The Building Boom Is Prolonging Market Pain
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The Building Boom Is Prolonging Market Pain

Construction employment is higher than ever—undermining bets the Fed will soon pivot

By RYAN DEZEMBER
Mon, May 1, 2023 8:48amGrey Clock 4 min

US: The building boom has helped push unemployment to around its lowest level in more than 50 years. That is perplexing investors who want to see the Federal Reserve switch course on interest rates.

Construction spending and employment have risen to new records this year, boosted by government outlays for infrastructure, a domestic manufacturing renaissance and a wave of apartment building that got off to a slow start during the pandemic when prices for building materials, such as lumber, were sky high.

Construction companies with jobs ranging from airport overhauls to bathroom renovations say they have enough work booked to maintain payrolls—for years in some cases. Even home builders, who slowed down last year when rates began to rise, are ramping up into spring.

The persistent strength in a sector that is usually among the first to suffer job loss when borrowing costs rise is undermining investor hopes that the Fed’s aggressive interest-rate increases would quickly slow inflation and rejuvenate the stock market.

It also threatens to upend bets in the market that recession and lower rates are on the horizon. Investors are trading government bonds as if rate cuts will come within the next year and buying technology stocks, bitcoin and other speculative assets that surged when borrowing costs were near zero.

The issue for investors is that the longer it takes for construction activity and employment to decline, the longer it will be before the central bank can cut rates.

“Through this whole cycle, many have expected a much faster slowdown than has occurred,” said Bob Elliott, co-founder and chief executive of asset manager Unlimited. “Macroeconomic cycles take years to play out.”

There are signs of slowdown, to be sure. Apartment construction is expected to decline once the latest batch of buildings is finished. Problems at regional banks are drying up financing for some projects. Spending on home improvement and repairs is forecast to decline over the next year, the first contraction since the depths of the foreclosure crisis in 2010, according to a closely watched barometer of the remodelling industry.

“Maybe we’re starting to see the effects of higher cost of capital on interest-rate-sensitive sectors,” said Anirban Basu, chief economist at trade group Associated Builders and Contractors, which said its measure of construction backlog declined in March to the lowest level since August. “The Federal Reserve raises rates until something breaks and something is starting to break.”

Even when construction employment declines, the effects might not be felt immediately in the broader economy. During the relatively fast-crashing 2008 financial crisis, the number of people working in residential construction peaked in April 2006 and had fallen roughly 15% before overall employment began to drop about two years later, Bureau of Labor Statistics data show.

The 2008 crash kicked off a deep recession and a years long home-building slump that left the U.S. severely short of housing.

Meanwhile, millions of homeowners are locked into historically low mortgage rates, which is keeping existing homes off the market and stoking demand for new construction, builders and analysts say. New-home sales climbed 9.6% in March, the Census Bureau said.

PulteGroup Inc., the country’s third-largest home builder, Tuesday reported record first-quarter revenue after selling 6% more houses at a 9% higher average price than a year earlier. Executives said they are adding sales and construction staff and building more spec homes, especially those aimed at first-time buyers.

“They don’t have a home to sell. And so they are not hampered by the low interest rate,” said Chief Executive Ryan Marshall. Pulte’s shares are up 47% this year and among the leaders of the S&P 500 stock index, which has gained 8.6%.

Employment in residential construction has been buoyed by the biggest burst in apartment building since the mid-1980s. Apartment projects were delayed after the Covid lockdown because of the budget-straining expense of building materials, such as lumber, which shot to more than twice the pre pandemic high and added millions of dollars to construction costs.

“People couldn’t build their projects, so they kicked the can down the road,” said Ivan Kaufman, chairman and CEO of Arbor Realty Trust Inc., which lends to landlords.

Though prices for lumber and other materials have come down, developers now face construction financing that is about twice as expensive as it had been and landlords are unlikely to be able to offset greater borrowing costs with rent increases, which should hinder new projects, said Mr. Kaufman.

So far, the roughly $50 billion decline in residential construction spending over the past year has been more than made up for by gains in commercial projects, including highways, hotels and hospitals. A record $108 billion was spent building factories last year, and the amount has risen this year, to a seasonally adjusted annualised rate of about $141 billion in February, according to Census Bureau data.

Some, such as those in fields that the Biden administration has made national priorities, such as semiconductors and electric vehicles, are supported by government incentives. Others are being built by big companies that can fund projects without borrowing.

Graphic Packaging Holding Co. is building a plant in Waco, Texas, to recycle old cardboard into new paperboard and said it would cover the $1 billion cost with cash over three years of construction. A similar facility that Graphic completed last year in Kalamazoo, Mich., required as many as 1,200 workers from 38 states.

The 2021 infrastructure bill and last years’ climate, tax and healthcare law are pumping money into industrial projects—such as renewable-energy facilities and railroad expansions—that promise to keep workers busy for years.

John Fish, CEO of the Suffolk construction firm, said the Boston-based company is focusing more on government-supported construction, such as airport upgrades. Suffolk employs roughly 2,500 and contracts with another 25,000 or so. It has three or four years of work lined up, including the renovation of Terminal C at Dallas Fort Worth International Airport, which won’t start until next year and isn’t scheduled for completion until 2026.

Home remodeller Jay Cipriani said his staff of 34 has plenty of kitchens and bathrooms to work through this year. But he said he’s getting fewer calls for new jobs and expects a slowing economy could make some prospective clients think twice about nonessential projects: “Maybe we don’t put in that fish pond this year.”



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Melbourne’s Most Expensive Suburbs to Rent

Melbourne’s lifestyle appeal is driving record population growth — and rising rents. Here are the six most expensive suburbs to rent a house in right now.

By Staff Writer
Wed, May 14, 2025 5 min

Melbourne is considered Australia’s most liveable city. In fact, Melbourne competes on the global stage, consistently ranking among Time Out’s top cities to live in the world and ranking fourth in 2025. Melbourne is a cultural mecca filled with arts, x, and the country’s best sporting events.

It’s the lifestyle factor that has seen Melbourne’s population grow by over 142,000 people over the 23/24 financial year, largely driven by overseas migration. With increased population comes increased demand for properties, particularly in the rental market. 

Akin to Sydney’s Eastern Suburbs, Melbourne’s South Eastern suburbs, towards Bayside and the water, dominate the most expensive suburbs listed to rent across the Victorian capital. 

In this article, we’ve examined the six most expensive suburbs to rent a house in Melbourne right now, according to property data analytics firm Cotality (formerly CoreLogic).

Brighton

Median purchase: $3.15m
Median rent: $1,353

Brighton is Melbourne’s most expensive suburb to rent a house, and it’s easy to see why. A blend of grand period homes and modern architectural builds line the wide, tree-filled streets. The suburb is synonymous with luxury, and rental properties—especially those close to the famed Brighton Beach and its iconic bathing boxes—are snapped up quickly. Vacancy rates sit at a tight 0.9 per cent.

The Neighbourhood

Brighton offers an enviable mix of a beachside lifestyle and convenient shopping and dining. With access to top schools like Brighton Grammar and Firbank, plus Church Street’s boutiques and the Royal Brighton Yacht Club, the Bayside suburb is the complete package for Melbourne’s high-end renters.

Malvern

Median purchase: $2.8m
Median rent: $1,313

Long known for its timeless Victorian and Edwardian homes, Malvern is a leafy inner suburb with prestige appeal. Many properties here are fully renovated period homes, featuring extensive gardens and original features that appeal to families and executives.

The Neighbourhood
Malvern boasts a refined atmosphere with a strong community feel. Glenferrie Road and High Street offer upscale cafes, boutiques, and grocers, while schools like De La Salle and St Joseph’s make the suburb particularly attractive to families.

Black Rock

Median purchase: $2.29m
Median rent: $1,253

Nestled along the Bayside coast, Black Rock has seen steady growth in both house prices and rents in recent years. Larger blocks and a quieter, more laid-back vibe than neighbouring suburbs make this a coveted spot for renters seeking both space and lifestyle. 

The Neighbourhood
Black Rock is home to the picturesque Half Moon Bay and scenic cliffside walks. The suburb blends beachside charm with village convenience, offering local cafés, golf courses, and direct access to some of Melbourne’s best coastal trails.

Sandringham

Median purchase: $2.21m
Median rent: $1,199

Sandringham, next door to Black Rock, offers more of the same as its neighbouring suburb, at similar prices. Sandringham too ticks the box for laid-back waterside recreation, with the majority of homes in walking distance to the sand and charming village shops.

The Neighbourhood
This is a family-friendly suburb with a strong community vibe. Sandringham Village, with its mix of cafes, wine bars, and boutiques, sits just a short walk from the train station and beach. The area also offers excellent sporting facilities and parks. Sandringham Harbour is the local landmark, a popular destination for boating, fishing, and waterfront views from Sandringham Yacht Club.

Canterbury

Median purchase: $3.15m
Median rent: $1,179

Canterbury is the innermost Melbourne suburb on this list. It is considered one of Melbourne’s most prestigious suburbs, defined by grand family homes, generally over-the-top opulent new builds with French Provincial façades behind gated entries.

The Neighbourhood
Canterbury is anchored by the exclusive “Golden Mile” precinct and is surrounded by elite private schools such as Camberwell Grammar and Strathcona. Maling Road provides a quaint village feel, while the area’s lush green spaces complete the picture of prestige.

Hampton

Median purchase: $2.3m
Median rent: $1,171

It’s back to Bayside for the sixth and final suburb on the priciest rental areas in Melbourne. Hampton is not too dissimilar to Brighton, with a main High Street providing convenience and the beach rounding out the relaxed lifestyle found on the bay. The suburb has undergone significant gentrification, with many original homes replaced by contemporary builds.

The Neighbourhood
With a stretch of clean, family-friendly beach and the bustling Hampton Street shopping strip, Hampton has everything renters could want—from stylish cafes to gourmet grocers and boutique fitness studios. Its proximity to Brighton and Sandringham only adds to its appeal.

Melbourne’s Cheapest Suburb: Melton South

Median purchase: $460,000
Median rent: $430

On the opposite end of the spectrum, Melton South—roughly 40km west of the CBD—offers the most affordable rental market. With a median rent of under $450 a week, it’s less than a third of the weekly rent in Brighton. The suburb attracts families and first-home renters seeking value and larger land lots.

Melbourne’s Best Suburb: Toorak

Toorak is considered the Point Piper of Melbourne. Boasting even more billionaires than Sydney’s harbourside hotspot, Toorak is home to Melbourne’s most expensive houses, and reportedly Australia’s most expensive house sale if the 1860s Italianate mansion Coonac settles at over $130 million.

The suburb has some of the best educational institutions in Melbourne, as well as luxury homes on the Yarra, two train stations, and a central shopping precinct undergoing a full transformation with several mixed-use retail and residential developments. It is definitely the place to be. 

Where is Melbourne’s most expensive suburb to rent a house?

As of May 2025, Brighton is Melbourne’s most expensive suburb to rent a house.

Where is Melbourne’s cheapest suburb to rent a unit?

As of May 2025, Melton South is Melbourne’s most expensive suburb to rent a house.

Where is Melbourne’s most expensive suburb to buy a house?

As of May 2025, Toorak is Melbourne’s most expensive suburb to buy a house.

Where is Melbourne’s most expensive suburb to buy a unit?

As of May 2025, Beaumaris is Melbourne’s most expensive suburb to buy a unit

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