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This is the eighth consecutive month where the Index has printed below 100 indicating that pessimists continue to outnumber optimists.
The Index is not sending encouraging signals about the outlook for consumer spending.
Having said that, developments around interest rates during the month could have been much more damaging for confidence than turned out to be the case.
Banks increased rates on ‘interest only’ mortgages while there was considerable media speculation about prospects for rising rates overall.
In the event confidence amongst respondents with mortgages actually rose by 4.8%.
However, the interest rate increases may have contributed to softer reads in some sub-groups with higher exposure to investor housing – sentiment down about 10% in the month for those aged over 55.
The key components of the Index gauging respondents’ assessments of their own financial position were mixed.
The component measuring assessments for family finances relative to a year ago lifted slightly by 1.2% while the component tracking assessments of the outlook for finances over the next 12 months fell by 4.2%.
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Overall however both of these components are down significantly over the year by around 4%. While-ever respondents remain concerned about their own finances prospects for a marked lift in spending patterns will remain remote.
On the other hand there was an improvement in how respondents assess conditions in the labour market.
The Westpac Melbourne Institute Index of Unemployment Expectations fell by 3.1% (a lower number indicates that fewer consumers expect unemployment to rise) but really only recouped the increase we saw in the last month.
Over the last year this Index has remained fairly steady despite the encouraging developments in the stunning employment reports which indicate that 141,000 jobs were added in the three months to May.
Other components of the Index were also mixed.
The ‘economic conditions over the next 12 months’ sub-index increased by 1.8% while the ‘economic conditions over the next five years’ sub- index fell by 1.5%.
Over the last year, 12 month prospects have increased by a modest 1.1% while 5 year prospects have fallen by 8%.
The ‘time to buy a major household item’ sub-index improved by 4.2% to be up 1.0% over the year.
Conditions in the housing market appear to be stabilising, at least for the time being. The ‘time to buy a dwelling’ index lifted by 3.1% in the month – the first significant increase we have seen for this year.
Recall that in the first half of 2017 this indicator fell consistently by just over 10%.
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Recent increases in state government assistance for first home buyers appears to have been a big factor in the July rise with the ‘time to buy a dwelling’ sub-index for 25–34 year olds surging 36% in the month.
The outlook for house prices also partially reversed the recent deterioration.
The Westpac Melbourne Institute Index of House Price Expectations increased by 8.6% following the cumulative 11.8% fall we saw in the previous two months.
With banks raising some mortgage rates and overall confidence soft it is too early to call a recovery in confidence in the housing market.
The Reserve Bank Board next meets on August 1.
Rates will remain on hold.
We continue to predict that the Reserve Bank cash rate will remain on hold throughout the remainder of 2017.
A cautious consumer; a slowing housing market; and a weakening in the labour market with limited prospects of any boost to wages growth all point to another year of steady policy.
Bill Evans is the chief economist at <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Consumer sentiment remains soft: Bill Evans

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GUEST OBSERVER
The six month annualised growth rate in the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, fell from 1.11 percent in March to 0.92 percent in April. 
This marks the ninth consecutive month where the growth rate in the Index is at or above trend. That followed a period of seventeen consecutive months where the growth rate had been below trend. That sustained period of below trend growth in the series had been pointing to the weakness we saw in the economy in the September quarter (although no lead indicator could have prepared us for a negative growth print).
The resumption of positive growth in the Index in August last year gave us some comfort that the bounce back in growth in the December quarter to 1.1% could have been anticipated.
While the strong bounce back in the December quarter was partly statistical in response to the negative quarter in September the ongoing positive signal from the Index is consistent with solid growth through most of 2017.
In his statement following the Reserve Bank Board meeting on May 2 the Governor noted: “Growth is expected to increase gradually over the next couple of years to a little above 3 percent”.
Recall that it is generally accepted by the market and in official circles that trend growth in the Australian economy is around 2.75 percent so a confident prediction of “a little above 3 percent” would be consistent with the Index remaining clearly positive for an extended period.
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The Bank’s current spot forecasts for growth are: 3 percent in 2017; 3.25 percent in 2018 and 2019 (to June).
Westpac concurs with the Bank’s forecast of 3 percent growth through 2017. That is above trend and consistent with the positive leads from the Index over the last nine months.
However we do have concerns for growth beyond 2017. Prospects for 2018 look discouraging. Housing construction is likely to be contracting through 2018 while export growth will slow and the terms of trade are likely to be falling, slowing nominal income growth.
Prospects for an offsetting boost from household spending and business investment are not encouraging given the ongoing negative feedback loop from weak labour incomes to consumption and sales.
The Leading Index growth rate has lifted over the last six months from 0.25 percent in November to 0.92 percent in April. Until recently the key drivers of that improvement had been global factors: rising commodity prices and the steepening of the yield curve.
In April both of these components slowed with the change in the 6 month contribution being -0.19 percentage points for commodity prices and -0.05 percentage points for the yield curve (which has recently been flattening).
However, other international factors are still supportive of the Index – US industrial production has contributed 0.33 percentage points to the increase in the Index while ASX200 has contributed 0.29 percentage points.
On the domestic front dwelling approvals have contributed 0.19 percentage points; the Westpac-MI Unemployment Expectations Index 0.11 percentage points; and Westpac-MI Consumer Sentiment Expectations Index 0.06 percentage points.
The only ‘domestic’ component dragging on the Index is “aggregate monthly hours worked” which reduced the index growth rate by 0.08 percentage points between November and April.
The Reserve Bank Board next meets on June 6. Policy is firmly on hold as the Bank assesses developments particularly in housing and labour markets.
As discussed, the Governor expects a period of sustained above trend growth over the course of 2018 and 2019.
“That view would be broadly consistent with markets which continue to expect the Reserve Bank to be raising rates next year (although the strength of this conviction does vary over time). Consistent with the Leading Index we do concur with the Bank’s forecast for 3 percent growth in 2017 but expect a slowdown next year.
Such a development would eliminate any ‘pressure’ to raise rates next year – we continue to expect rates to be on hold in 2018.  
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BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Leading Index eases back a little: Bill Evans

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GUEST OBSERVER
The minutes of the monetary policy meeting of the Reserve Bank Board for May provide no real changes from the April minutes.
As with April, the minutes concluded with “the Board continued to judge that developments in the labour and housing markets warranted careful monitoring”.
This comment was not included in the Governor’s statement following the May board meeting possibly suggesting that the Board had become more relaxed on these issues.
Consequently, repeating the statement in these minutes confirms the Board’s most prominent areas of interest.
The commentary on the housing market was little changed from April with conditions in the Sydney and Melbourne markets being described as “robust” (compared to April – “strengthened further”) -while prices had been falling in Perth.
The threat of additional supply, particularly from apartments, was repeated, with Brisbane being held out for particular attention.
Concerns with household leverage continued to be emphasised - “the risks associated with household balance sheets had been rising”.
Equally, the Board expects that recently announced supervisory measures will assist in this regard, although time will be needed to assess the full effects.
Data on the labour market is described as “somewhat mixed”, although forward indicators provide some comfort that “spare capacity in the labour market will decline gradually”.
Since April, the Board received an update on inflation with the release of the March quarter inflation report.
This report was described as “in line with forecasts” and consistent with, in the Board’s view, that the underlying inflation rate would pick up to around 2% by early 2018.
(Note, that still represents the bottom of the 2-3% target band and the forecasts in the May SoMP do not have inflation back in the middle of the 2-3% band until mid 2019).
The Board neatly describes the inflation dynamics around strong competitive pressures in the retail sector and soft wages growth being partly offset by higher utilities and housing construction costs, although these costs are around materials rather than wages.
The forecasts that growth will lift above 3% in the first half of 2018 is attributed to “the drag from declining mining investment waned and as resources exports continued to pick up”.
Consumption is still forecast to expand above its average rate of recent years, with risks being balanced.
It is interesting to note that these minutes include a comment “a fall in housing prices would also weigh on consumption growth” – this prospect has not been discussed in recent minutes.
The Board expects that commodity prices will continue to fall, probably moving back towards the levels of mid 2016 when the spot iron ore price was around USD$50 compared to the current USD$60.
They are also cautious about the impact of the rising terms of trade on activity particularly boosting mining investment.
There is limited confidence around the outlook for non-mining business investment with some surveys pointing to a lift in intentions and others indicating that it will be some time before we see stronger mining investment growth.
Commentary around global conditions is more positive. “The broad-based nature of the data… provided some confidence that the expansion could become self-reinforcing”.
Monetary policy clearly remains on hold as the Board assesses developments in those key markets – housing and the labour markets.
The persistent view remains that despite clear evidence that the housing construction cycle will turn down (and regulation and recent rate hikes are likely to slow housing activity and price appreciation), risks are still evident around household leverage.
On the other hand, while the Board appears to be increasingly more confident on the global outlook, there is limited optimism around the labour market; household consumption; and non-mining investment.
From our perspective, the persistent view that growth will evolve around 0.5 percent above trend in 2018 and 2019 seems overly optimistic.
While it may seem that the Bank expects to be tightening policy in 2018, our view remains that developments in the housing market; labour market; and global environment will not justify such a policy.
We remain comfortable with our view that rates will remain on hold for the remainder of 2017 and 2018.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a><a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2017/2017-05-02" target="_blank">.</a><a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2017/2017-05-02" target="_blank"> </a>
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Rates on hold through 2017 and 2018 as housing market remains robust: Bill Evans

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GUEST OBSERVER
As expected, the Reserve Bank Board decided to leave the cash rate unchanged at 1.5 percent.
The minutes of the April Board meeting noted that “the Board judged that developments in the labour and housing market warranted careful monitoring over coming months”. It was therefore a little surprising that the Governor did not repeat that same sentiment in his statement.
Instead, the statement finished in the usual way “the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time”.
Possibly explaining this approach is a more confident assessment of the labour market. This comes in response to the March employment report which showed that full-time jobs increased by 74.5k and total jobs rose by 60.9k.
This one month report seems to have calmed concerns at the Bank. For example, in April the Governor commented that “indicators of conditions in the labour market have softened recently… the unemployment rate has moved a little higher and employment growth is modest”. In this statement, he notes that “the unemployment rate is expected to decline gradually over time” and employment growth has been a little stronger.
It is unlikely that we will be able to discern an improved outlook for the labour market in the Bank’s forecasts, which will be updated for the May Statement on Monetary Policy, to be released on September 5.
That is because the unemployment rate forecast is a rather timid “5-6 percent". As we predicted in the preview of the SoMP, it now seems likely that the key growth and inflation forecasts will remain unchanged from the February SoMP.
In the Governor’s statement today, he foreshadows that “growth is expected to increase gradually over the next couple of years to a little above 3 percent”. Note that the growth forecasts for the February SoMP are 2.5-3.5 percent for 2017 and 2.75-3.75 percent for 2018 (mid-points of 3 percent and 3.25%).
Similar comments can be made about the inflation forecasts. The Statement refers to underlying inflation running at “around 1.75 percent” and gradually increasing. The forecasts for underlying inflation in the February SoMP are 1.5-2.5 percent in both 2017 and 2018 (or 2 percent mid-point).
While the Governor clearly responded to the better than expected employment report, there is no change in the assessment of the housing market despite recent reports that house price growth in April was the weakest for sixteen months. He still worries that growth in household debt is outpacing household incomes and notes that “prices have been rising briskly in some markets”. As in April, he points out that recently announced supervisory measures should help address housing risks.
Commentary on other aspects of the domestic economy remains downbeat. Indeed, whereas in April, he referred to “non-mining business investment has risen over the past year”, he now talks about non-mining investment” remaining low as a share of GDP“.
Finally, commentary on the global economy is more confident than in April. He talks about a “broad based pick up in the global economy” whilst recognising that commodity prices have recently reversed.
Conclusion
Westpac has been forecasting that the official cash rate will remain on hold throughout 2017 and 2018. With our view that growth is likely to slow in 2018 under the weight of a contraction in the residential construction cycle and falling terms of trade, the case for raising rates in that year will prove to be fragile.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/">Westpac</a>. 
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Reserve Bank more confident about labour market: Bill Evans

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GUEST OBSERVER
This will be the traditional Board meeting being held one week before the Commonwealth Budget on May 9.
The Board is certain to hold rates steady.
In fact Westpac has argued consistently since May last year that, after an expected cut in August 2016, rates would be held steady for the remainder of 2016 and 2017.
Earlier this year we extended that view with the expectation that the Bank would also hold rates steady through 2018. 
In the minutes to the April Board meeting the Bank surprised somewhat by emphasising the importance of the major competing forces on rates: “The Board judged that developments in the labour and housing markets warranted careful monitoring over coming months.”
Since that statement key news items have been around the employment report and the inflation report.
The employment report for March printed much stronger than expected – 60,900 jobs added including a 74,500 rise in full time jobs. However the unemployment rate remained at 5.9 percent – well above the 5.0 percent level accepted as 'full employment'.
That theme of excess capacity was prominent in the March inflation report. The report was highlighted by falling prices for clothing &amp; footwear; household contents &amp; services; cars; audio visual &amp; computing; and international travel. Underlying inflation rose just 0.4 percent for an annual pace of 1.8 percent.
Overall, while the employment report may have been somewhat welcome to the spectre of spare capacity in the economy weighing on inflation; labour markets and wages would still be a concern for the authorities.
The situation around housing markets is more unclear with uncertainty around the impact of new macro prudential policies – a 30 percent cap on the proportion of new loans that are 'interest only' (currently 62 percent of investor loans and 23 percent of owner occupier loans are interest only).
The last time macro prudential policies were adopted, in 2015, they were very successful in slowing house price growth. These earlier measures included slowing annual growth in investor housing credit to a 10 percent target and were complemented by an effective increase in the mortgage rate of 27bps. Sydney dwelling price inflation slowed from 20 percent to 0 percent (on a 6mth annualised basis) while Melbourne prices slowed from 14 percent to 5 percent. This impact was curtailed by the May and August rate cuts in 2016.
Arguably the Board might regret those cuts given the resurgence in house price growth through the second half of 2016 and 2017.
Our call for steady rates assumes the persistence of the excess capacity in goods; services; and labour markets as exemplified in recent data releases without any threatening collapse in house prices – rather a gradual slow down through the remainder of 2017 and 2018. A sharp retraction along the lines of 2016 is still highly unlikely to draw further rate cuts from the Bank given the experience of 2016/17.
Our major interest will be in the growth and inflation forecasts along with some more colour to the risks.
Key growth forecasts in the February SoMP were: GDP growth in calendar 2017: 2.5 percent -3.5 percent; GDP growth in calendar 2018: 2.75 percent- 3.75 percent.
We believe the Bank will see growth prospects as unchanged since February although there may be a 'one off' adjustment for the impact of cyclone Debbie in the June quarter (some official estimates of a 0.25 percent 'hit' have been mentioned).
Of more importance will be the 3.25 percent (mid- point) forecast for 2018. Westpac is surprised at the Bank's persistent optimism. We expect the housing construction cycle to have clearly 'rolled over' by then with the terms of trade also in retreat. We expect growth in 2018 of around 2.5 percent.
Other factors that are also likely to weigh on growth in 2018 are the impact on business and household balance sheets of high energy prices, and intensifying political uncertainty. A lower AUD will contribute a welcome offset (USD 0.65 'target' in 2018).
The IMF recently released upward revised growth forecasts for Australia – 3 percent in 2017 and 3 percent in 2018 (year average measures). The 2017 forecast is higher than the RBA’s year average forecast of 2.5 percent but we expect the Bank to hold its forecasts steady. 
We do, however, expect that the Government will adopt a higher growth forecast in the May 9 Budget, raising the 2017-18 financial year number from 2.75 percent to 3 percent, in line with the IMF.
Inflation forecasts are also expected to be unchanged: current underlying inflation is running at 1.8 percent annual. RBA forecasts are 1.5-2.5 percent in both 2017 and 2018. These forecasts are 0.5 percent below the target 2-3 percent but not sufficiently awry to demand a policy change, particularly since the forecast to June 2019 indicates a return to the 2-3 percent target band.
Underlying assumptions around the AUD are also unlikely to warrant any forecast changes with the February forecasts using USD 0.76 compared to the likely USD 0.75 in the May forecasts. 
In the February SoMP the discussion on 'housing risks' centred on the downside: "history shows that sentiment can turn quickly.” Of course prices have continued to boom in the interim – we expect ongoing nervousness in the May SoMP emphasising the risks associated with a further intensification of macro prudential controls.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>. 
 
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Expect ongoing emphasis on housing risks: Westpac's BIll Evans

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The minutes of the Monetary Policy meeting of the Reserve Bank Board on April 4 contained some significant changes from the previous minutes for the March meeting. 
Of most importance has been the final sentence in the section Considerations for Monetary Policy – “the Board judged that developments in the labour and housing markets warranted careful monitoring over coming months”.
We previously noted that the discussion of the Governor’s statement immediately following that April board meeting on the labour market had become more down beat and the housing market commentary, more concerned, emphasising “risks associated with high and rising levels of indebtedness”.
The minutes provide more detailed commentary on these issues. The Board has been concerned that soft conditions in the labour market prevail. 
It has also been surprised that indications from forward looking indicators of labour demand, which were quite positive, have not led to an improvement in current labour market conditions. 
Of course, this meeting preceded the announcement that full-time jobs in March had jumped by 74,500 while total employment had increased by 60,900. 
Annual employment growth jumped to 1.2%, although the unemployment rate remained at 5.9%. 
This encouraging result partly confirms the signals from the forward looking indicators, although the Board will remain cautious given the volatility in the monthly series.
The subsidiary  concern around weak employment growth is the feedback to household consumption which has been “a little weaker than expected”
I do not expect that the Board would regret the decision to highlight the importance of the labour market in these minutes based on this one result. 
But the March employment report should certainly provide some evidence that any policy response around the labour market is not imminent.
While a policy response around labour market concerns would involve an interest rate cut, the policy response around housing markets is more likely entail further direct controls. 
The minutes note that “developments needed to be kept under review and depending on how the system responds to the various measures, members noted that the Council of Financial Regulators would consider further measures if needed”.
A further policy response around the housing market cannot be discounted. 
Consistent with heightened concerns around the labour market, the Board decided to drop its confident prediction from the March Minutes, “Looking forward, year-ended growth was expected to pick up gradually to be above its potential rate over the forecast period”. 
The April minutes merely refer to the economy continuing to grow moderately.
The link between soft income growth and the housing market appears prominently in the minutes.
Even though household credit growth has moderated slightly, soft income growth has led to an increase in household debt ratios and “risks associated with the housing market and household balance sheets had been rising”.
Two issues that stand out in the bank’s Financial Stability Review are firstly that the proportion of borrowers with no buffer on their repayments has risen to around a third.
Secondly, a common theme for many years of the Bank has been that the build-up in household debt is largely concentrated amongst high income/wealth borrowers.
That theme may now be less certain.
The data on which the bank relies to form that conclusion comes from a survey in 2014, which noted that only 12% of the loans by value of highly indebted borrowers is attributed to those borrowers in the bottom 40% of the wealth/income stratum.
With household debt ratios rising since 2014, concerns that more debt is transitioning to lower income/wealth cannot be dismissed.
Conclusion
The decision by the Board to specifically highlight labour market and housing market is significant. 
However, it does not change our view that rates are set to remain on hold over the course of 2017 and 2018. 
We expect that further upside on employment growth is likely, and while consumer spending growth will remain around trend, the case to cut rates is not strong.
On the other hand, the evidence from the second half of 2015, when a tightening of regulations contributed to a sharp slowdown in house price inflation points to the likelihood that any official concerns with rising household debt will be dealt with through the regulatory channels.
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Employment and housing "warrant careful monitoring"- rate changes still very unlikely

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GUEST OBSERVER
Given the Reserve Bank’s intense concentration on stability issues, including the introduction of new guidelines from APRA, the April Stability Review is of particular interest.
Our interest is twofold. Firstly to gauge the degree of concern with which the Bank views the current risks and secondly whether it has released any new research which sheds more light on the issues.
Evidence on the first issue confirms the Bank’s concerns. “Risks to household balance sheets and housing markets have increased.” Compare that assessment with the previous Review in October last year, “Risks to financial stability from lending to households have lessened a little over the past 6 months.”
The risk that was emphasised back in October – “risks around the projected large increases in supply in some inner city apartment markets are coming to the fore, especially in Brisbane and Melbourne” - is still seen to be a major consideration - “concerns about an oversupply of apartments in pockets of Melbourne and in parts of Brisbane.”
Current risks around household balance sheets are seen to be macroeconomic in nature rather than direct risks to the stability of financial institutions. The key dynamic is seen to be “a highly indebted household sector is likely to be more sensitive to declines in income and wealth and may respond by reducing consumption sharply”.
Of most interest is the investor. While the Bank recognises that arrears data shows that investors have historically performed better than owner occupiers, this observation has not been tested “in a severe downturn.”
The recent guideline from APRA to limit the interest only component of new lending to 30 percent appears to be aimed at investors. Only around 23 percent of owner occupier loans are interest only whereas 64% of investor loans are interest only. IO loans have a higher average indebtedness over the loan than principal and interest; while after the IO period expires (typically 5-10 years) repayments are considerably higher.
Since the October Review, household indebtedness has increased further primarily due to rising levels of housing debt and weak income growth.
The Bank has emphasised in the past that offset accounts and redraw facilities have increased considerably (at around 17 percent of outstanding balances or around 2.5 years of scheduled repayments at current interest rates).
But around one third of borrowers have either no accrued buffer or a buffer of less than one month’s repayments. For the vulnerable “highly indebted households”, which represent the top 10 percent on the household debt to disposable income ratio measure, only 40 percent hold any kind of buffer.
Presumably as new lending lifts this ratio will continue to rise since minimal buffers are dominated by newer mortgages or lower income or lower wealth households. This ratio strongly debunks the assertion that the “buffer” is an important source of stability.
However, in previous Reviews a much more relaxed Bank has emphasised the point that those borrowers with the high leverage tend to be the high income earners who can best manage debt. The Review takes a revised look at “Highly Indebted Households”.
The aggregate household debt to income ratio has increased further in recent years up to 160 percent, but 30 percent of households have no debt.
In assessing the characteristics of highly indebted households the Bank uses information on the distribution of debt, income, and wealth which is available in the Household, Income, and Labour Dynamics Survey (HILDA). Unfortunately this data is only available to 2014. In fact it is only collected every 4 years with the next survey due for 2018 – an interminable wait for an update to the critical issue of whether debt is accumulating with those borrowers who are the most vulnerable.
The Household Debt to Disposable Income ratio has risen from around 150 percent to over 160 percent (latest available). The Bank defines a “highly indebted” household as one with debt to income ratio in the top 10 percent. Over the 10 years to 2014, households in that group had a debt to income ratio above 550 percent and represented 35-40 percent of total household debt. Around 30 percent of the “highly indebted” households’ debts were investor loans.
Of some concern is that around 25 percent of the highly indebted households are in the bottom two quintiles for income and wealth, although this group only owes 12 percent of the debt owed by the highly indebted households.
These “ratios” confirm the Bank’s previous position that much of the debt held by highly indebted households is owed by households with high income and wealth. However, the lift in household indebtedness since 2014, coupled with the lack on any significant “buffer” for the highly indebted borrower, must be presenting reasons for the Bank and APRA to raise concerns.
The other issue is around the risks of relying on “averages” . Even though the 2014 data indicated that only 12 percent of the debt of highly indebted borrowers is held in the two bottom income quintiles, that still represents nearly 5 percent of total household debt .
The policy challenge for the Bank is clear. It’s most comforting “defence” of the risks associated with Australia’s high household debt is that high debt levels are associated with those in the best position to deal with them – high income / high wealth. But this data is already three years out of date and an update will not be available for another year at least. Household debt to disposable income ratios have lifted from 150 percent to above 160 percent over that time period and appear to be rising further.
Vulnerable borrowers with limited buffers appear to be growing. The higher risk aspects of interest only loans may be exacerbating that issue.
All the Bank can really do is focus on slowing the rise in household debt without really having much comfort about the risks they face.
For our part we remain reasonably relaxed about these risks, not because of the distribution of the debt, but because we see that Australia has sufficient flexibility around policy; its exchange rate and strong banking system to ameliorate the impact of shocks.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/">Westpac</a>. 
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Rising household debt risks but no timely measure of the effective threat: Westpac's Bill Evans

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GUEST OBSERVER
The Westpac Melbourne Institute Index of Consumer Sentiment fell by 0.7 percent in April from 99.7 in March to 99.0 in April.
This is a surprising but welcome result.
Since the last survey there has been intense media attention on housing highlighting concerns around affordability and potential price bubbles. Banks have also increased interest rates for some mortgage borrowers.
Reports on the labour market have been disappointing. The unemployment rate was reported to have lifted back to just below 6 percent.
On the international front, markets have been unnerved by the lack of progress shown by the Trump administration in delivering health care; tax; and infrastructure reform. And recently we have seen a heightening of tensions in the Middle East.
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The iron ore price has fallen by 14 percent over the last month while the Australian dollar has pulled back from USD 0.77 to USD 0.75 over the last few weeks.
Arguably these factors could have been expected to produce a marked fall in confidence, particularly around the economic outlook. And indeed the components of the Index relating to the economic outlook have deteriorated.
Individual state issues have also impacted the overall result more than usual. A change of government in Western Australia saw a boost to confidence in the west while higher commodity prices have assisted sentiment in both Queensland and Western Australia.
In addition, speculation around the upcoming Commonwealth Budget has been benign. Accordingly, respondents are more confident about their finances. Contrast this result with April last year when the Index fell by 4% amid nervousness leading into the May Budget.
Any significant negative shocks in the Budget can be expected to render considerable damage to the Confidence Index.
Despite this better than expected result the current level of the Index is hardly encouraging. April marks the fifth consecutive month when the Index has been below 100 – indicating that pessimists are slightly outnumbering optimists.
Confidence around the labour market deteriorated somewhat in April. The Westpac Melbourne Institute Index of Unemployment Expectations increased by 1.8% from 137.9 to 140.3 (higher readings mean more consumers expect unemployment to rise in the year ahead). This Index has been stuck in a narrow range of 136 to 142 over the last year, well above its long run average of 
130, highlighting the difficulties the Australian economy has had building any positive momentum in the labour market.
There were diverse movements in the components of the Index. There was some encouraging improvement in those components measuring respondents’ assessments around their own finances. The ‘finances versus a year ago’ sub-index lifted by 8.5 percent while the ‘finances next 12 months’ sub-index improved by 2.4 percent. These results contrast with movements in these components in April last year of -3.9 percent and -6.6 percent respectively. At that time there was much more angst about prospects for the upcoming Budget.
On the other hand, expectations for the economy, possibly reflecting prospects for the housing market and global developments, fell. The ‘economic conditions next 12 months’ and ‘economic conditions next 5 years’ sub-indexes fell by 6.5 percent and 2.7 percent respectively.
Consumer attitudes towards spending also fell, the ‘time to buy a major household item’ sub-index down 2.9 percent.
Not surprisingly, confidence in the housing market deteriorated. The ‘time to buy a dwelling’ index fell by 3.3 percent to 96.3. This read is 6.2 percent below the average over the last 12 months and 20% below the peak levels seen in early 2015. The fall in April reflected large falls in the two major markets – Sydney and Melbourne – partially offset by solid gains in Brisbane and Perth. Clearly affordability factors were behind this divergent response.
The Westpac Melbourne Institute Index of House Price Expectations fell 1.1 percent in April – possibly reflecting additional policies from the regulators aimed at slowing house price appreciation. In that regard it is worth noting that in the year to April 2016, in the aftermath of the previous round of regulatory and interest rate changes the Index fell by 16 percent. Since the Reserve Bank’s rate cuts in May and August 2016 the Index has lifted by 19 percent to be back near previous highs. 
The Reserve Bank Board next meets on May 2. The Board is certain to keep rates on hold. As discussed previously the Board is concerned about excessive household leverage which has been boosted by rising house prices. While this concern might be alleviated by a rate hike the real economy is in no shape to deal with higher rates. Considerable spare capacity persists in a stagnant labour market (as indicated by our own index); inflation remains below the Bank’s target zone andis expected to remain at the bottom of the zone; and incomes and confidence are restraining consumption.
The authorities are therefore opting for a policy mix of steady official rates and heightened regulatory controls. As noted with our House Price Expectations Index these regulatory controls, complemented by increases in banks’ rates have been successful in easing conditions in the housing market in the past. 
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Economy in no shape to deal with higher rates: Westpac's Bill Evans

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GUEST OBSERVER
As universally expected, the Reserve Bank Board decided to leave the cash rate unchanged at 1.50 percent.
As we anticipated in our preview, two key changes are prominent in this month’s statement by the Governor.
Firstly, the commentary around the domestic economy is somewhat less upbeat. The growth performance is described as “ongoing moderate growth.” In particular the commentary around the labour market is downbeat. It is recognised that some indicators of conditions in the labour market have softened recently; the unemployment rate has moved a little higher and employment growth is modest. The forward looking indicators continue to be pointing to continued growth in employment although the use of the words “still point” provides some hint that the Bank is less committed to that prospect. Further, the Governor notes that “wage growth remains slow.”
Considerable attention is given to the housing market. While the theme that conditions vary markedly around the country is maintained the Governor speaks for the first time around “the risks associated with high and rising levels of indebtedness.” The minutes to the March meeting referred to “a build-up of risks associated with the housing market” and today’s statement just emphasises the Bank’s concern in this regard. In the March statement the Governor noted: “supervisory measures have contributed to some strengthening of lending standards.” In this statement he significantly raises the bar and asserts that: “lenders need to ensure that the serviceability metrics that they use are appropriate for current conditions … [including] a reduced reliance on interest only housing loans.” This is a much more direct statement setting the scene for expected further pressure on the banks from the regulators.
As has been the case in previous statements the currency is quoted as “an appreciating exchange rate would complicate this adjustment.”
Conclusion Since August last year we have argued consistently that rates will remain on hold over the course of 2017 and 2018. We do expect that macro prudential and banks’ self-regulatory policies will be successful in taking most of the heat out of the housing market over the course of the remainder of this year. Even though spare capacity is expected to persist in the labour market and low wage and inflation conditions remain the Bank will not opt for further policy easing given the risks of reigniting house prices.
With Australian interest rates steady and US rates continuing to rise (two Fed hikes expected this year) supplemented by a turnaround in commodity prices the stimulus required for the domestic economy is likely to come through a more competitive Australian dollar than lower interest rates. 
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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RBA holds rates steady, more concerned about the labour market: Bill Evans

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GUEST OBSERVER
The Reserve Bank Board meets next week. It is certain to keep rates on hold. The minutes of the March board meeting were less upbeat on the economy than we had seen in previous assessments.
While I was meeting with customers and officials in Asia, my colleagues assessed the minutes as "The overall theme is still of upside risks from global growth and commodity prices near term but a likely muted pass through to local conditions and question marks beyond 2017".
Readers will be aware that our central theme for the Australian economy has been for slightly above trend growth in 2017, partly reflecting the boost to the terms of trade and the ongoing construction boom, to be followed by an abrupt slowdown in 2018 as construction contracts and the terms of trade reverse.
With the Reserve Bank sharing our caution around 2018, along with ample capacity in the labour market (unemployment rate is 5.9% compared to full employment rate of 5.0%) and stubbornly low wages growth, there is only scope to cut rates. But as we have argued consistently, a resurgent housing market disallows such a policy option. Indeed, the minutes refer to “a build- up of risks associated with the housing market”. A tighter macro prudential stance seems appropriate.
Indeed, as we go to press, APRA has announced new controls, restricting the "flow of new interest-only lending to 30 per cent of total new residential mortgage lending" with a particular focus on limiting interest only loans with a loan-to-value ratio above 80%.
Currently, "interest-only terms represent nearly 40 per cent of the stock of residential mortgage lending by ADIs", so this policy will restrict the terms at which a marginal borrower can access credit (investors and owner-occupiers). APRA also noted that they want banks to manage growth in investor credit to "comfortably remain below the previously advised benchmark of 10 per cent growth".
This is not a hard change to the target as had been mooted recently in the press (some suggesting the 10% limit could be as much as halved), but it does suggest lending to investors will continue to grow at a pace meaningfully below 10%.
Looking ahead, the next RBA Stability Review (April 13) may provide more clarity on the macro prudential policy outlook and potential triggers for further action. For the time being though, the 2015 experience offers an understanding of the potential impact of this further tightening.
Figure1 shows the slowdown in house price appreciation that came as a result of curtailing investor loan growth to 10% in 2015. Those direct controls on lending volumes were complemented by interest rate adjustments by the banks themselves.
Figure 2 shows our estimate of the changes in the weighted average of the variable mortgage rate (including investors and owner occupiers) in 2015. We estimate that during that period, the weighted average rate lifted from 5.44% to 5.71%. Of course, that lift was more than fully offset by subsequent rate cuts by the RBA in 2016, pushing the weighted average rate down to 5.34%.
As we see in Figure1, that cut re-ignited house price growth as well as auction clearance rates and new lending.
The RBA has already been given a “start” in this current cycle, with the weighted average rate lifting from 5.34% to 5.51%, largely reflecting increases in investor rates by the four majors. 
<a href="https://www.propertyobserver.com.au/images/2017/03/31/Screen%20Shot%202017-03-31%20at%2010.08.19%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/31/Screen%20Shot%202017-03-31%20at%2010.08.19%20AM.png" alt="">
Complementing these rate adjustments with a more constraining restriction on new lending to investors (as well as to owner occupiers for interest only loans) is likely to yield a comparable response in house prices as 2015.
By year’s end, the RBA’s concerns with “a build- up of risks associated with the housing market” are likely to have eased.
As we move into 2018, despite ongoing rate hikes by the Federal Reserve, the Reserve Bank, troubled by low inflation; on-going spare capacity in the labour market; and weak wages growth might be tempted to ease policy further.
However, the “lessons” of 2016 will have been learnt – do not risk re-igniting house prices – and a more prudent approach will be to rely on the currency to provide the boost to activity.
From our perspective, a reversal of the commodity price boom of 2017, coupled with Australia’s cash rate falling below the US, is likely to yield a sharp lift in Australia’s competitiveness. 
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BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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RBA on hold, housing excesses to ease: Westpac's Bill Evans

Melbourne developer Spacious Group has completed Voyage Altona, one of the closest new apartment developments to Altona Beach.

Off the plan purchasers have started moving into the 49-apartment project on Pier Street, with the remaining move-in-ready one-, two- and three-bedroom apartments starting from just over $500,000.

Display apartments have now been fitted out, allowing prospective buyers to inspect the completed residences by appointment.

[smartcode_project:default project_id=112195 project_image_fid=372638]

The completed apartments feature open-plan living and dining areas which extend onto private balconies and terraces, while full-height glazing maximises natural light throughout the interiors.&nbsp;

Hybrid timber-look flooring, stone benchtops, Miele appliances, porcelain-tiled bathrooms and generous storage feature throughout the building which also features landscaped communal areas, expansive shared terraces, lift access and secure on-grade parking.

Drawing inspiration from its bayside setting, Voyage adopts a restrained palette of warm neutral tones and textured finishes. Many of the apartments take advantage of views across Port Phillip Bay, while the indoor-outdoor living spaces have been designed to make the most of the coastal outlook.

[smartcode_project:default project_id=112195 project_image_fid=3286]

Voyage was developed to address what Spacious Group identified as an undersupply of higher-quality apartment product in Altona, with a focus on owner-occupiers looking to remain within the bayside community.

"Voyage responds to very strong local buyer demand for quality, owner-occupier-focused product," says Barry Plant Projects Director Jarrod Farey, who has handled sales since the project's launch.

"The project delivers an elevated lifestyle proposition, with its design and quality of finish far exceeding anything previously produced in the area, as well as its proximity to Pier Street Village and the beach."

The majority of purchasers have been local downsizers and owner-occupiers looking to stay within the Altona community but who previously had limited opportunities to buy a brand-new apartment.

[smartcode_project_cta:default project_id=112195]

Joel Robinson

Spacious Group completes Voyage Altona in Altona's beachside precinct

Homecorp has secured approval for a $360 million apartment development at Budds Beach, paving the way for one of the Gold Coast's most amenity-rich residential projects to launch later this year.

Gold Coast City Council has approved Lýon Residences, a 32-level tower that will deliver 178 two and three-bedroom apartments across a prominent corner site at 8-10 Acacia Avenue and 25-27 Oak Avenue.

The approval comes as developers continue to invest in premium lifestyle-driven apartment projects on the Gold Coast, where owner occupiers are increasingly prioritising amenity as much as apartment size and location.

<a href="https://www.apartments.com.au/new-apartments/l-on-residences-25-27-oak-avenue-surfers-paradise-qld-4217">Lýon Residences</a> has been designed around a resort-style wellness offering, headlined by a Moroccan-inspired spa precinct featuring treatment rooms, a Nordic sauna and steam room, hot and cold plunge pools, a soaking pool and a residents-only juice bar.

The rooftop will include a heated infinity pool and spa, residents' lounge with private kitchen and bar, gymnasium, yoga and Pilates studio, outdoor entertaining areas and barbecue facilities overlooking the Surfers Paradise skyline.

<img alt="Lyon" data-entity-type="file" data-entity-uuid="2d3e29af-8793-486e-a684-52cef862241f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-15%20at%204.32.26%E2%80%AFPM.png?VersionId=ayG2zpLf3SS6Zy8XmKDcQods4kVWb0gm" />

Homecorp Founder and CEO Ron Bakir said Budds Beach provided the ideal location for the company's latest luxury apartment project.

"Budds Beach represents one of the most unique and sought-after pockets of the Gold Coast, and Lýon Residences has been designed to reflect that sense of rarity and refinement," Bakir said.

The project arrives as wellness continues to become a defining feature of new residential developments both in Australia and internationally.

The latest Global Wellness Institute figures show wellness real estate remains the fastest-growing segment of the global wellness economy and is forecast to exceed $1.8 trillion by 2030. Australia continues to rank among the world's 15 largest wellness real estate markets, with developers increasingly integrating health, recreation and community facilities into apartment projects.

Queensland is also experiencing strong population growth, with the Gold Coast continuing to outperform many other Australian cities as demand for new housing remains elevated ahead of the 2032 Olympic and Paralympic Games.

Bakir said the project had been designed to respond to that shift in buyer expectations.

"Strong population growth and sustained demand across the Gold Coast continue to highlight the need for well-designed new housing supply. Lýon Residences responds directly to this demand while setting a new benchmark for residential living," he said.

Each apartment has been designed to maximise views across the coastline, the Nerang River and the Gold Coast hinterland.

Located just minutes from Surfers Paradise beach and the Broadwater, the development also offers easy access to the light rail network, Broadbeach and Burleigh Heads.

Early site works are underway, with construction expected to commence later this year.

Homecorp approved for Budds Beach apartment tower, Lýon Residences

New apartment developments with uninterrupted, north-facing views over Perth's Swan River are exceptionally rare.

Recognising just how limited those opportunities are, <a href="https://www.apartments.com.au/developers/edge-visionary-living">Edge Visionary Living</a>, one of Perth's most respected builder-developers, targeted <a href="https://www.apartments.com.au/developments/applecross-wa-6153">Applecross</a>, assembling an unrepeatable 6,342 sqm riverfront site on the corner of Moreau Mews and Canning Beach Road to create one of Perth's only new north-facing apartment developments directly overlooking the Swan River.

Today, <a href="https://www.apartments.com.au/buildings/riviere-residences-applecross-59-canning-beach-road-applecross-wa-6153">Rivière Residences</a> offers buyers a unique opportunity to choose between completed residences ready to move into now and off-the-plan homes in the final stage, Rivière West.

[smartcode_project:default project_id=28384 project_image_fid=3823]

Across the completed East and Central buildings, residents are already enjoying the development's luxury amenity, while two of the precinct's hospitality venues are now open.

The completed component of the development gives buyers the advantage of experiencing the finished product firsthand, including its uninterrupted river views, while still having the opportunity to secure a residence in the final stage.

"People are wowed by the view and the quality of the apartments,"&nbsp;Edge Visionary Living Sales Executive, Holly McSweeney, says.

"They're looking for the convenience of lock-and-leave living, but they're not looking to downsize on quality."

[smartcode_project:default project_id=28384 project_image_fid=3826]

The rarity of the development hasn't been lost on prospective buyers, McSweeney says.

For McSweeney, it all comes back to a location that is becoming increasingly difficult to replicate.

"Location, location, location," she says. "We are nestled right on the front of the Swan River. You can never get built out, so wherever you are in Rivière Residences, you've got views of the river forever."

The unique waterfront position has resonated particularly strongly with local downsizers. McSweeney says many buyers are long-time Applecross residents looking to transition from large family homes into a luxury apartment without sacrificing space, quality or the lifestyle they've enjoyed for decades.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/N_FowNW0wu8?si=vb25XFq1wZ-iufAW" title="YouTube video player" width="560"></iframe>

A major focus for Edge in recent years has been resident amenity. Across its apartment portfolio, from beachfront developments in Scarborough to luxury towers in South Perth, the developer has increasingly invested in the spaces beyond the apartment itself.

The strategy has largely been shaped by downsizer demand. Many buyers are moving from large family homes with swimming pools and established gardens. While they're looking to leave the maintenance behind, they don't want to compromise on lifestyle.

At Rivière, <a href="https://www.apartments.com.au/architects/hillam-architects">Hillam Architects</a> designed the resident facilities as an extension of each apartment. A 25-metre heated swimming pool takes advantage of the north-facing river outlook, complemented by a large gym, sauna and steam rooms, private dining spaces, residents' lounges, a cinema, games room, and dedicated wine and whisky rooms.

[smartcode_project:default project_id=28384 project_image_fid=372542]

The waterfront location has also proved to be a major drawcard. Residents are within walking distance of the Raffles Hotel, South of Perth Yacht Club, the Heathcote Cultural Precinct and the cafés, restaurants and boutiques along Ardross Street.

Beyond the location and amenity, McSweeney says many buyers take confidence from Edge's fully integrated development model.

Having delivered apartments across Perth for decades, Edge now designs, develops and constructs its projects in-house, giving the company greater control over quality, delivery and the finished product.

"What I love is when people walk through their apartment for the first time and say, 'This is better than what we imagined,'" McSweeney says. "We hear that all the time."

Completed apartments in the East and Central buildings are now available to inspect by appointment, while Rivière West, the final stage of the precinct, is expected to be completed in the first quarter of 2027.

[smartcode_project_cta:default project_id=28384]

North-facing Swan River views drive demand at Rivière Residences in Applecross

Nearly 60 per cent of apartments at McNab Group's $220 million The Tannery development in Brisbane's West End have sold ahead of the project's public launch, including a suburb-record $2.57 million sale for a two-bedroom apartment.

The early sales campaign has secured buyers for 50 of the project's 87 apartments, highlighting continued demand for larger owner-occupier apartments that combine generous floorplans with premium lifestyle amenities in one of Brisbane's most tightly held inner-city suburbs.

[smartcode_project:default project_id=143337 project_image_fid=374768]

McNab Group Executive Chairman Michael McNab said selling more than half the project before launch reflected changing buyer expectations.

"Selling more than half the project before public sales open tells us buyers are actively seeking apartments that offer something genuinely different," McNab said.

"Today's buyers are looking beyond four walls. They want homes that genuinely enhance the way they live, with spaces that support health, connection and everyday wellbeing."

[smartcode_project:default project_id=143337 project_image_fid=374767]

A key point of difference for the project is the adaptive reuse of the heritage-listed Dixon's Tannery building, which will become The Retreat, a residents-only wellness precinct rather than being redeveloped into additional apartments.

The Retreat will feature a sauna and steam room, hot and cold plunge pools, a commercial-grade gym, Pilates studio, cinema, library, co-working spaces and private dining room. Rooftop amenities will include a swimming pool, landscaped gardens, outdoor entertaining areas and dog-friendly spaces.

[smartcode_project:default project_id=143337 project_image_fid=374760]

Designed by Cottee Parker Architects with interiors by Tom Mark Henry and landscape architecture by Aspect Studios, The Tannery comprises 87 two, three and four-bedroom apartments across 11 levels overlooking the Brisbane River.

Cottee Parker principal Dee Passenger said preserving the original tannery building had been central to the project's design.

"The easy option would have been to maximise the site's development potential with additional apartments. Instead, McNab has chosen to preserve the original tannery as a shared wellness retreat, ensuring this important piece of Brisbane's history remains at the heart of the community."

Passenger said sustainability also played a key role in the design, with materials from the original industrial site salvaged and repurposed throughout the development.

[smartcode_project:default project_id=143337 project_image_fid=374761]

Motiv CEO Carly Cottam said buyers had responded strongly to the combination of larger apartments, wellness facilities and the West End lifestyle.

"We are seeing more buyers looking for homes in the sky that provide the space and functionality of a traditional home, while benefiting from the convenience and lifestyle that apartment living brings," Cottam said.

She said purchasers included both owner occupiers and investors, with demand coming from local buyers as well as interstate purchasers.

Coinciding with the public launch, McNab also announced a partnership with Queensland Ballet, whose neighbouring Thomas Dixon Centre shares historical ties with the original Dixon family.

Located on a 4,465 sqm site at 439 Montague Road, The Tannery overlooks the Brisbane River and is around 10 minutes from the CBD.

Construction is underway, with completion expected in the second half of 2027.

[smartcode_project_cta:default project_id=143337]

More than half of residences sold before public sales as McNab announces significant partnership with Queensland Ballet

McNab's The Tannery nears 60 per cent sold before public release, sets two-bedroom West End record

Iwan Sunito's vision for a landmark mixed-use precinct in Sydney's Inner West has taken a major step forward, with approval granted for the $1.9 billion Five Dock development first unveiled earlier this year.

The approved scheme by <a href="https://www.apartments.com.au/developers/one-global-capital">One Global Capital</a> will deliver an 80,500 sqm mixed-use precinct comprising 840 apartments, integrated hotel accommodation, commercial and retail space, alongside publicly accessible open space designed to create a new destination for the growing suburb.

"This is a significant milestone for One Global Capital and for the future of housing delivery in Sydney," Sunito said.

"The Housing Delivery Authority was established to identify major housing projects capable of delivering meaningful supply more efficiently, and we are delighted that Spencer Street has been recognised as one of those projects.”

He said the declaration reflected the rapid progress achieved since acquiring control of the site.

"In less than seven months we have progressed from taking control of the site to securing entry into one of the NSW Government's most important planning pathways. It reflects the experience of our team, the strength of our consultant group led by Urbis, and our long-term commitment to delivering transformational projects that contribute to Sydney's future."

When the project was revealed earlier this year, Sunito described the opportunity as one of the strongest development sites he had worked on.

"I probably hadn't appreciated the uniqueness of the site until more recently when putting together the concept plans," Sunito said.

"The proximity to the water, and the golf course opposite, is unlike any other part of Parramatta Road. We have a unique position and view corridors over the water that makes this one of the best sites I've worked on."

The development has evolved since its initial announcement, with the approved plans increasing the residential component from the originally proposed 750 apartments to 840 homes while retaining the project's focus on creating an integrated neighbourhood rather than a standalone residential development.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/a-city-within-a-city-iwan-sunito-flags-1-5-billion-mixed-use-precinct-in-five-dock">"A city within a city": Iwan Sunito flags $1.5 billion mixed-use precinct in Five Dock</a>

The precinct will combine apartments with hotel accommodation, commercial workplaces, retail offerings and public spaces, creating a mixed-use environment intended to serve both residents and the broader Five Dock community. The proposal also continues the collaboration between One Global Capital and internationally recognised architect <a href="https://www.apartments.com.au/architects/koichi-takada-architects">Koichi Takada</a>, whose previous work with Sunito includes Infinity, Arc and Skye North Sydney.

Takada previously said the design was driven by a philosophy of integrating nature into the built environment.

"The concept for this development is born from our design approach to naturalising architecture," Takada said.

"The public realm benefits from biophilic design that integrates generous landscaping, and the development is optimised for natural daylight, airflow and water views to foster wellbeing, sustainability and spaces that foster community interaction."

Sunito has consistently described the project as a "city within a city", with a strong emphasis on creating a destination that extends beyond housing.

"We want to create a development that's not only to be seen, but to be experienced by the whole local community," he said.

The approval comes as Five Dock continues its transformation ahead of the opening of the Sydney Metro West line, with the new Five Dock station set to significantly improve connections between the Inner West, Parramatta and the Sydney CBD.&nbsp;

The precinct will also benefit from its proximity to the Parramatta Road corridor, nearby waterfront parklands and established retail and dining offerings that have made Five Dock one of Sydney's most tightly held Inner West suburbs.

Bill Evans

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