and buildings that trap heat and rely heavily on air-conditioning create the “urban heat island” effect.

This means cities absorb vast amounts of heat during the day and release it slowly at night, preventing the city from cooling down even after sunset. During heatwaves, this trapped heat accumulates day after day and pushes temperatures well beyond what people can safely tolerate.

Future urbanisation is expected to amplify projected urban heat, irrespective of background climate conditions. Global climate change is making the urban heat island effect worse, but much of the heat we experience in cities has been built in through decades of planning and design choices.

Hot cities are not only a result of climate change, they are also a failure of urban planning.

Heat is a health and equity crisis

Heatwaves already kill more than 1,100 Australians each year, more than any other natural hazard. Extreme heat increases the risk of heart and respiratory disease, worsens chronic illness, disrupts sleep and overwhelms health services.

Poorly designed and inadequately insulated homes, particularly in rental and social housing can become heat traps. People on low incomes are least able to afford effective cooling, pushing many into energy debt or forcing them to endure dangerously high temperatures. Urban heat deepens existing inequalities. Those who contributed least to the problem often bear the greatest burden.

Australia has expertise, but not ambition

Here is the paradox. Australia is a major contributor to global research on urban heat. Australian researchers are developing national tools to measure and mitigate urban heat, and studies from cities such as Melbourne have quantified urban heat island intensity and investigated how urban design can influence heat stress.

Additionally, Australia already has the technologies to cool cities, from reflective coatings and heat-resilient pavements to advanced shading systems. Yet many of our cities remain dangerously hot. The issue isn’t a lack of solutions, but the failure to roll them out at scale.

Internationally, we are lagging behind countries where large-scale heat mitigation projects are already reducing urban temperatures, cutting energy demand and saving lives.

For example, Paris has adopted a city-wide strategy to create “cool islands”, transforming public spaces and schoolyards into shaded, cooler places that reduce heat stress during heatwaves.

In China, the Sponge City program, now implemented in cities such as Shenzhen and Wuhan, uses green infrastructure and water-sensitive design to cool urban areas and reduce heat stress.

Paris has a city-wide strategy to create cool zones by transforming public spaces into shaded environments.CC BY 42 North/Unsplash,

Symbolic change can’t meet the challenge

Too often, urban heat policy stops at small, symbolic actions, a pocket park here, a tree-planting program there. These measures are important, but they are not sufficient for the scale of the challenge.

Greening cities is essential. Trees cool streets, improve thermal comfort and deliver multiple health and environmental benefits. But greenery has limits. If buildings remain poorly insulated, roads continue to absorb heat and cooling demand keeps rising, trees alone will not protect cities from extreme temperatures in the coming decades.

Urban heat is a complex systems problem. It emerges from how cities are built, and is largely shaped by construction materials, building codes, transport systems and planning decisions locked in over generations. Scientists know a great deal about how to reduce urban heat, but many responses remain piecemeal and intuitive rather than systemic.

People trying to keep cool in Melbourne on January 27, 2026, during the hottest day in six years. Will Li/Unsplash

Designing an uncomfortable future

Research suggests that even if global warming is limited to below 2°C, heatwaves in major Australian cities could approach 50°C by 2040. At those temperatures, emergency responses alone will not be enough. Beyond certain temperature thresholds, behaviour change, public warnings and cooling centres cannot fully protect people.

The choices we make now about buildings, streets, materials and energy systems will determine whether Australian cities become increasingly unliveable, or remain places where people can safely live, work and age.

The battle against urban heat will be won or lost through design, technology, innovation and political will. Cities need to deploy advanced cool materials across roofs, buildings and roads, in combination with nature-based solutions. This will only work if governments use incentives to reward heat-safe design. Heat must be planned for systematically, not treated as a cosmetic problem.

With leadership and a handful of well-designed, large-scale projects, Australia could shift from laggard to leader. We have the science. We have the industry. We have the solutions. The heat is here. The only real question is whether we act, or keep absorbing it.

This article has been republished from The Conversation under a Creative Commons license. Read original here.

The investment Outlook for 2026 - expect a rough but, ultimately, ok ride

By Dr. Shane Oliver, Head of Investment Strategy and Chief Economist, AMP

Despite uncertainty around US President Trump’s policies, geopolitics and interest rates, 2025 saw strong investment returns on the back of falling interest rates, solid economic and profit growth globally and expectations for stronger profit growth in Australia. AI enthusiasm boosted US shares although they were relative underperformers globally.

Key points

• 2025 was another strong year for investors with shares up strongly on the back of better than feared growth and profits and global central banks cutting rates. Balanced super funds returned around 9%. Volatility rose though mainly on the back of worries about Trump’s tariffs. 

• 2026 is likely to see good returns but after the strong gains of the last three years, it's likely to be more constrained. And another 15% plus correction is likely along the way again.

• We expect the RBA to leave rates on hold, the ASX to return around 8% and balanced growth super funds to return around 7%. Australian home price gains are likely to slow to around 5-7%. 

• The key things to watch are interest rates; the AI boom; US midterms; China; geopolitics; and the Australian consumer. 

Introduction

Despite uncertainty around US President Trump’s policies, geopolitics and interest rates, 2025 saw strong investment returns on the back of falling interest rates, solid economic and profit growth globally and expectations for stronger profit growth in Australia. AI enthusiasm boosted US shares although they were relative underperformers globally. This saw average superannuation funds return around 9%. This is the third year in a row of returns around 10% and over the last five years, they returned 7.7% pa.

Source: Mercer Investment Consulting, Morningstar, Chant West, AMP

Here is a simple dot point summary of key insights & views on the outlook. 

Five key themes from 2025 

• US tariff turmoil - Trump’s Liberation Day tariffs caused volatility, but fortunately he backed down, retaliation was limited, deals were cut, and a trade war was averted. 

• AI enthusiasm - It surged along with related investment.

• Global resilience - Despite Trump’s shock and awe global growth remained just above 3% and Australian growth picked up. 

• Lower interest rates - Despite sticky inflation around 3%, central banks continued to cut rates. In Australia rates were cut three times.   

• Gold a “safe haven” - There was lots of geopolitical noise, but it failed to dent investment markets significantly, but it did help gold prices!

Five lessons for investors from 2025

1. Government intervention in markets is still rising. It was evident under Biden with increasing subsidies, and it’s ramped up dramatically under Trump with tariffs a key example along with the US Government buying shares in companies like Intel and charging Nvidia a fee for selling chips to China. “Socialism with American characteristics” is becoming more apt. In Australia it’s also evident in government moves to prop up failing steel works and aluminium smelters. Ultimately, it will mean a high cost to taxpayers and consumers.

2. Trump’s bite is often worse than his bark. Variations are “take Trump seriously but not literally” or “Trump always chickens out” (TACO). Trump often puts something out there (like Liberation Day tariffs around 30%) then backs down as markets rebel or deals are cut.

3. Timing markets is hard. It was tempting to switch out of shares in response to the plunge around Trump’s silly Liberation Day tariffs and on the back of concerns around stretched valuations or an AI bubble. But the trend remained up. As Keynes once said, “markets can remain irrational for longer than you can remain solvent.”

4. Geopolitical risk remains high in an age of populists and nationalism, and this can create periodic setbacks in markets.

5. By the same token, geopolitical events are hard to predict & then can be less impactful than feared. There was much fear that a US strike on Iran would lead to a flare up and surge in oil prices, but it was all a bit of a non-event from a market perspective and quickly forgotten about.

Some of these are covered in detail by my colleague Diana Mousina here.

Seven big worries for 2026

• Share valuations – these remain stretched relative to history with US shares offering little risk premium over bonds and Australian shares not much better. Fortunately, Eurozone and Asian shares are cheaper.

• The surge in AI shares shows some signs of being a bubble - including surging data centre capex increasingly being funded by debt. 

• Some central banks are at or close to the bottom on rates - this includes the ECB, Bank of Canada and the RBA. In Australia, higher inflation since 2025 could see the RBA hike prematurely. 

• Trump’s policies - there is much uncertainty about the impact of his policies in relation to tariffs, immigration, university research, the rule of law and his attacks on Fed independence which are hotting up ahead of Chair Powell’s term expiring in May. And now his crazy grab for Greenland to get its minerals and threat of tariffs on Europe if they don’t let him have it. All of which threaten “US exceptionalism.” 

• Risks for China’s economy remain - as its property slump continues.

• High public debt in the US, France the UK and Japan is a problem - it runs the risk that governments will try and inflate their way out of it. 

• Geopolitical risk remains high - the Ukraine war is yet to be resolved, problems with Iran could flare up again with a possible US military strike, US tensions with China could escalate again, political uncertainty will likely be high in Europe with the rise of the far right, the US intervention in Venezuela could turn bad for the US (and may be interpreted as a “green light” for China and Russia to act in their own spheres of influence). Trump’s grab for Greenland threatens the NATO appliance. And the midterm elections in the US are often associated with share market volatility with an average 17% drawdown in US shares in midterm election years since 1950. This is arguably evident in Trump’s increasingly erratic and populist policies.

These considerations point to another year of high volatility. 

Five reasons for optimism

1. First, while AI may be in the process of becoming a bubble it could still be early days. Compared to the late 1990s tech bubble: valuations are cheaper; Nasdaq is up less; tech sector profits are very strong; bond yields are lower; and its early days in the associated capex build up around data centres.

2. Second, while central banks are likely close to the bottom on interest rates, rate hikes are likely a way off (probably a 2027 story). For the Fed, another rate cut is likely in 2026, and a Trump appointee will likely be given some leeway before Fed independence worries really kick in. In Australia we expect some fall back in underlying inflation to allow the RBA to avoid rate hikes, but it’s a close call.

3. Third, despite lots of noise Trump is pivoting to more consumer-friendly policies ahead of the midterms which will boost demand, and ultimately, he wants shares to rise ahead of the midterms and not fall. There is a chance he could now pivot further towards the populist left. But mostly his shift will likely be more market friendly and given the elections he has an interest in keeping geopolitical flareups low. Pressure to reduce the cost of living suggest the threatened tariffs on Europe over Greenland are a bluff & won’t stick.

4. Fourth, global growth is likely to stay just above 3% as the lagged impact of rate cuts feed through along with some policy stimulus in the US and China.  Australian growth is likely to edge up to 2.2%.

5. Finally, okay economic growth likely means solid profit growth globally & about 10% profit growth in Australia (after 3 years of falls).

Key views on markets for 2026

• After three years of strong returns, global and Australian share returns are expected to slow in the year ahead to around 8%. Stretched valuations in the key direction setting US share market, political uncertainty associated with the midterm elections and AI bubble worries are the main drags, but returns should still be positive thanks to Fed rate cuts, Trump’s consumer friendly pivot and solid profit growth. A return to profit growth should also support gains in Australian shares. Another 15% or so correction in share markets is likely along the way though.

• Bonds are likely to provide returns around running yield. 

• Unlisted commercial property returns are likely to stay solid helped by strong demand for industrial property for data centres. 

• Australian home price growth is likely to slow to around 5-7% in 2026 after 8.5% in 2025 due to poor affordability, rates on hold with talk of rate hikes & APRA’s ramping up of macro prudential controls. 

• Cash & bank deposits are expected to provide returns around 3.6%.

• The $A is likely to rise as the rate gap in favour of Australia widens as the Fed cuts & the RBA holds or hikes. Fair value is about $US0.73.

• Precious metals like gold are likely to remain strong as a hedge against Trump related inflation risks and geopolitics.

• Balanced super fund returns are likely to be around 7%.

Six things to watch

1. Interest rates – if underlying inflation fails to fall, central banks including the RBA could start hiking rates.

2. The US midterms – historically these drive more volatility in markets & uncertainty is high this time around given Trump’s erratic approach. 

3. The AI boom – watch for signs that it may be becoming more bubble like with investor euphoria and excessive debt driven capex. 

4. The Chinese economy – China’s property sector is continuing to struggle, and more measures are needed to support consumers.

5. Geopolitics – risks remain high on several fronts including the US/China détente, Iran, Ukraine and now Greenland.

6. The Australian consumer – consumer spending has seen a decent pick up but may be vulnerable if rates start to rise.

Nine things investors should always remember (yeah, I know I say this every year, but they are important!)

1. Make the most of compound interest to grow wealth. Saving in growth assets can grow wealth significantly over long periods. Using the “rule of 72”, it will take 16 years to double an asset’s value if it returns 4.5% pa (ie, 72/4.5) but only 9 yrs if the asset returns 8% pa.

2. Don’t get thrown off by the cycle. Falls in asset markets can throw investors off a well-considered strategy, destroying potential wealth.

3. Invest for the long-term. Given the difficulty in timing market moves, for most it’s best to get a long-term plan that suits your wealth, age and risk tolerance and stick to it. 

4. Diversify. Don’t put all your eggs in one basket.

5. Turn down the noise. We are increasingly hit by irrelevant, low quality & conflicting information which boosts uncertainty. The key is to avoid the click bait, turn down the noise and stick to a long-term strategy. 

6. Buy low, sell high. The cheaper you buy an asset, the higher its prospective return will likely be and vice versa. 

7. Avoid the crowd at extremes. Don’t get sucked into euphoria or doom and gloom around an asset.

8. There is no free lunch! If an investment looks dodgy, hard to understand or has to be justified by odd valuations, then stay away.  

9. Seek advice. Investing can get complicated.

This article was republished with permission by AMP. Read the original article here.

Housing rebound defies affordability strain as 2025’s standout suburbs revealed

By Eliza Owen, Cotality Australia Head of Research

Eliza Owen is the Head of Residential Research Australia at Cotality (formerly CoreLogic).
Eliza has a wealth of experience in property data analysis and reporting. She worked as an economist at Residex, a research analyst at Domain Group and previously as the commercial real estate and construction analyst at Cotality. Eliza is passionate about economics, and is a popular keynote speaker, having presented to thousands across the real estate, finance and construction sectors.

Overview

• Lower-value suburbs delivered the strongest value gains, led by Kalbarri (WA), up 40.2% for houses, and Cranbrook (Qld), up 29.3% for units.

• Sydney’s premium suburbs remained the country’s highest value markets, with Point Piper recording a house median of $17.3 million and unit median of more than $3.1 million.

• Mosman recorded the highest total value of house sales nationally, with $1.58 billion transacting across 229 sales.

• WA’s resource-linked towns produced the nation’s strongest rental yields, with Newman at 12.6% for houses and South Hedland at 17.8% for units.

• Pegs Creek (WA) had the highest annual house rent increase at 23.5%, unit rents rose highest in Rockhampton (QLD) up 21.1%.

Australia’s housing market staged a turnaround in 2025, defying intense affordability and cost of living pressures to deliver an above decade-average growth rate of 7.7% through the year-to-date.

Cotality’s annual Best of the Best report, a detailed nationwide breakdown of the suburbs that rose fastest, had the highest rent return or offered the most accessible entry points, identifies which markets led the year’s recovery.

National dwelling values are set to close 2025 at least 8% higher, a result Cotality Australia Head of Research Eliza Owen says highlights how quickly conditions shifted after a challenging start.

“Markets entered 2025 under considerable pressure. Affordability had hit a series high, serviceability was stretched and price growth had flattened out. What followed was an unexpectedly strong rebound as interest rate cuts, easing inflation and limited supply reignited competition,” Ms Owen said.

Three rate cuts, an expansion of the 5% Home Guarantee Deposit Scheme and persistently low listing volumes helped drive the recovery, with the housing market recording three consecutive months of growth of at least 1% by November and reaching a new high of $12 trillion.

Ms Owen said the turnaround was most visible across lower value markets and regions where buyers were able to respond quickly to more favourable credit conditions.

“Tight supply meant even modest demand created upward pressure on prices. Cheaper markets were had the most acceleration because they remained within reach for buyers navigating higher living costs,” she said.‍

Prestige Sydney remains Australia’s price leader

Sydney’s top-end suburbs sat in their own price bracket in 2025, widening the gap between premium enclaves and the rest of the country.

Point Piper led the national list with a median house value of $17.3 million and unit medians above $3.1 million, followed by long-established areas such as Bellevue Hill, Vaucluse, Tamarama and Rose Bay.

Ms Owen said the resilience of premium Sydney markets was in sharp contrast to affordability pressures elsewhere.

“Affordability constraints were a defining feature of 2025, yet premium markets continued to operate on their own cycle. These suburbs are far less sensitive to borrowing costs and listing trends, which is why their performance often diverges from the broader market,” she said.

Mosman recorded the highest total value of house sales nationally at $1.58 billion across 229 transactions, underlining the scale of turnover even in a year of strained serviceability.

Lower value suburbs delivered the strongest gains

Western Australia dominated high house value growth in 2025, with Kalbarri increasing 40.2% to $515,378 followed by Rangeway (32.2%) and Lockyer (32.0%).

Similar trends emerged in the unit market, with strong results concentrated in Queensland’s mid-priced regions such as Cranbrook (up 29.3%) and Wilsonton (up 26.9%).

Ms Owen said the performance of these markets highlighted the role of affordability at a time of constrained borrowing power.

“Lower value areas offered buyers an opportunity to get into the market if they had the capacity to service a mortgage. Once interest rate cuts started to flow through, demand lifted quickly in those areas where prices had further room to grow,” she said.

“Investors were a particularly strong driver of demand in markets across WA and QLD, where the share of new mortgage lending to investors reached 38.3% and 41.1% respectively.”

Perth, Brisbane and Darwin lead capital-city upswing

Darwin posted the strongest rise among the capitals at 17.1% through the year-to-date, following a flat result in 2024, joined by Brisbane and Perth as Australia’s three top-performing capital cities.

The fastest growing capital-city suburb for houses was Mandogalup in Perth (up 33.0% to $944,609), alongside several outer Darwin suburbs where more moderate entry points below $600,000 supported stronger value growth.

The most affordable capital-city suburbs for houses were clustered around Greater Hobart, including Gagebrook, Herdsmans Cove and Bridgewater, all with medians under $450,000. Suburbs in Adelaide and Darwin provided some of the best value for unit buyers, with medians ranging from less than $250,000 in Hackham, Adelaide to $328,416 for Karama in Darwin.

Biggest gains and the steepest falls in Regional Australia

Strong upswings in WA and Queensland contrasted with declines in other regional pockets.

House values fell 11.6% in Millthorpe (NSW) and 10.5% in Tennant Creek (NT) while several unit markets recorded annual declines, including South Hedland (down 14.1%) and Mulwala (down 11.8%).

Ms Owen said these differences reflected the uneven backdrop of supply levels, migration flows and localised demand.

“Some regional areas are still benefiting from relative affordability and tight rental conditions. Others are adjusting to earlier periods of rapid growth or shifts in local economic activity,” she said.

Mining towns produced the highest yields

Rental demand remained firm across key resource corridors in regional WA and parts of regional Queensland, where constrained supply, strong employment bases and short-stay workforces contributed to some of the highest yields in the country.

Newman, in the Pilbara, delivered the strongest house yields at 12.6%, reflecting demand linked to iron ore operations, Kambalda East, near the Goldfields mining belt, followed at 12.2%, supported by nickel and gold activity.

Unit yields were even stronger, with South Hedland leading the country at 17.8%, while Newman recorded 14.3% and Pegs Creek recorded 13.2%, as apartment stock is limited and worker demand remains consistent.

Pegs Creek, located in Karratha, recorded a 23.5% increase in house rents over the year and Rockhampton City recorded a 21.1% jump in unit rents.

Constraints to shape 2026

Market conditions are expected to be more restrained in 2026 as borrowing capacity, affordability and credit assessments place limitations on demand.

National listings remain 18% below the five-year average and new housing completions continue to trail household formation, maintaining the structural imbalance that supported stronger conditions in 2025.

Ms Owen said that imbalance alone is not enough to drive the same level of growth next year.

“Supply remains tight, but the demand environment is shifting. Inflation forecasts have been revised higher, interest rate expectations have adjusted with them, and households are facing stricter borrowing assessments. Those factors can temper buyer activity even when stock levels are low,” she said.

“Lower value markets may still outperform because they carry less sensitivity to credit constraints, but overall growth is likely to be more measured compared with 2025.”

This article has been republished with permission from Cotality. Read original here.

A Middle Path: How Gentle Density Can Help Solve Australia's Housing Crisis

By Danika Adams, Senior Economist, CEDA and Mark Dawson, Partner, Urbis

REPORT OVERVIEW

Australia has some of the least affordable housing in the world. With population growth projected to exceed 14 million people over the next 40 years, much of it concentrated in our major cities, housing pressures will continue to intensify. Without a serious commitment to change, we will not be able to meet the housing needs of current or future generations of Australians.

The current debate too often overlooks the significant opportunity presented by medium-density housing. Dual occupancy homes, terrace housing, townhouses and mid-rise apartments in well-located areas can deliver diverse, attainable housing while making better use of existing infrastructure and transport networks.

Even modest increases to housing density could add close to one million new homes across Australia’s five largest cities. The success of broad-based housing policy reforms in Auckland demonstrates that meaningful urban planning reform can increase supply and improve affordability. 

Building consents doubled in Auckland within five years of the reforms being introduced in 2016.

Unlocking density requires planning reforms that are large-scale, encourage feasible development and enable ‘by-right’ development – housing that can be built without specific approval if it complies with local planning rules.

These changes should be supported by federal and state incentives to accelerate delivery and help overcome barriers to development such as entrenched regulation and planning restrictions, and local opposition that can outweigh broader community needs. 

Without change, Australia risks perpetuating the status quo: some of the world’s highest housing prices, inadequate supply and increasingly unequal access to housing. 

CONCLUSIONS

Australia’s housing crisis is decades in the making and requires action on many fronts. High-density infill and low density fringe development alone cannot provide enough homes to meet demand and aren’t always the right outcome. Embracing the middle ground of gentle density in well-located and serviced middle-ring areas is key to increasing Australia’s housing supply. States and territories should include upzoning in their housing policy mix, applying the lessons learned in Auckland, where it has helped to increase housing supply and stabilise house prices. 

RECOMMENDATIONS

Zoning and planning (state and local) 

1. Update planning controls to facilitate an increase in dwellings per hectare and floor-area ratios. This should be done across sizable areas, such as an entire local government area or several LGAs.
   

2. Revise zoning to allow for a broader range of mixed-use developments and land use. Thoroughly review legacy zoning from unused or underutilised land that could be updated to residential and mixed-use.
   

3. Introduce ‘by-right’ planning rules that specify what can be built without objection based on land size. These rules should apply across large parts of the city. Few exceptions should be made for heritage, environmental and character overlays.
   

4. Introduce fast-tracked and limited approval times. If a development is not assessed within a certain timeframe, it should be deemed automatically approved.
   

5. Continue to pursue planning policies aimed at speeding up housing delivery, such as Transport Oriented Development (TOD), infill and Low and Mid-rise housing in NSW, and the Development Facilitation Program (DFP) and Townhouse and Low-Rise Code in Victoria. 

Encourage development in well-located areas

1. State governments should offer financial incentives to councils that meet their housing targets, and penalise local governments that do not. Targets can signal how much housing should be approved, and where.
   

2. The Federal Government should set clear criteria for planning reform targets that are broad, feasible and ‘by right’, and reward state governments that deliver successful planning reforms. 
   

3. Unlock pilot programs to support local government proof of concept, such as applying pattern book standardisation to government sites.

This article has been republished under creative Commons license. Read original here.

Housing Stress is now a business crisis

By Robert Pradolin, Founder & Executive Director of Housing All Australians

Australia's housing crisis has crossed a dangerous threshold. What began as a social equity issue is now an economic emergency with productivity impacts threatening businesses in every sector and region. 

The 2025 Rental Affordability Index, released by National Shelter, SGS Economics and Planning and Housing All Australians, reveals how essential workers are struggling to find homes they can afford after years of declining affordability in most cities and regions.

In the ACT, a minimum-wage couple has to spend 31% of their income on rent, exceeding the threshold for housing stress and classifying their rent as “unaffordable”.

The situation is worse for hospitality workers who face “severely unaffordable” rents taking up 38% of their income.

Outside the national capital, hospitality workers in Sydney spend 42% of their income on housing while minimum wage couples across Brisbane, Adelaide, Perth, and Sydney spend between 32% and 38% of their income on rent.

These are people who serve customers in restaurants, teach children, care for elderly Australians, and staff early childhood centres. When essential workers cannot afford to live near where society needs them, they are forced to commute for hours and turn up to work exhausted, reducing their productivity. 

Businesses everywhere are struggling to find staff because there’s nowhere affordable for them to live nearby. This is forcing companies to reduce their operating hours, consider re-relocation, or close their doors for good. When we force businesses to compete not just wages, but on how far the job is away from a worker’s home, we push economic activity away from where it's most efficient. There is an unmeasured economic cost to this all too frequent scenario and the underlying cost trend in increasing.  

Tackling this challenge requires action at all levels of government in conjunction with the private sector. Australia’s housing crisis is too big for government to solve on its own. It is a problem for the entire community, and that includes business.

There are encouraging signs, however, that governments have recognised the urgency and are taking meaningful action. Green shoots are appearing across the country as policymakers are starting to recognise, and embrace, housing as critical and essential economic infrastructure.

The Commonwealth Government has moved housing policy into Treasury, a symbolic but significant shift that signals housing's role in economic productivity. Federal initiatives including reformed build-to-rent tax arrangements, bringing forward first home buyer support schemes, and committing to a Better Deal for Renters demonstrate recognition that housing affordability directly impacts workforce productivity and business competitiveness. The upcoming shared equity scheme and third round of the Housing Australia Future Fund represent further commitment to addressing supply constraints at scale. 

State governments are also stepping up. The ACT continues to demonstrate that policy intervention works. While much further relief is needed, affordability has improved 4% in the past year. This type of intervention looks like continuing as the ACT considers reduction in the Lease Variation Charge with the aim of delivering a greater level of affordable housing.  

And planning reforms across multiple jurisdictions are removing regulatory bottlenecks that have constrained housing supply for decades. It will not solve the housing crisis in itself, but it does remove one more of the hurdles that has impacted on the delivery of new housing supply.

Governments know that investing in housing delivers enormous cost and productivity benefits, in terms of health cost savings, reduced domestic violence, reduced costs of crime, enhanced human capital, improved labour market productivity and better education. In fact, research commissioned by Housing All Australians showed that every dollar spent delivers more than two dollars in returns to future taxpayers. That is better than investments in roads, hospitals, and schools.

However, the scale of challenge means that governments cannot solve it on their own. To meet our national shortfall of social and affordable homes, estimated by federal government, actuaries, we need to build 44,500 every year over the next 20 years. The Housing Australia Future Fund aspires to deliver 11,000 homes annually every year for five years, leaving a significant gap of 33,500 homes per year. We must activate the entire property ecosystem to have a chance of solving this current shortfall.

The private sector's engagement through organisations like Housing All Australians signals business community recognition that we all must be part of the solution. The private sector has a vital role to play, through innovative financing and the use of technology, increased direct investment in workforce housing, and partnership with government to deliver housing where it's needed.

We also need bipartisan commitment to long-term strategies that transcend electoral cycles. Housing supply constraints didn't develop overnight, and they won't be solved in a single term of government. It will require decades of commitment and consistency of policy.

When both major parties commit to consistent housing policy frameworks, it sends powerful signals to private sector investors that Australia is serious about addressing this crisis. Long-term investment in affordable housing requires long-term policy certainty. Political point-scoring on housing policy might win short term electoral battles, but it ensures we will lose the war against housing affordability in the longer term.

Business leaders are calling for this stability. Our employees, customers, and communities need housing policy that persists regardless of which party holds power.

With sustained investment, bipartisan commitment to long-term housing strategy, and ongoing political will, we can create a system that delivers affordable homes for Australia's workers so they can serve the communities that need them.

This article has been published with permission by the author.

CBD Office Market Commentary H2 2025 - Charter Keck Cramer

By Mark Willers - National Director, Mathew Young - Director, Harry Davidson - Associate Director, Charter Keck Cramer

Australia’s CBD office markets are showing early signs of stabilisation, with a clear “flight to quality” emerging across all major capitals as tenants prioritise premium spaces and investors navigate a high interest rate environment.

Sydney Summary

The Sydney office market has recently shown signs of improvement, particularly in premium grade spaces, while overall vacancy rates remain high due to ongoing tenant consolidation, flexible work arrangements, and a supply lag from previous cycles. Elevated tenant incentives continue, especially in sub-markets with greater vacancy, though face rents appear stable or slightly rising. The market is also experiencing a “flight to quality”, with premium buildings recording positive absorption and secondary grades facing negative absorption, a trend driven by businesses seeking higher quality spaces and incentives.

Investment activity has been subdued, with the bifurcation between prime and secondary yields becoming more pronounced as secondary yields soften more than those of prime assets. The higher interest rate environment has increased debt costs and softened yields, making loan serviceability more challenging and stifling transaction volumes. However, the ongoing reshaping of the CBD—supported by major infrastructure projects like the new Metro lines—along with government efforts to encourage a return to the office and narrowing price gaps between buyers and sellers, is expected to boost sales activity and gradually improve occupancy rates as the market continues to adjust.

Melbourne Summary

The Melbourne office market is demonstrating early signs of recovery, with some improvement in occupancy, especially within Premium and A-Grade spaces. However, vacancy rates remain high and overall occupancy is subdued, driven by ongoing tenant consolidation, flexible working patterns, and a lag in supply from previous cycles. Tenant incentives are still elevated, particularly in sub-markets with higher vacancies, though face rents have stabilised and are beginning to edge upwards for higher quality assets.

Charter Keck Cramer notes a widening gap between prime and secondary yields, with secondary yields likely having softened more noticeably, a trend expected to become clearer as transaction volumes pick up. The elevated interest rate environment continues to challenge net cashflows and interest cover, stifling investment activity. Ongoing major infrastructure projects, including the nearing completion of the Metro Tunnel, are expected to enhance CBD connectivity and may positively influence office occupancy in certain precincts. As price expectations between buyers and sellers converge, increased sales activity is anticipated in the latter part of 2025 and into 2026, particularly as some owners are compelled to recycle capital due to rising costs and weaker cashflows

Brisbane Summary

In Brisbane, leasing demand strengthened post-lockdowns, with face rents increasing due to both higher demand and inflationary pressures, although recent evidence suggests a slight tapering in activity. Tenant incentives remain elevated, especially in premium and A-grade buildings, reflecting increased construction and fitout costs. The market continues to see a "flight to quality," with premium and A-grade buildings outperforming secondary assets in terms of vacancy and rental growth. As of July 2025, Brisbane CBD vacancy rates stood at 10.7%, with ongoing and future developments largely pre-committed, indicating sustained demand for high-quality office space and limited relief from new supply.

The Queensland office property market experienced strong demand for securely leased, highquality assets throughout 2021 and early 2022, driven by low interest rates and a limited supply of investment options. However, following the Reserve Bank of Australia's rate hikes starting in May 2022, demand softened, with fewer purchasers and properties available. As the market adjusts, yields have softened—particularly for larger and secondary assets with higher cashflow risk— leading to a decline in capital values, despite rising rents. By early 2025, yields for premium grade office buildings averaged 6.75% to 7.00%, with secondary assets at around 8.25% to 8.50%. Owneroccupiers have remained active, less affected by traditional investment returns.

This article has been republished with permission from Charter Keck Cramer. Read full report here.

More homes, better cities: Letting more people live where they want

by Brendan Coates, Joey Moloney, Matthew Bowes, The Grattan Institute

Three-storey townhouses and apartments should be permitted on all residential land in all capital cities as part of a concerted policy assault on Australia’s housing crisis.

Download the report

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Housing developments of six storeys or more should be allowed as-of-right around major transit hubs and key commercial centres. 

Housing in Australia’s major cities is among the least affordable in the world.

Restrictive planning controls add hundreds of thousands of dollars to the cost of new housing in our capital cities.

For decades, Australia has failed to build enough homes in the places that people most want to live.

Now we have a housing affordability crisis that is dividing families and communities and robbing young Australians of their best chance in life.

The key problem is that state and territory land-use planning systems say ‘no’ to new housing by default, and ‘yes’ only by exception.

About 80 per cent of all residential land within 30km of the centre of Sydney, and 87 per cent in Melbourne, is zoned for housing of three storeys or fewer. And three quarters or more of residential land in Brisbane, Perth, and Adelaide is zoned for two storeys or fewer.

The upshot is that our capital cities are among the least dense of their size in the world.

Allowing more housing in established suburbs would mean cheaper housing in all suburbs.

It would boost Australians’ incomes and quality of life, by letting more people live closer to high-paying jobs as well as transport, schools, and other amenities.

And it would mean shorter daily commutes and hence lower greenhouse-gas emissions.

Developments of up to three storeys that meet clear standards should not need a planning permit. 

Larger developments that meet pre-set criteria should be assessed via ‘deemed-to-comply’ approval pathways.

Allowing three-storey townhouses and apartments on all residential land in capital cities would unlock commercially feasible capacity for more than one million new homes in Sydney alone.

Our modelling for this report shows that these reforms could lift housing construction across Australia by up to 67,000 homes a year, which over a decade could cut rents by 12 per cent and slice more than $100,000 off the cost of the median-priced home, and by much more in the longer term.

Australia needs a housing policy revolution. The equation is simple: If we build more homes where people most want to live, housing will be cheaper and our cities will be wealthier, healthier, and more vibrant.

 Australia has built too few homes where Australians most want to live

• Australia’s housing stock per adult has gone backwards, whereas housing demand has risen rapidly

• Australia’s capital cities are among some of the least dense of their size in the world

Restrictive planning systems prevent many more homes from being built

• Land-use planning is necessary to mediate between land uses and coordinate the public realm. But there are three problems:

1. Much inner-city land in our major cities is subject to restrictive zoning & built form controls that prevent greater density

2. Development approval processes are costly, slow, and uncertain

3. The governance of planning systems favours existing residents and is biased against change

States should reform their planning systems to permit more housing

• Upzone their capital cities, particularly in high-demand areas:

- A Low-Rise Housing Standard: three-storey townhouses should be permitted on all residential-zoned land in capital cities

- A Mid-Rise Housing Standard: allow for 6+ storeys around transit hubs, and higher densities where there is unmet demand

• Modest density should use complying development pathways & higher density should mostly be deemed-to-comply

• Improve evaluation and review: subject planning controls to cost-benefit analyses and regularly evaluate feasible capacity

Recent planning reforms in NSW and Victoria don’t go far enough

• Victoria’s planning reforms are more ambitious than those in NSW, especially in allowing modest density via the Townhouse Code

• Both states’ have upzoned for higher density around transit hubs, but higher density is more feasible in Sydney currently

The federal government should sharpen incentives to encourage states to get more housing built

• The New Home Bonus isn’t working: most states are not on track to qualify for incentive payments

• The federal govt. should pay the states for specific residential planning reforms in a revitalised National Competition Policy

• The Productivity Commission should regularly assess the performance of planning systems, including feasible capacity

This article is republished from The Grattan Institute under Creative Commons license. Read it here.

Latent conditions: The silent killer of civil construction projects

Author: Alex Cox, Practice Leader, Bellrock Advisory  

Whilst losses from natural perils like flood, cyclone and fire fill the headlines, there is a silent risk which is derailing civil construction in Australia. This silent threat is latent conditions.

“A latent condition is a physical condition on or near the site that could not reasonably have been anticipated by an experienced contractor at the time of tendering.”
Common examples of potential latent conditions include:

• Contaminated soil such as asbestos or PFAS; which contributed to the 2 year delay of The West Gate Tunnel in Victoria.

• Below ground conditions (e.g. sink holes, cavities, fault lines); sink holes and a reverse fault line have contributed to the 3 year delay of Sydney’s M6 Motorway. Sinkholes were also to blame for the 2 year delay to the Forrestfield Airport Link tunnel in Perth.

• Concealed building services, such as power, water, data, cabling or other features (whether active or redundant) hidden behind walls, above ceilings or below floors; and below ground. There are many recent examples including in 2016 when Sydney light rail was delayed due to the discovery of 400 disused utilities in the CBD.

It is important that civil contractors are aware of these exposures and the contractual options available to them prior to executing a contract.

Contracts

Commercial realities

In the first instance it is best to push back on the acceptance of these risks (whether you are a contractor or a principal) however this isn’t always a commercial reality. So, the questions becomes… “if I have to accept, then how do I mitigate the risks internally?”

Mitigating the risk – tender phase

Has enough information been provided to be able to price the risk accurately?

A complete and comprehensive review of the geotechnical reports, site surveys, and utility plans must be complete to then be able to identify the gaps in data. Where uncertainty exists, assumptions should be clearly documented and clarified during tender queries.

If uncertainty cannot be clarified, then allowances or contingencies must be built into the program and pricing. These may take the form of:

• Provisional sums – agreed upfront to address unknowns.

• Contingency allocations – internal buffers in time and budget.

• Exclusions and clarifications – expressly set out in the tender submission to avoid later disputes.

Mitigating the risk – post award

Once the contract is awarded, attention shifts from pricing to active management. At this stage, risk mitigation hinges on:

• Early works and site investigations: front-loading investigative works (trial pits, boreholes, service proving, and ground-penetrating radar) to confirm conditions before bulk construction begins.

• Design risk management: ensuring that design consultants are engaged early and held accountable for the accuracy of their inputs.

• Stakeholder engagement: working closely with utility providers, authorities, and landowners to resolve conflicts before they impact the program.

Transferring the risk – insurance

There are some instances where principals and contractors can then transfer this risk off their balance sheets via insurance. Refer to the risk matrix below for details:

Transferring the risk– downstream

An equitable and fair allocation of risk is always in the project’s best interest. However, as this might not be achievable the next best option would be to ensure that you have a robust and comprehensive subcontracting regime, to then pass on the risk downstream. At Bellrock advisory our experts and legally trained advisors support our clients in achieving this.

Conclusion

Clients should be aware of the dangers of accepting latent condition risk. Assumptions or gaps in information can cause time delays and cost blow-outs if they’re not actively managed. The most reliable defence is layered:

1. Allocate the risk fairly in the contract and record clear assumptions at tender.

2. Reduce uncertainty early through targeted investigations, service proving and accountable design inputs.

3. Run tight post-award controls—notice, records, stakeholder coordination.

4. Partner with an experienced risk advisor like Bellrock to transfer risk off your balance sheet where possible, supported by wordings that fit the project.

5. Accept that some exposures are uninsurable and must be priced, programmed, or subcontracted downstream with clarity.

Done well, this approach lowers disputes, keeps projects moving, and protects margins without paying unnecessary insurance premiums.

If an entirely “equitable” allocation isn’t commercially achievable, discipline in assumptions, contingencies and subcontract flow-downs is the next best way to keep the project bankable.

Bellrock Advisory can help test your allocation, tighten your mitigation plans, and structure the insurance programme so that it responds effectively in the event of a claim, when it matters most. Contact a Bellrock Advisor today.

This article was originally published as part of Bellrock's library of risk trending articles here. 

Author: Alex Cox, Practice Leader, Bellrock Advisory  

Bellrock is a national risk advisory and advocacy firm with a specialisation in risk management and insurance for the construction industry. Discover more about our unique methodology here. 

The future of finance could be written by private credit not banks

Written by Andrew Schwartz, Group Managing Director, Co-Founder and CIO of Qualitas.

If we get that balance right, private credit can protect inexperienced investors, empower professionals, and strengthen the real economy – without taxpayer backing. That’s a goal worth pursuing.

The ASIC-commissioned report into private credit by independent financial services experts Nigel Williams and Richard Timbs provides a timely and much-needed diagnosis of how the financial industry can lift its game, and why private credit plays a vital role in building Australia’s future.

Private credit mobilises long-term capital to fund real assets and plugs the gaps where banks can’t or won’t lend. However, this growth brings increased responsibility. Regulators have a duty to protect investors who may not fully grasp the risks they are taking on.

That duty is even more pressing as the global economy undergoes structural change. Artificial intelligence, decarbonisation, and the reshoring of supply chains are reshaping capital flows.

Banking institutions – formed long before the rise of large superannuation and sovereign wealth funds – are maturing in sophistication. The need for government guarantees to underpin bank liabilities is diminishing as other pools of capital step up to meet growing debt demand.

The appeal of private credit is obvious: it offers attractive returns at a time when many investors are searching for yield. But higher returns often mean higher risks. Many retail investors need better disclosure and education to understand complex credit structures, illiquidity constraints, and subordination in the capital stack.

Investor protection, then, is not about stifling the industry but about curbing its weakest practices. In recent years, retail investors have gained increasing exposure to private credit. Although Australia has seen retail participation in credit markets before, history shows it hasn’t always ended well. Poor asset quality, excessive leverage and liquidity pressures drove the collapse of building societies and merchant banks in the 1990s when redemptions surged.

It’s encouraging that the regulator is focused on transparency and accountability for investors without throttling innovation.

“To sustain the vitality of the private credit sector, we need smarter standards – transparent fees, realistic liquidity terms, and differentiated regulation that recognises the industry’s diversity.”

Leverage can be a liability

Many still assume that banks represent the safest and best form of lending. Unfortunately, history says otherwise. Bank crises in 1991 and again in 2008 showed that leverage, not lending, is what brings down institutions.

When banks take excessive risk, taxpayers step in – through deposit guarantees and central bank liquidity – because banks hold the public’s money and sit at the core of the payments system.

While this taxpayer-funded safety net is understandable, it creates a massive market distortion. Banks routinely leverage their balance sheets tenfold, knowing their solvency is backstopped by an implied government guarantee. This effectively subsidises their cost of capital and masks the true risks of their funding costs. It also gives them an advantage over private credit providers who operate without such support.

From the outset, banks and private credit therefore aren’t competing on equal ground, so they should not be regulated the same way. While the report doesn’t seek to equalise them, it should be more explicit in recognising that each plays a different role in the financial system.

Measuring true risk

Risk, moreover, isn’t just about the borrower. It’s also about the relationship between asset risk and the leverage supporting it. The sub-prime mortgage crisis that contributed to the 2008 financial crisis proved this point: it wasn’t just risky borrowers but excessive leverage that caused collapse. True risk equals asset risk multiplied by leverage – not simply the quality of the loan.

Moreover, liabilities are often overlooked in discussions about financial stability. In private credit, leverage is limited, but redemption risk is real. Redemption risk is the danger that a fund cannot meet investor demands to withdraw their money in a timely manner.

When funds offer liquidity mismatched to asset terms, pressure arises precisely when markets tighten and redemptions spike. Liquidity management and honest labelling of redemption terms are vital. Outside leverage, liquidity mismatch is the biggest solvency risk the industry faces.

The report suggests the riskiest part of Australia’s private credit market is real estate construction and development finance.

While that segment carries risk, history tells a bigger story. The 1980s saw bad corporate lending, which caused banks and merchant banks to lose billions. The 1990s then brought a real estate crash, with office values falling about 40 per cent amid soaring interest rates. Even prudent lenders struggled to avoid losses.

This history shows that disciplined lending can still be hit by systemic shocks – something retail investors need to better understand. What matters is the discipline of underwriting, transparency, and proper alignment of risk and reward, whatever the sector.

On the report’s treatment of provisioning, construction lending should never be judged halfway through. As I often say, you don’t eat the cake while it’s still baking.

Interim valuations are meaningless because the building’s value is being assessed in the middle of a project before it is fully completed, sold or generating revenue. The only valuation that matters is when the project is complete.

The report also misses an important distinction: concentrated portfolios, where loans are individually managed, require different approaches than diversified portfolios that use statistical provisioning to build up reserves against expected loan losses over an economic cycle. Australia also needs stronger specialist credit-rating capability if the industry is to mature.

Transparency matters

One of the most important parts of the Williams-Timbs report concerns fees. The question isn’t whether managers should be paid for their work – of course they should. The question is whether those fees are transparent and aligned with investor interests. Borrower-paid fees and margins vary widely across funds. There’s nothing wrong with sharing in upfront borrower fees – provided it’s capped and disclosed. The problem arises when arrangements are hidden or inconsistent.

Some of this stems from ASIC’s Regulatory Guide 97 (RG 97), which governs how funds, including super funds, disclose fees and costs to retail investors. Designed for transparency, it has made it difficult for funds to pay private credit managers fairly for the labour-intensive work of origination, monitoring and restructuring.

The solution isn’t to demonise them but to modernise the rules. Regulators should clarify how super funds can legitimately pay for credit expertise without distorting the appearance of low fees. Otherwise, the market will drift toward misleading ‘low-fee’ models that hide true costs and misalign incentives.

The interim report gets many things right: transparency, liquidity management, and consistent terminology. But it understates how low fund-level leverage makes private credit more stable than banks, and it does not fully differentiate between institutional and retail segments.

A more detailed report due in November will no doubt expand on these themes and address some of the concerns that have been raised.

To sustain the vitality of the private credit sector, we need smarter standards – transparent fees, realistic liquidity terms, and differentiated regulation that recognises the industry’s diversity. If we get that balance right, private credit can protect inexperienced investors, empower professionals, and strengthen the real economy – without taxpayer backing. That’s a goal worth pursuing.

This article has been republished with permission from Qualitas under a copyright licence. Read original here.

GST and Build-to-Rent: It’s Time to Fix the Missing Link

By Ken Fehily, GST Specialist, Fehily Advisory

Ken Fehily is Director of Fehily Advisory, specialising exclusively in consulting on GST. He was a member of the Federal Treasurer’s GST Technical Advisory Committee during the introduction of GST in 2000, served nearly 10 years on the ATO’s GST Rulings Panel, and is a long term and continuing member of the ATO’s GST Stewardship Group.

The Build-to-Rent (BTR) sector has gathered extraordinary momentum as Australia grapples with housing undersupply and affordability pressures. Developers, superannuation funds, and institutional investors increasingly view BTR as a stable, long-term asset class. Yet a fundamental obstacle remains: the way Australia’s Goods and Services Tax (GST) applies to large-scale residential developments intended solely for long-term rental.

Having advised the ATO, Treasury, industry, and the private sector on GST since its introduction in 2000, I can say with authority that BTR faces a unique and unintended disadvantage. The GST system was never designed to deal with BTR at scale, and reform is now overdue.

The GST Mismatch

Under the law, largely unchanged since July 2000, GST treatment depends on the end use of the property:

• Build-to-Sell: Developers claim full GST input tax credits on land and construction. GST is payable on sales later, often reduced under the margin scheme, and is passed on to purchasers. Developers carry no permanent GST cost.

• Build-to-Rent: Rental income is GST “input-taxed” so no GST is charged on the rent, but no input tax credits are available during the development. The 10% GST becomes a permanent cost embedded in the project carried by the developer.

For BTR, this can mean millions in unrecoverable GST before the first tenant even moves in. That distorts feasibility, deters institutional capital, and limits the sector’s growth. In effect, GST favours Build-to-Sell over Build-to-Rent despite today’s clear policy objective of expanding long-term rental supply.

Realistic Options for change

The GST settings were defensible in 2000, but the housing and investment landscape is very different today. Reform is now essential:

1. Efficiency: Allowing credits on construction costs would remove a deadweight cost during the development phase and create neutrality between BTR and BTS.

2. Supply: With credits restored, more projects stack up financially, more become bankable and more rental housing comes online.

3. Investor confidence: Offshore investors are particularly sensitive to after-tax returns. A permanent 10% impost on capital expenditure makes Australian BTR less competitive.

4. Revenue integrity: GST is meant to tax private consumption, not business inputs. Denying credits contradicts that design principle.

5. Parity: Even if GST was imposed later on rental flows, maybe at a concessional rate like the current half GST rate for long-term residential accommodation and/or capping it till it reaches the GST that would be payable on the margin scheme for sales, removing the upfront denial would make BTR feasible and fair.

Learning From Abroad

Australia is not alone in grappling with a housing crisis. Other jurisdictions have acknowledged that when governments prioritise affordable housing, tax systems should not undermine feasibility and delivery.

The ATO’s Role

The ATO can only apply the law Parliament gives it. Its current draft update to GSTR 2012/6 confirms that modern BTR developments will be assessed against existing principles, but the Commissioner’s view is unchanged. The ATO is clear that it cannot rewrite the rules. That responsibility lies squarely with government.

Industry and Policy Momentum

Developers, investors, and peak bodies are increasingly vocal about the GST barrier. Federal, state and territory governments already support BTR through planning reforms and other tax concessions. But GST problem remains the missing link, undermining otherwise supportive policy settings.

Having worked with Treasury, the ATO, and the property sector for decades, I have seen how pragmatic GST adjustments can unlock investment. The law was designed to be flexible and now is the time to use that flexibility to meet today’s housing challenge.

Conclusion

BTR has enormous potential to reshape Australia’s housing landscape. Without GST reform, however, the sector will fall short of what it’s capable and desirous of delivering. The cost of inaction will be measured not only in stalled projects and subdued investment, but in the thousands of Australians who miss out on secure, long-term rental homes.

The solution is not really that radical. It is a reasonable alignment of GST laws with current housing realities. What was fit for purpose in 2000 is no longer fit for 2025. If government is serious about addressing housing supply and affordability, it must act and fix the missing link.

Do Property Developers Need an Australian Financial Services Licence?

By Andrew Patrick, Managing Director MARQ Trustees

Raising money for a development project can quickly move a property developer into the world of financial services regulation. Many assume an Australian financial services licence (AFSL) is something only financial advisers and fund managers need. However, the way projects are funded can bring them squarely within the scope of Australia’s financial services laws.

If you are a developer raising money from investors for a project, there’s a very high chance you need an AFSL. Understanding why this is the case — and what happens if you ignore the requirement — is critical for protecting both your business and your reputation.

Common Misconceptions about “exemptions”

Developers are frequently told by professional advisers or colleagues that they don’t need an AFSL, because, for example:

• They are only raising money from wholesale investors

• They are only raising money from people they know

• They are raising less than $2 million, from less than 20 people (the so-called “20/12/$2m rule”)

• They haven’t raised money before, so are only doing it for the first time, or

• They are a developer, not someone who is carrying on a financial services business.

These are common misconceptions, with serious consequences. In each of these circumstances, the AFSL requirement still applies.

It doesn’t matter whether your investors are family, friends, or wholesale investors. Nor does it matter if you raise less than $2 million, or keep the group to fewer than 20 investors. These so-called “exemptions” often only remove regulated disclosure obligations (the need to prepare a product disclosure statement or a prospectus) — they do not remove the need for an Australian Financial Services licence).

Our ‘Exemptions brochure’ explains these misconceptions is more detail.

When an AFSL is Required

An AFSL is needed by anyone “carrying on a financial services business.” However, despite common beliefs to the contrary, virtually everyone who raises money in Australia will be taken to carry on a financial services business and will require an AFSL, regardless of the method used, the type of investors involved, how the money is to be used, what their usual day-to-day business is, or how many times they raise money. 

The exemptions to this are so rare, that the only safe and realistic assumption is that you are not exempt. This includes property developers.

For property developers, an AFSL is needed when, for example:

• Funds are raised from investors. If any investors contribute money to a development being carried-out by a developer, this will be either a “managed investment scheme” or an investment in a company.

• A property investment opportunity is promoted. Even merely telling potential investors about your project can amount to providing what is called “general financial product advice”. This requires an AFSL. It doesn’t matter who the potential investors are – you might already know them, and they might be wholesale investors. It doesn’t matter under the licensing rules.

•  The “interests” in the investment are issued (after the money is taken from the investors). Units in a trust, shares in a company, or other interests offered to investors are “financial products” under the Corporations Act. An AFSL is needed to issue those to investors.

The Consequences of Getting it Wrong

The penalties for offering an investment in a property development without an AFSL can be severe. Developers and their advisers face risks, including:

• Civil penalties and compensation orders

• Director bans and reputational damage

• Liquidation of projects mid-development

• Criminal liability.

Recent cases highlight ASIC’s focus on unlicensed property investment offers. In March 2025, for example, a property developer was banned for six and a half years for offering investments in projects without an AFSL. The group collapsed, leaving creditors owed $131 million. In another recent example, an unlicensed property scheme promoter was personally fined $1.25 million.

What You Should Do

If you are funding a project just through your own capital and bank debt, you may not need an AFSL. However, if you intend to raise money from others (including even family and colleagues), it is imperative to:

• Obtain expert legal advice. Get advice from lawyers who specialise in and understand financial services laws. Don’t rely on informal guidance or myths about licensing “exemptions”.

• Get an experienced AFSL holder involved. Developers can use a licensed professional trustee, which will allow them to raise funds lawfully, whilst focusing on what they are good at – property development.

Conclusion

Property development and financial services laws are more closely connected than many understand. It is an area rife with misconceptions and misunderstandings, even amongst professional advisers. If you are raising any capital from investors, regardless of who they are, then the chances are you need an AFSL. Ignoring this requirement exposes your project, your business, your investors and your reputation.

Getting the structure right from the start is not just about legal compliance. It is also about building credibility with investors and helping to ensure your projects can succeed.

At MARQ Trustees, we work with developers, advisers, and investors to ensure fundraising is compliant, efficient, and aligned with commercial objectives.

7 ways Brisbane 2032 can avoid repeating past Olympic planning disasters

By Tan Yigitcanlar, Professor of Urban Studies and Planning, Queensland University of Technology

Sajani Senadheera, PhD Researcher, School of Architecture and Built Environment, Queensland University of Technology

Tracy Sherwood Washington, Senior Lecturer of Urban Studies and Planning, Queensland University of Technology

Umberto Baresi, Research Fellow, Faculty of Engineering, School of Architecture & Built Environment, Queensland University of Technology

Wenda Li, PhD Researcher, School of Architecture and Built Environment, Queensland University of Technology

ROMAIN TERPREAU/Unsplash

Ahead of the 2032 Brisbane Olympic and Paralympic Games, Queensland stands at an historic crossroads.

An A$7.1 billion plan for Olympic venues is in place, with funding split 50:50 between the federal and state governments.

With about seven years to go before the games, a profound question lies before all Queenslanders: how can the games leave a positive, beneficial and permanent legacy for all?

This question has never been more urgent. As outlined in a Queensland University of Technology report released today, the answer lies in strategic, legacy-focused urban planning.

The 7 pillars of a lasting legacy

Recent games have faced heavy criticism for their immense financial, social and environmental costs.

The lessons of history are profound. For example, the venues built at great expense in Athens and Rio are now mostly “white elephants” – long-term derelicts that burden taxpayers.

Brisbane cannot afford to repeat past mistakes.

Our research team analysed the past seven games to outline seven keys to success for Brisbane, all rooted in strategic, sustainable, human-centred urban planning.

1. Reject single-use venues

Brisbane must focus on developing versatile venues that address long-term community needs.

Planning should prioritise multi-functional, adaptable facilities.

This will ensure games venues can be easily converted into community hubs, exhibition centres, or local sports clubs such as Barcelona’s Olympic waterfront, which is a lasting civic landmark. Similarly, London’s VeloPark now anchors one of the city’s premier recreational precincts.

Cyclists ride the BMX track at the VeloPark, formerly the cycling venue for the London 2012 Games. Stephen Cannon/flickr

Technology such as artificial intelligence, which turns complex data into predictive insights, and the use of digital twins – live virtual models of real places – make it possible to test future transformations in advance.

2. Plan beyond a short-term economic boost

When cities host the games, the short-term economic lift is undeniable. But history shows us these benefits often vanish quickly.

For example, infrastructure spending and tourism spikes can provide a temporary boost. However, once the games have finished, many venues become underused, maintenance costs rise, and projected long-term business or job growth may fail to materialise.

To avoid the “mega-event syndrome” of budget blowouts and misaligned priorities, all investments must be tightly aligned with Queensland’s long-term economic strategy.

This means investing in sectors with enduring value: advanced manufacturing, tourism and renewable energy.

Prioritising local procurement and workforce development ensures benefits reach small businesses and regions, spreading prosperity beyond central Brisbane.

Every dollar invested should yield long-term value.

3. Focus on social equity and community resonance

Games have historically been criticised for deepening social inequality, such as the forced evictions in Rio ahead of Brazil’s 2016 games.

Brisbane must do better. We need equity-focused planning that protects renters, long-term residents and the rights of Traditional Owners.

Conversion of athlete villages into affordable housing should be secured through binding planning agreements.

Genuine community engagement must be integrated into every stage of decision-making.

4. Set a new environmental standard

While Brisbane’s initial “climate-positive” pledge was highly praised during its bid, its quiet removal from the host contract later sparked widespread controversy.

Sustainability cannot be an afterthought.

The environmental footprint of the games is massive, from construction emissions to waste.

Brisbane should embed “nature-positive” principles at all stages of planning and development. This includes prioritising renewable energy sources, green infrastructure and the construction of venues that promote active transport.

Sydney’s Accor Stadium, designed to harvest rainwater for irrigation, shows how early planning delivers decades of benefit.

Ultimately, Brisbane will be judged on its ability to leave future generations with cleaner air, cooler streets and a truly sustainable environment.

5. Showcase transparent governance

Good governance is the cornerstone of a successful legacy.

Past failures such as budget blowouts, secret deals and bypassed planning processes have eroded public trust.

Brisbane has an opportunity to set a better standard with a robust, transparent and inclusive governance structure.

6. Celebrate and incorporate Indigenous culture

The games will be held on the unceded lands of First Nations peoples across South East Queensland.

Brisbane 2032 has the potential to make history by placing Aboriginal and Torres Strait Islander cultures at its core.

This is an exceptional opportunity to advance reflection, reconciliation and power-sharing.

Integrating Indigenous knowledge and voices – from venue design and public art to environmental management – can enrich the games’ legacy.

However, respect for these voices appears to be questionable, with a First Nations group appealing the decision to build a stadium at Victoria Park.

7. Embrace smart city innovation

The games are a catalyst for urban innovation and smart city transformation.

Brisbane can capitalise on this by deploying cutting-edge urban technology to solve long-standing challenges such as traffic congestion and housing shortages.

Innovative solutions such as autonomous shuttle buses, digital twin platforms and enhanced smart and green infrastructure can ensure the games run smoothly, while fostering a more sustainable and liveable future city.

The real finish line

Brisbane 2032 is not just a sporting event. It presents a unique opportunity to reimagine and reshape the city’s future.

By embracing bold leadership, collaborative governance and a “legacy-first” approach, Brisbane can set a global example for transforming an Olympic moment into lasting public good.

The path we choose now will define Queensland’s reputation and the quality of life for its residents for decades to come.

The stakes are high, but so is the potential.

This article has been republished from The Conversation under a Creative Commons license. Read the original.

Victoria has a once-in-a-generation chance to stamp out the 'un-Australian practice' of not paying construction contractors

By Associate Professor Matthew Bell, University of Melbourne

For the first time in nearly 20 years, Victoria is re-thinking its approach to ensuring vulnerable contractors in the construction industry get paid for the work they do

Why can’t I just get paid for the work I have done?’ This is a question many tradies in Victoria’s construction industry ask every day.

But the threat of non-payment by contractors and clients higher up the contracting chain doesn’t just affect the hundreds of thousands of people who rely on the construction industry for their livelihoods.

It also makes building and maintaining our homes and infrastructure far more costly than it needs to be.

If construction contractors and suppliers cannot rely on getting paid on time, the only rational thing they can do to cover the risk of non-payment is to increase their prices.

Construction has always been a business engaged in by private companies and individuals in the pursuit of profit. So, it shouldn’t come as a surprise that parties will seek any advantage they can within – and, not infrequently, outside – the law.

This is where the ‘security of payment’ laws step in.

Over the past 25 years, Australia’s state and territory governments have used these laws to set rules about what can and can’t be done in construction contracts, as well as to speed up dispute resolution if the parties don’t agree on how much is payable.

In mid-September 2025, the latest reforms were introduced into the Victorian Parliament.

The Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025, amending Victoria’s Building and Construction Industry Security of Payment Act 2002, is the result of multiple industry consultations, including a Victorian Parliamentary Committee Inquiry that reported in 2023.

The Bill sought to cherry-pick changes from other states over the past few years, particularly those in New South Wales and Western Australia, following a 2017 national review.

The key proposed changes include:

• Allowing adjudicators, courts and others to declare terms in contracts unfair and unenforceable

• Imposing maximum limits on how long claimants have to claim payment and how long respondents have to pay

• Giving parties who provide bank guarantees or other types of payment security the right to receive notice before it is called upon and to have it promptly returned

• Imposing a ‘blackout period’ for the Act’s processes across the Christmas industry shutdown, de-fanging the risk that respondents to payment claims (and their lawyers) find themselves ‘ambushed’ when their offices are closed for the holidays

• Removing Victoria’s unique and complex ‘excluded amounts’ regime: this confuses and slows down the Act’s fast-track scheme for payment and dispute resolution because the regime does not allow claims under the Act for commonly occurring matters like latent site conditions or delay costs.

The aim is to make sure subcontractors "get paid fairly and promptly for their hard work".

Overall, the Bill proposes sensible changes that should bring Victoria into line with other states where payment adjudication has become an accepted (though sometimes still resisted) part of the construction contracting landscape.

That said, the many ways the proposed legislation limits parties’ abilities to write their preferred contracts will remain controversial, especially as the Bill’s intent seems to be to override existing contracts where their provisions are out of line with it.

It’s also worth bearing in mind that the Bill runs to around 80 pages of amendments, adding to an existing Act of about the same length.

So, there is significant potential for ‘devil in the detail’ to be lurking: ambiguities and loopholes in the eight Acts in place around the country have made security of payment one of the most litigated areas of Australian construction law over the past quarter century (indeed, there are so many cases that we have an entire Masters subject on payment at Melbourne Law School).

The current Bill also only brings in the ‘tranche 1’ reforms; there’s a second tranche of complex issues – those the Victorian Government did not support in full in its response to the Committee’s recommendations – still under consideration.

Despite these challenges, there is cause for optimism.

These reforms could help move the dial towards the Government’s goal of making sure subcontractors “get paid fairly and promptly for their hard work”.

They are part of a broader Victorian program that recognises that effective construction industry regulation requires a holistic approach.

That program is founded upon the creation of the Building and Plumbing Commission, intended as a well-resourced regulator that accepts that ‘the buck stops’ with it. The BPC also intends to be a ‘one-stop shop’, bringing together the Victorian Building Authority (VBA), Domestic Building Dispute Resolution Victoria (DBDRV) and the domestic building insurance arm of the Victorian Managed Insurance Authority  (VMIA).

Security of payment laws set rules about what can and can’t be done in construction contracts.

The fact that the Bill brings Victoria into line with key aspects of the security of payment regimes in other states should reduce transaction costs for national construction firms, along with their lawyers and other consultants.

Ultimately, though, the reforms will only be as effective as the industry and broader community allow them to be.

This buy-in requires that anyone affected be informed about the changes and ensures any unworkable aspects are resolved before the Bill is passed.

If this happens, Victoria has a once-in-a-generation opportunity to do what the security of payment laws were originally designed to do: “stamp out the un-Australian practice of not paying contractors for work they undertake on construction”.

This article has been republished from the Pursuit under a Creative Commons license. Read original here.

Planting the seeds of prevention: How green spaces can transform public health

By Rongbin Xu, Tingting Ye and Yumin Guo, all of the Climate, Air Quality Research (CARE) unit at Monash University

Picture: Krisztina Papp on Unsplash

It’s long been known that green spaces can improve our wellbeing, but in today’s post Rongbin Xu, Tingting Ye and Yumin Guo, all of the Climate, Air Quality Research (CARE) unit at Monash University, share their research which demonstrates the emerging understanding of how green spaces protect our physical health as well. Such findings point to the importance of green spaces as planning and policy priorities.

In our cities, parks are often seen as luxuries—nice to have, but not essential. But what if green space was one of the most powerful tools we have to improve public health?

In the past few years, our Monash Climate, Air Quality Research (CARE) unit have been examining how green (and blue) spaces—like parks, trees, and waterways—impact human health. Across four recent studies, we've found that nature doesn’t just make us feel better. It protects us, from before we’re born to our final years. And these findings carry critical implications for how we design our cities and allocate resources.

Green neighbourhoods slow biological ageing

In one of our studies, published in Environmental Health Perspectives, we found that women living in greener areas appear biologically younger than their peers. Using a sophisticated DNA-based marker of ageing measured in about 500 Australian women, we found that for every 0.1 increase in the vegetation index (a measure of greenness) within 500 meters of homes, their biological age was 0.31 years younger. This is equivalent to a 3% reduction in all-cause mortality. Our findings were confirmed by a following study conducted in 924 US adults. These studies suggest that urban greening isn’t just about aesthetics or recreation. It can make you biologically younger and potentially extend your life.

Green spaces reduce Heat-Related Mortality

With climate change bringing more frequent heatwaves, finding ways to protect public health is crucial. Our recent study published in The Lancet Planetary Health investigated the global impact of greenness on heat-related deaths. It analyzed data from 11,534 urban areas and found that increasing greenness by 10%, 20%, or 30% could decrease heat-related deaths by 27%, 32%, and 37%. This means that more green spaces could save lives by cooling our cities and reducing the impact of extreme heat in a warming climate.

Green space protects unborn babies from heat

Pregnant women are particularly vulnerable to heat exposure, which can increase the risk of preterm birth. We conducted a large cohort study in Sydney, Australia, published in JAMA Pediatrics, analyzed over 1.2 million births. It found that daily extreme heat and nighttime extreme heat exposure during the third trimester can increase the risks of preterm birth by 61% and 51%, respectively. However, living in greener areas mitigated this risk. Higher greenness was associated with lower odds of preterm birth, and increasing greenness could reduce heat-related preterm births by up to 20.9%.

Planning matters: not all green space is created equal

Our fourth study asked a key question: what types of green infrastructure work best to reduce heat-related health risks? This study, published in Environmental Health Perspectives, showed that different types of green have varying effects on reducing heat-related mortality: green spaces like forests, parks, nature reserves, and street greenery can effectively mitigate heat-related mortality, but the benefits of grasses, farms, and scrubs are quite limited. This suggests that urban planners need to consider the specific types of green spaces when designing cities to maximize health benefits.

What this means for good policy

These studies provide compelling evidence for the health benefits of green spaces and highlight the need for policies that promote their creation and preservation. Here are some key policy implications:

1. Increase Urban Green Spaces
   Cities should prioritize the development and maintenance of parks, gardens, and other green areas. This not only beautifies our cities but also improves public health by slowing ageing, reducing heat-related deaths, and protecting pregnant women from preterm birth risks.

2. Targeted Planning for Green Spaces
   Since different types of green spaces have different impacts, urban planners should design spaces that are most effective for their local climates and populations.

3. Heat Mitigation Strategies
   As heatwaves become more common due to climate change, green spaces can act as natural air conditioners, cooling cities and protecting residents from heat-related illnesses and deaths. Policies should integrate green spaces into urban design as a key strategy for heat mitigation.

4. Public Health Focus
   Policymakers should recognize the health benefits of green spaces, especially for vulnerable groups like pregnant women, the elderly, and those with chronic illnesses. Green spaces should be considered an essential part of public health infrastructure.

5. Equitable Access to Green Spaces
   Green spaces must be accessible to all communities, not just affluent areas. Ensuring equitable distribution can help reduce health disparities, as lower-income neighbourhoods often face higher exposure to heat.

The big picture: Greener cities, healthier futures

Green spaces are not just pleasant to look at—they are essential for our health and wellbeing. From slowing biological ageing to reducing heat-related deaths and protecting pregnant women, the benefits are clear. By supporting policies that promote green urban environments, we can create healthier, more resilient cities for everyone. It’s time to recognize green spaces as a vital part of public health and urban planning.

Planting trees is planting prevention.

Rongbin Xu currently holds a VicHealth Postdoctoral Research Fellowship which is mapping the health impacts of extreme heat and bushfire smoke across Victoria. His views may not reflect the position of VicHealth.  

This article has been republished from Power to Persuade under a Creative Commons license. Read original here.

Australian parents are helping their kids buy a first home with less money, but more rent-free living

By Rachel Ong ViforJ, John Curtin Distinguished Professor & ARC Future Fellow, Curtin University, Amity James, Associate Professor and Discipline Lead Property, Curtin University, Christopher Phelps, Research Fellow, School of Accounting, Economics and Finance, Curtin University and Paul Vivian, PhD Candidate, School of Accounting, Economics & Finance, Curtin University

As many young Australians struggle to enter the housing market, research shows the “bank of mum and dad” is often called on to help.

But what kind of financial support are parents willing to offer their kids? And how has that changed over time?

That’s what our recent survey of 1,725 Australian parents – mostly aged 45 to 64 – sought to find out.

More parents are stepping in

Despite the growing body of research showing young people’s reliance on their parents to help buy their first home, we still don’t know enough about how parents are helping their children.

This includes how much parents are dipping into their own pockets to fund this assistance, and what the financial implications might be for parents who do so.

Earlier this year, we sought to find out more using Qualtrics, an online platform used for survey research. Of the 1,725 parents who responded to our survey, 61% were aged 45-64, while 34% were 65-69, and 5% were under 45.

We started by asking if they had done anything to help at least one of their three eldest kids buy their first home.

More than half of the 1,725 respondents – or 994 parents – said yes, they had helped at least one of their kids.

Of those whose children bought more than ten years ago, 44% had helped.

If their children bought within five to ten years ago, 50% had helped.

And if their children had bought within the past five years, an even higher share – 58% – had helped their children buy their first home.

(Note: some parents surveyed helped multiple children in different time periods.)

Rent-free living overtakes gifts

Our survey found living rent-free in the family home has become the number one way parents helped in the past five years.

Cash gifts are still crucial, but less common than a decade ago.

These findings are part of a wider, yet-to-be published study of parents’ attitudes and motivations on assisting their children into homeownership. They offer timely insights into how families are responding to one of the biggest challenges facing young people: unaffordable housing leading to declining homeownership rates.

Our study sample was not designed to be nationally representative of all Australian parents, as our primary interest was in those who’ve helped children buy their first home. However, quotas were applied on income, region and ethnicity to ensure sufficiently diverse representation.

Broader trends emerging over time

Looking at all 994 parents who said they’d helped at least one of their children buy a home over the past decade or more, some longer-term trends emerged.

Over the past ten or more years, around one in five children (22%) of the parents we surveyed received more than one type of help. The most common combinations paired direct help – gifts, loans, guarantorship – with rent-free living.

Both homeowning and renting parents said they had helped their children. But homeowning parents were more likely to assist in financial resource-intensive ways, such as cash gifts and loans, while renting parents tended to help in other ways, such as letting children live at home rent-free.

The use of loans rose sharply with parental income, spiking to 41% among those with parental incomes above $200,000.

Children of higher-income parents were also more likely to benefit from rent-free accommodation in their parents’ second or investment home. This is a distinct advantage, as this support is likely to more than double the odds of private renters of becoming homeowners.

The survey also explored where the money comes from when parents provide financial gifts or loans.

The majority (78%) of parents who offered cash gifts over the past decade or more drew on their savings.

Among those who offered loans, a much smaller share (46%) drew from savings; nearly one in three (29%) drew down on their own home equity; while another 12% drew equity from a second property.

A few parents went further

Thirty-six parents surveyed reported taking “other” measures to help their children access homeownership. Seven (19%) said they had co-purchased homes with their children, or entered into loans as co-borrowers using their own home as collateral.

Three (8%) said they had signed their house or another property over entirely to their children.

Another three (8%) gave their children early inheritances, passing on intergenerational wealth earlier than usual.

An entrenched wealth divide

The benefits of parental homeownership are now transmitted across generations. Parents giving cash gifts or loans are drawing down from multiple sources of assets, including their own savings, home equity and superannuation.

Homeowning and higher-income parents are better resourced to assist their children through cash gifts and loans, but these are not risk-free. Aside from the potential financial burden, the lack of legal protections for the “bank of mum and dad” expose older Australians to the risk of financial abuse.

Finally, significant numbers of young people do not have well-resourced parents who can support their homeownership aspirations. As the importance of parental assistance grows, this will widen an intra-generational housing wealth gap between young people with and without access to the bank of mum and dad.

This article has been republished from The Conversation under a Creative Commons license. Read the original.

Demanding, and in-demand: advancing the data centre asset class

By Vicky Grillakis, Director Urbis and Eleni Roussos, Director Urbis

Smart precincts increasingly enable the way we live, work and interact. But while data centres are critical infrastructure that will fuel our economic future, if we do not invest in them, we risk eroding our global competitiveness and ability to have productive cities.

Data centres have become a star-performing property asset class, offering attractive returns for investors. Data centres power the technology that defines modern life, from work and banking to social media scrolling and Netflix streaming. With this expanding digital economy and exponential growth of artificial intelligence (AI), this asset class is tipped to power on with Australia's market for data centres alone expected to nearly double to $40 billion by 2028. This has triggered a globally competitive 'arms race' among data centre providers and developers to secure sites, water and power.

“Within just a few years, data centres have emerged as a core investment sector spanning a global scale, poised to have transformative impact on national economies, cities and communities in the next decade,” says Jonathan Denis-Jacob, Director at Cistri.

While the pivotal role of data centres in powering smart precincts of the future is clear, their development is complex and challenging – particularly regarding power consumption and water supply. Addressing these challenges is required to integrate data centres into smart precincts.

The opportunity and challenge for data centre construction

Goldman Sachs estimates that international data centre power demand is projected to grow by a remarkable 165 per cent by 2030, rising from 411 terawatt hours (TWh) in 2023, driven by the exponential growth of AI. For instance, an average ChatGPT query requires 10 times the power load of a Google search. 

Globally, data centres are projected to consume up to four percent of power generated by 2030, a significant increase from today’s 1-2 per cent. But the opportunity lies in the transition to sustainable and integrated solutions for data centre construction. Operators are increasingly securing renewable power supplies to meet part of their substantial energy needs. However, green energy supplies and battery technology are not anywhere near the minimum scale required to supply adequate power. In a land abundant with natural resources, it seems obvious we should be able to find solutions that utilise renewable energy. 

With the operators’ need to be close to population centres, there is a push for innovative design and integration of data centres into urban environments. This need to integrate must be balanced with the need for security. Despite generating relatively limited direct employment, data centres need to be recognised as critical economic infrastructure that attracts investment, stimulates economic activity in surrounding areas, and employs a high-tech workforce, thus contributing substantial value to the economy. These broader economic benefits are crucial to recognise in the puzzle of creating a sustainable and successful mixed-use precinct.

The NSW Government recently introduced the Investment Delivery Authority to streamline approvals for large projects, including data centre construction, recognising their "first-of-a-kind scale challenges" and "nation-building" significance. 

But the scarcity of appropriate and available land in major cities is driving up land values and complicating strategic site selection. Data centres require large plots of land with specific zoning designations and utilities access. Their land size requirements have grown significantly, pressuring constrained industrial land supply. 

In NSW, most data centres trigger State Significant Development due to their MegaWatt capacity, leading to increased government interest in design outcomes and potentially lengthening approval timeframes due to strict design requirements influenced by operators. In Victoria, they can be considered via the State Development Facilitation Program under the voluntary Significant Economic Development Pathway. 

Local councils often face challenges in balancing data centre needs with community expectations and public domain considerations, as these are highly secure facilities with limited public access. Therefore, advocating to local authorities and communities about the economic benefits and critical role of data centres is essential for facilitating support and approvals. Noise and air quality, particularly from backup generators during maintenance testing scenarios, also remain key criteria under scrutiny from agencies.

Where to from here?

The strategic siting of data centres is not just about finding available land; it’s about integrating these facilities into smart precincts. Effective site selection ensures that data centres can support the digital infrastructure needs of precincts, fostering economic growth, enhancing connectivity and promoting sustainability. By strategically planning the location and design of data centres, we can create precincts that are technologically advanced, vibrant and resilient.

The growth of the requirement for data centres is and will be a major use of our cities and regions resources. Effective and strategic siting of these facilities through holistic land acquisition that considers power, water and land-use requirements, and uses the renewable energy transition to their advantage, will help support their ongoing growth and integration into our cities in a sustainable manner. 

This article has been republished from CEDA under a Creative Commons license. Read the original.

Building faster isn’t building better

As Australia’s productivity summit focuses on boosting housing supply, are we prepared to sacrifice quality for speed?

By Dr Paulo Vaz-Serra, University of Melbourne

Paulo Vaz Serra is a Senior Lecturer in Construction Management within the Faculty of Architecture, Building and Planning. He is a civil engineer with over twenty years’ experience in commercial, industrial, institutional and domestic construction as a senior construction manager and as a senior project manager.

The Australian Federal Government’s promise to deliver 1.2 million new homes by 2029 through the National Housing Accord has become one of the most pressing policy debates in Australia.

It’s an ambitious target, intended to relieve housing pressures, particularly for younger Australians locked out of ownership and renters facing record-high costs.

Parliment House Picture: Social Estate/Unsplash

But as negotiations between the housing industry and the Housing Minister intensify this month, and “building more homes more quickly” is touted as one of ten reform directions announced from the just-completed productivity summit, a critical question looms.

What are we prepared to sacrifice for speed?

Speed vs quality

Cutting corners in construction isn’t new, but the risks are magnified when governments set aggressive targets without equally ambitious planning frameworks.

On the surface, reducing red tape looks like a solution to the housing shortfall.

In reality, it risks locking in systemic defects.

A 2022 Architects Registration Board of Victoria report highlighted that time pressures and cost-cutting were the leading causes of building failures.

Poorly built homes often require costly repairs or, in extreme cases, demolition.

The Grenfell Tower fire in London remains a sobering reminder of how quickly good intentions can collapse into catastrophe when safety is compromised.

The complexity of building a home

Constructing a house is never just about pouring concrete and putting up walls.

A recent report by the National Housing Supply and Affordability Council has identified ten critical stages, from zoning and land acquisition to infrastructure planning and approvals.

At nearly every step, pressures for speed can create disputes or poor outcomes. Four of the ten stages – land acquisition, development approval, planning infrastructure and construction – were assessed as having a strongly adverse impact on housing supply.

Consider infrastructure: new suburbs require water, sewage, power grids, roads and public transport. Without them, homes are shells, disconnected from the fabric of sustainable communities.

This mismatch is already evident in Melbourne, where the transport network is playing catch-up on planning decisions made two decades ago.

Inadequate infrastructure around new housing can lead to decades-long problems. Picture: Leon Hitchens/Unsplash

The bottleneck isn’t red tape, it’s labour and materials

Even if approvals were fast-tracked tomorrow, Australia lacks the workforce to deliver on these housing promises.

The Master Builders’ 2024 Productivity Report tracked an 18 per cent fall in productivity over the past decade.

Industry estimates put the labour shortfall at 80,000, 90,000 or even 130,000 workers, and that number could rise to 480,000 in 2026.

And this isn’t just about raw numbers.

Building 1.2 million homes requires a delicate balance of skills – electricians, plumbers, carpenters, tilers, surveyors – available in the right places at the right time.

Apprenticeships take years to complete, yet completion rates remain stubbornly low. In 2023, 28,445 people commenced a construction services traineeship or apprenticeship, but only 13,800 completed one.

And even if enrolments and completions rise dramatically, those starting an apprenticeship now won’t be fully qualified for at least four years – after the promised 1.2 million homes are due to be completed.

Materials add another layer of complexity.

The government’s investment of $AU300 million in forestry will help meet timber demand – but steel, concrete and other emerging structural materials are already under pressure.

Without proper forecasting of material availability risks and upfront investment in supply, shortages will stall projects and push up costs, undermining affordability, the very goal of the housing push.

Safety, oversight and responsibility

Beyond workforce and material concerns, the way Australia regulates construction remains a weak link.

Prefabrication can help ensure consistent quality in house builds.

Compared to our international peers, professional qualifications required for people to register as builders in Australia are minimal.

In countries like Singapore and Portugal, builders must employ teams of architects and engineers to sign off on projects.

In Australia, builders can register with TAFE-level qualifications, with responsibility for oversight often outsourced to stretched inspectors.

This is a recipe for inconsistency, and small mistakes can add up to major risks.

Modern methods of construction, such as prefabrication, can help, but without a regulatory system that adapts to new materials and techniques, innovation risks becoming another casualty of the rush to build.

Planning for communities, not just numbers

If Australia is serious about building 1.2 million homes, we must invest time upfront in planning. That means:

• Mapping capacity suburb by suburb: Local councils should identify what growth they can sustainably manage, with state governments aligning infrastructure and services accordingly.

• Workforce planning as policy, not afterthought: Incentives must not only attract trainees but support them to complete qualifications and stay in the industry.

• Better regulation and professional accountability: Builders should be required to employ or consult qualified engineers and architects, ensuring that quality is embedded, not inspected after the fact.

This will take longer but it’s a delay worth making.

A proper 20-year strategy, with the first five years focused on planning and preparation, would avoid locking Australians into substandard housing for generations.

The bigger picture

The urgency of housing affordability is real, and the political temptation to move faster is understandable.

But homes are not just numbers on a spreadsheet or photo opportunities at a sod-turning.

They are the places where families grow, communities form and cities evolve.

Rushing to meet a target without laying the groundwork risks leaving Australians with homes that are unaffordable to maintain, disconnected from infrastructure, or unsafe to live in.

Knee-jerk reactions like freezing the National Construction Code is likely to provide a strong temptation for developers and builders to cut corners.

Getting this right means resisting the urge to sprint.

It means preparing for the marathon of building communities that last and accepting that building well will always take more time than building fast.

This article has been republished from the Pursuit under a Creative Commons license. Read the original.

The science of beautiful buildings

By Michael J. Ostwald & The Conversation Digital Storytelling Team

Dr. Michael J. Ostwald is Scientia Professor of Architectural Analytics at the University of New South Wales (UNSW), Sydney (Australia) where he was previously Associate Dean of Research in the Faculty of Arts, Design and Architecture and in the Faculty of the Built Environment. He is an adjunct Professor at XJTLU (China) and University of Liverpool (UK) and has consistently been ranked 'top 10' in the world in architecture (Stanford 2019-2024) and 'a top 2%' globally cited researcher in all fields (Stanford 2019-2024) .

If you asked someone on the street to name Australia’s favourite building, there's a good chance it would be the Sydney Opera House.

Sydney Opera House was opened 1973. Bernard Spragg / Wikimedia

But this iconic structure hasn't always been considered one of the country's most beautiful buildings. In the 1960s, it was described as an ugly “monstrosity” that looked like a “disintegrating circus tent”.

This dramatic shift in attitude raises two questions about our experience of the built environment.

• How do we make decisions about what is beautiful?

• And why do we then change our minds?

Answers to these questions can be found in psychology and neuroscience.

The science of attraction

This is what we'd call a standard suburban home. Notice where your eyes drift first.

In the late 19th century, scientists realised there are patterns in the ways people respond, emotionally and intuitively, to what they see.

More recently, studies have identified several qualities of objects that attract the eye and hold its gaze, triggering pleasurable spikes in brain activity, making the heart beat faster and the skin tingle.

Here, we tracked the eye movements of people looking at that standard suburban home. The eye is drawn to the complex features like the balcony and arched windows, or the centre like the door and steps.

One of the simplest models for explaining this aesthetic attraction was developed in the 1960s by psychologist Daniel Berlyne.

Berlyne’s model of aesthetic appreciation is typically represented by a bell-shaped curve on a graph.

The horizontal axis (‘arousal potential’) depicts the volume of stimulation we experience when viewing something.

It ranges from bland or repetitive objects on the left to complex and unexpected ones on the right.

Bland and repetitive

Complex and unexpected

The vertical axis of the graph (‘hedonic value’) is the amount of pleasure we feel when viewing something. This scale rises from unappealing at the bottom to attractive at the top.

This model suggests that we are most likely to perceive something as beautiful if it is neither too simple nor too complex, and not too dull or too surprising.

We find beauty, science tells us, in the balance of these properties. This is also why, if we become more familiar with an object (like the Sydney Opera House), we may reassess our initial judgements.

Let's look at some famous buildings and place them on Berlyne's curve. We can apply the principles of pleasure, stimulation and beauty and see how these architects stack up.

Villa Stein, France - Le Corbusier

Robie House, USA - Frank Lloyd Wright

Gunther House, USA - Frank Gehry

In the 1960s, viewing the Sydney Opera house for the first time may have triggered the 'shock of the new'.

The building would have seemed both complex and alien.

But as the shock subsided, the Opera House's underlying geometric properties like symmetry and repetition at different scales would have cemented its present day, more central location on the curve.

Is there a remedy for ugliness?

If you asked someone on the street to name Australia’s ugliest building, they might single out the ‘McMansions’ multiplying at the edges of suburbia.

Clarendon Homes ‘Kirribilli’ Dwelling Façade Options. Peter McManus, UNSW

These project homes, almost never designed by architects, would be found to the left of centre in Berlyn’s curve. They are slightly dull and predictable, but not entirely in the ugly zone.

Large, suburban homes. Michael Tuszynski / Pexels

Here's the problem with suburbia: imagine if we took the world’s most beautiful house and then placed almost identical copies side by side on a street.

Next, push them so close together that there's only room for a dark concrete strip between them, no trees or shrubs.

Is the house still beautiful?

In isolation, it may be, especially for the euphoric homeowner who's simply happy to have a roof over their head. But the collective ugliness of the street, its monotonous and oppressive character, overwhelms any beauty that may exist.

The problem with suburban ugliness is that people who build and buy McMansions tend to prioritise the interior (marble benchtops, tick; butler's pantry, tick; ducted air conditioning, tick) and ignore the qualities of the street it is located on.

A typical Roman street features terraced apartment blocks with restaurants and shops on the street frontage. Rachel Claire / Pexels

The reverse occurs in many parts of Europe, where tree-lined boulevards shelter cafes on the ground level with apartments above. These buildings often have very simple repetitive shapes, but are finished with subtle variations in colour, texture and materials.

Here, beauty is found in the collective qualities of the street, not in the appearance of a single home.

A Spanish street. Photo: Anna S / Pexels

Many of Melbourne’s and Sydney’s most sought-after suburbs were once regarded as ugly.

Perhaps when the owners of houses in the new suburban sprawls gradually repaint their homes, remodel their facades, replace old cladding, reject black roofs, plant trees and celebrate diversity in their neighbourhoods, suburbia may swing just slightly closer to the peak of Berlyne's curve.

This article has been republished from The Conversation under Creative Commons license. Read the original.

What’s behind the high rate of suicide in Australia’s construction industry?

By Milad Haghani, Associate Professor and Principal Fellow in Urban Risk and Resilience, The University of Melbourne and Nick Haslam, Professor of Psychology, The University of Melbourne

The construction industry is a pillar of Australia’s economy, employing more than a million people.

But construction work is also among the most dangerous industries.

According to Safe Work Australia, construction had the third-highest fatality rate of any sector in 2023. With 3.4 deaths per 100,000 workers, it far exceeded the national average of 1.4.

Many workers also sustain serious injuries, resulting in a 33% higher compensation claim rate than the all-industry average.

Yet despite these well-known physical hazards, the leading cause of death among construction workers is not falling from heights, electrocution, or being struck by heavy machinery.

By a wide margin, it is suicide.

This raises urgent questions: why is suicide so prevalent in this sector, what progress has been made in addressing it and what more needs to be done?

How big is the issue?

Each year, the construction industry loses around 190 workers to suicide. A construction worker is five to six times more likely to die by suicide than from an onsite incident.

Men suicide at higher rates than women, but construction workers are nearly twice as likely to take their own lives as other employed Australian men of the same age.

The rate of suicide, adjusted to allow fair comparison between age groups, is 26.6 deaths per 100,000 male construction workers, compared with 13.2 per 100,000 for other employed men.

This pattern is not unique to Australia. In the United States, construction workers make up only 7.4% of the workforce, yet account for almost 18% of all workplace-recorded suicides.

In the United Kingdom, suicide rates in construction are almost four times the national average. In New Zealand, male construction workers have rates nearly double the general population.

Although rates of suicide are relatively high in the construction industry, rates of suicidal thoughts are similar to other industries. By implication, certain features of the construction sector make those thoughts far more dangerous.

What’s behind the trend?

The nature of work in the sector and its culture appear to play a part in these trends.

Working conditions may also be a factor, as suicide risk is not evenly distributed among workers. Lower-skilled workers such as labourers are most vulnerable.

Job-related pressures are likely to account for this uneven distribution of risk.

Many construction workers have limited control over their work, face job insecurity, workplace bullying and periods of unemployment or underemployment.

Long hours, transient work arrangements and frequent travel often mean extended time away from family and support networks.

Apprentices are particularly exposed. Almost a third report having had suicidal thoughts in the previous year, with similar numbers reporting bullying and reduced wellbeing.

Many do not trust their supervisor as a source of mental health support.

Cultural factors compound the problem.

The industry’s male-dominated environment – 88% of construction workers are men – reinforces traditional masculine norms of self-reliance and reluctance to seek help, which are associated with higher risk of suicide.

A recent review of 32 international studies into this issue identified five recurrent suicide risk factors in the construction industry.

Job insecurity was the most frequently cited, followed by alcohol and substance abuse, lack of help-seeking, physical injury and chronic pain.

Together, these factors form a combustible mix.

What has been done and has it worked?

Although suicide rates remain high among Australian construction workers, the numbers have fallen markedly in the past two decades.

This is a reflection of the combined impact of national mental health initiatives, male-specific interventions and targeted industry programs.

Following the 2003 Cole Royal Commission, which identified suicide as a leading cause of death in Queensland construction industry, the sector began treating the issue as an urgent safety priority.

MATES in Construction, launched in 2008, is a flagship program. Built on worker-to-worker peer support, it has trained more than 300,000 people, backed by nearly 22,000 volunteer “connectors” (who help keep someone safe in a crisis and connect them with professional help) and 3,000 suicide intervention-trained workers.

The strength of this initiative lies in its capacity to build trust through its relatable peer workforce. It frames suicide as an industry-based injustice to be solved collectively through “mateship”.

Evaluations show the initiative reduces stigma, boosts mental health literacy, and increases help-seeking.

Other peer-to-peer support network programs – such as Incolink’s Bluehats Suicide Prevention, which provides education, training and support to workers – are further contributing to this declining trend.

From 2001 to 2019, the construction industry’s suicide rate declined by an average of 3% a year, double the drop seen in other male workers.

What remains to be done?

Although the disparity in suicide rates between construction and other industries has narrowed, it is still substantial. To reduce it further, prevention efforts will need to be extended and enhanced.

Workplace initiatives must continue to expand their reach and build a culture in which struggling workers feel supported to seek help and their peers feel capable of offering it. Programs must also target younger and less skilled workers, who are at elevated risk.

Similarly, awareness among families about the heightened risks in this sector could help them identify warning signs earlier and support workers in seeking help.

Efforts must continue to remedy workplace conditions known to contribute to suicide risk, like job insecurity, long hours and remote work.

It is particularly important to do so during industry downturns when insecurity rises.

Finally, we must reckon with the impact of high rates of musculoskeletal pain among construction workers.

Pain is associated with two major risk factors for suicide – poor mental health and substance misuse – so efforts to address it might play a role in reducing suicide’s terrible human cost.

If you or someone you know is struggling, help is available. In Australia, you can contact Lifeline at 13 11 14 for confidential support.

This article is republished from The Conversation under a Creative Commons license. Read the original.