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GUEST OBSERVER
The Westpac Melbourne Institute Index of Consumer Sentiment rose by 0.1 percent in March from 99.6 in February to 99.7 in March. 
The Index appears to be stabilising around that point where optimists and pessimists are around equal in number. The encouraging 2.3 percent lift we saw in the Index in February has been sustained in March.
In this survey we ask respondents for information on the news items that have affected their views and whether the news has been well received. This gives us an assessment of what may be on the minds of respondents.
<a href="https://www.propertyobserver.com.au/images/2017/03/15/Screen%20Shot%202017-03-15%20at%2010.51.27%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/15/Screen%20Shot%202017-03-15%20at%2010.51.27%20AM.png" alt="">
As we saw in December the two dominant news categories were ‘economic conditions’ (27.9 percent of respondents recalled news on this topic) and ‘budget and taxation’ (25.2 percent). On both counts respondents saw the news as less unfavourable than had been the case in December. In particular ‘economic conditions’ showed a marked improvement.
It is also interesting to note that overall awareness of ‘budget and taxation’ news is down significantly from a year ago when 37.1 percent of respondents recalled news on this topic. That difference can be largely attributed to a fall from 17.6 percent to 3.7 percent in those respondents recalling news on taxation.
Other well-recalled news items covered: employment (15.7 percent,  up from 11.1 percent in December); interest rates (15.6 percent); and international conditions (12.0 percent). Despite no move by the Reserve Bank over the intervening period news on interest rates was much more positively received while the pessimism around international conditions eased. Respondents, who regularly assess the news on employment as unfavourable, were somewhat more concerned in this survey.
The Westpac Melbourne Institute Index of Unemployment Expectations fell by 3.1 percent in March pushing the Index back to around the levels in December. Recall that lower readings on the index mean more consumers expect unemployment to fall in the year ahead. Our take on the index is that respondents’ assessments of the unemployment outlook have stabilised around a level which is consistent with spare capacity consistently available in the labour market with little prospect of that spare capacity actually clearing.
There was one quite significant movement within the components of the Index: the ‘Family finances compared to a year ago’ sub-index fell by 5.3 percent. This component is now at its lowest level since June 2014 when respondents were shaken by the May Budget announcement.
However on that occasion the overall Index was much lower than we see today, indicating that, currently respondents are particularly concerned about their own finances. News from the December quarter national accounts that wage incomes had fallen by 0.5 percent is indicative of the source of these concerns. That news, of course, complemented other recent reports that wages growth had fallen to a record low of 1.9 percent.
Other components of the Index are less newsworthy. The ‘family finances, next 12 months’ sub-index fell 0.2 percent, the ‘economic conditions, next 12 months’ sub-index rose 1.6 percent; the ‘economic conditions, next 5 years’ sub-index rose 3.9 percent and the ‘time to buy a major household item’ sub-index dipped 0.1%.
Housing sentiment lifted in March. The ‘time to buy a dwelling’ index rose by 7.0 percent. However that increase only recovered the 7.8 percent fall in February. The recovery was mainly attributed to a sharp turnaround in Victoria where the state government has recently announced a range of new measures including abolishing stamp duty for first home buyers.
Despite this, the national index still seems to be drifting lower having fallen by 4.9 percent over the last year. That compares with the 13 percent fall we saw over the previous year. The Index is still around 25 percent higher than the deep lows we saw in the 2007/08 period.
<a href="https://www.propertyobserver.com.au/images/2017/03/15/Screen%20Shot%202017-03-15%20at%2010.52.35%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/15/Screen%20Shot%202017-03-15%20at%2010.52.35%20AM.png" alt="">
House price expectations continue to rise. The Westpac Melbourne Institute Index of House Price Expectations rose by 2.2 percent to be 26.7 percent above the level of a year ago.
Every quarter we also ask respondents for their preference for their savings. This can provide us with any evidence that consumers are becoming more or less risk averse. There was a notable shift in March with the proportion nominating ‘pay down debt’ jumping from 20.5 percent in December to 25.7 percent, and the proportion favouring real estate dropping to just 11.6 percent, a record low since we first started asking this question back in 1974. The moves indicate a clear increase in risk aversion.
The Reserve Bank Board next meets on April 4. The Bank will decide to keep rates on hold. Even though income growth and inflation are too low and there remains ample spare capacity in the labour market (unemployment rate of 5.7 percent compared to a ‘full employment‘ rate of around 5 percent) the Bank has no flexibility to cut rates. The evidence is clear that the rate cuts the Bank embraced last year in the face of low inflation fuelled house  prices and household leverage. The Bank is concerned about possible excesses in the housing market.
Markets accept the view that rates will remain on hold in 2017 but are pricing in at least two hikes from the Bank next year. We expect that growth in the economy will slow in 2018 as the residential construction boom unwinds. As we saw in today’s report households are concerned about their finances, largely because of weak income growth. This concern is unlikely to fade in 2018 appropriately constraining household spending and discouraging investment. That is no environment for higher rates. Accordingly, we expect rates will remain on hold throughout 2018 as well. 
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BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>. Justin Smirk is ‎senior economist, Westpac Group and can be contacted <a href="https://www.westpac.com.au/about-westpac/westpac-group/" target="_blank">here</a>.
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Time to buy dwelling index rises 7 percent: Westpac's Bill Evans

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GUEST OBSERVER 
The Reserve Bank Board meets next week on March 7.
We can be certain that the decision from the Board will be to hold rates steady.
Recall the comments from the Governor in his answer to a question during his appearance before the House of Representatives Standing Committee on Economics, “At the moment the market pricing is for interest rates to be constant right through this year. That seems a reasonable proposition to me.... The central scenario of a period of stability of interest rates is quite reasonable to me.”
Now we have never framed our medium term forecasts around the views of the Reserve Bank – after all they are only “mortal” forecasters like the rest of us . Their forecasts can go awry and policy can change accordingly. But for the immediate future ( like next week) we can take the Governor’s views as definitive.
Our view since the rate cut in May last year has always been for a follow up move in August and the steady rates throughout the remainder of 2016 , 2017 and 2018.
We assess that at least the Governor currently has that view for 2017 but has not commented on the market implied two rate hikes in 2018.
His growth forecast in 2018 is 2.75 percent-3.75 percent (down from 3-4 percent) well above our forecast of around 2.5% (with downside risks). Achieving the RBA’s growth forecast in 2018 might be consistent with market pricing but, certainly, our forecast for a slowdown in 2018 is not consistent with rate hikes – below trend growth signals steady rates at best.
In his comments to the House the Governor considers the case for rate cuts in 2017. He points out that inflation is below the target range ( “a bit low”) and the unemployment rate is “a bit high”. We would assess full employment at around 5% so, at 5.8%, there is clear excess capacity in the labour market. Of course, that spare capacity is further emphasised in the latest wages report which showed wages growth at a record low of 1.8 percent.
However, his clear problem with leaning further on interest rates is “The main effect (of a rate cut) would be more borrowing for housing, pushing up house prices...”.
His concerns with the impact of rate cuts on the housing market are well based.
Consider figures 1 and 2.
Figure 1 shows recent trends in house prices in Australia. The recent periods of rate cuts (first half of 2015 - February and May) and second half of 2016 (rate cuts in May and August) are associated with significant increases in house price inflation. However, note the trends in the intervening period. These will not be lost on the Governor.
During the period (second half of 2015) when the Bank and APRA imposed macro prudential guidelines to slow the pace of lending to investors the pace of house price inflation (national) slowed from 13.7% (six month annualised to August 2015) to zero (6 month annualised to March 2016). In response to the May and August rate cuts house price inflation has lifted to 10% (6 month annualised to February 2017). 
<a href="https://www.propertyobserver.com.au/images/2017/03/02/Screen%20Shot%202017-03-02%20at%2011.52.00%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/02/Screen%20Shot%202017-03-02%20at%2011.52.00%20AM.png" alt="">
Figure 2 shows a similar trend for new lending for housing (key to Governor’s concerns about rate cuts just boosting household debt). In response to the rate cuts in 2015 new lending for housing peaked at $26.8 billion in August 2015 . It subsequently slowed to $23.8 billion by January 2016 (down 11%) only to pick up to $27.1 billion (up 14%) by December 2016 in response to the May and August rate cuts.
The conclusion that the Bank would have reached is that macro prudential policies do work and rate cuts stimulate prices and credit despite rates being so low.
Little wonder that the Governor noted at the Hearing when referring to recent macro prudential policies, “For us, that is a first order thing that we can do to limit the growth rate of investor credit and, I think, that has been a successful public policy intervention.” 
I assess that, given that both Sydney and Melbourne prices are up 14% (six month annualised – Core Logic data) the Bank and APRA may be considering even tighter macro prudential policies.
It is not only inflation and the unemployment rate that would be of concern to the Reserve Bank.
Throughout the Hearing he indicated a preference for a lower Australian dollar. He accepts that the AUD is probably around fair value but questioned the feed-back to activity from higher commodity prices with miners apparently reluctant to increase capacity and wage pressures in the sector continuing to ease.
He has also adopted a more conservative attitude to the consumer, expecting that the recent falls in the savings rate are unlikely to be sustained.
Most of this “mood” does not sit well with the expectation that growth will lift in 2018, particularly in the face of a downturn in residential construction. His “faith” that non mining investment will lift to reflect tightening capacity utilisation is not convincing particularly with the higher AUD and a more cautious consumer.
Overall we saw little in the comments at the Hearing to sway our expectation of a slowing economy in 2018. If, as we expect, the Bank will get around to adopting additional macro prudential policies to slow housing in the second half of 2017 the stage will be set for another year of steady rates in 2018.
With the economy slowing and macro prudential policies further tightening housing markets, the risks to rates in 2018 will be to the downside rather the upside as currently expected by markets. 
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>. 
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RBA to hold interest rates next week: Westpac's Bill Evans

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GUEST OBSERVER
As expected, the minutes of the February monetary policy meeting of the Board of the Reserve Bank provided little additional insight to the Governor’s post-meeting statement and the February Statement on Monetary Policy.
The surprise 0.5 percent decline in real GDP in the September quarter attracted considerable discussion although it has largely been attributed to temporary factors including disruptions to coal supply for exports and bad weather which impacted residential construction. It is also noted that slower growth in consumption has been an aspect of growth trends in recent quarters.
However this weakness is not expected to have continued into the December quarter with growth in retail sales volumes having already been reported to have increased.
Nevertheless there is an emphasis on increased uncertainty around the outlook for consumption. On the one hand the minutes note the importance of households’ perceptions of their personal finances and job prospects. The assumption that the savings rate will continue to fall and support consumption growth has been discarded with growth in household income now representing a constraint to consumption growth.
On the other hand the minutes also point out that due to the strong lift in the terms of trade national income growth will be boosted providing some scope for upside risks to the forecasts.
The Board remains guardedly optimistic about an improvement in growth in non mining business investment with New South Wales and Victoria leading the way and a recent improvement in approvals for non residential investment also pointing to stronger investment. As we have seen in previous minutes the chasm between housing activity in the mining states and Sydney/Melbourne is emphasised clearly. Prospects for activity in Sydney and Melbourne remain solid with in particular investor housing approvals having risen in recent months.
Prospects for the labour market remain uncertain although the unemployment rate is still forecast to edge lower, albeit at a sufficiently modest pace for spare capacity to persist for some time. 
The Board is relying upon a gradual return to the inflation target coming from a modest boost in labour cost pressures and an easing in competitive pressures on retail prices. Unlike in recent years there is no expectation that the earlier depreciation of the exchange rate will put any upward pressure on tradeables prices. That cycle is assessed to have run its course. 
International conditions are assessed to have been more positive over recent months with GDP growth forecasts for our major trading partners having been revised up a little. Higher oil prices and rising inflation expectations were expected to flow through to higher core inflation in the advanced economies over time. As in previous minutes, uncertainty around China’s growth prospects, including imbalances in the financial sector, are an ongoing concern in the medium term. As with most commentators, uncertainty around the US is high with fiscal policy and deregulation potentially boosting activity although restrictive trade policies pose downside risks. 
Conclusion
We see nothing in these minutes to change our view that the official cash rate will remain on hold throughout 2017 and 2018. Markets continue to anticipate rate hikes in 2018 while a considerable number of commentators are predicting rate cuts in 2017. The middle course seems a much more likely outcome particularly given our view that growth momentum can pick up in 2017 but slow markedly through 2018 posing risks for the labour market and economic activity.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/">Westpac</a>. 
 
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Official cash rate will remain on hold, maybe until 2018: Westpac's Bill Evans

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GUEST OBSERVER
As expected the Reserve Bank Board decided to hold the overnight cash rate unchanged at 1.5 percent.
The commentary in the Governor’s statement was a little more upbeat than had been the case in December.
In particular the global view has been lifted from global growth “lower than average” to “growth above trend in a number of developed economies.”
Another aspect of the importance of global growth has been the ongoing strength in commodity prices.
This statement notes that the terms of trade have risen and this will boost national incomes.
The Bank confirms its forecast in November that growth in 2017 and 2018 will be around 3 percent.
In fact the 2018 forecast is 3.5 percent and given the more recent official forecasts we saw from the Government in the December Mid Year Economic and Fiscal Outlook that 2018 number is likely to be shaved a little to 3.25 percent.
Nevertheless 3 percent is considered to be above the Bank’s assessment of trend (2.75 percent) and therefore implies a gradually strengthening labour market.
The statement directly addresses the reported contraction in the economy in the September quarter attributing it to “temporary factors” with the RBA expecting a return to reasonable growth in the December quarter.
In that regard while consumption is expected to remain moderate, non mining investment is anticipated to show “some pick up”.
Specific commentary on the labour market is largely unchanged with conditions described as mixed although the Bank notes that leading indicators are pointing to continued expansion.
Commentary on the housing market is also largely in line with the December statement with the market described as strengthening overall and prices rising briskly in some cities.
In fact in December the statement pointed out that turnover had been lower and this comment is absent in this statement.
There is also some emphasis on the tightening in lending conditions from the banks that will give the RBA some comfort with respect to any financial stability risks.
Commentary around inflation remains confident pointing out that the most recent inflation report was in line with expectations and both headline and underlying inflation were expected to rise above 2 percent over the Bank’s forecast period.
This statement clearly sets out the Bank’s current policy approach.
That is, to hold rates steady in anticipation of a gradual lift in growth and inflation while imbalances in the housing market remain contained.
We expect this thinking will be sustained throughout 2017 being supported by a rising terms of trade, a peaking construction cycle and a gradually falling unemployment rate with rates remaining on hold.
Our central view for 2018 would be a similar policy stance despite clear preferences in the market for the beginning of a tightening cycle.
Westpac’s view on growth in 2018 is that is it will slow down to a below trend 2.5 percent with housing construction contracting, the terms of trade falling, and ongoing moderation in consumer spending and business investment.
This pitches the risks to the “on hold” call in 2018 to the downside in clear contrast to current market views.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/">Westpac</a>
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RBA keeps rates on hold, commentary slightly more upbeat than in December: Bill Evans

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<div class="section">GUEST OBSERVER</div>
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<div class="section">The Westpac Melbourne Institute Index of Consumer Sentiment fell by 1.1 percent in November from 102.4 in October to 101.3 in November. <div class="layoutArea">
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The Index continues to hold in a very tight band. Over the last six months the Index has held within the range of 99.1 to 102.4. 
However if you compare the average level during this period with the average over the comparable six month period in 2015 there has been a clear lift in the Index of 4.7 percent. Most of that improvement has been in the components of the Index that measure expectations which are up by an average of 7.3 percent on last year, whereas the components which measure current conditions have increased by only 1.2 percent. 
Developments of note over the month have included weakness in the share market as investors dealt with the uncertainties around the US election (ASX down by 4.4 percent since the October survey); a spectacular surge in coking coal prices (spot prices are up around 150 percent since August); a disappointing jobs report (annual employment growth slowing to 1.4 percent); and an unchanged rate decision from the Reserve Bank. 
Markets had been giving a decent chance to a November rate cut in earlier months so the fall in confidence amongst respondents holding a mortgage of 3.1 percent was somewhat understandable.
<a href="https://www.propertyobserver.com.au/images/2017/01/18/Screen%20Shot%202017-01-18%20at%2011.29.47%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/01/18/Screen%20Shot%202017-01-18%20at%2011.29.47%20AM.png" alt="">
Although down 3.4 percent in the latest month the lift in confidence in Queensland – the ‘Sunshine and Coal’ state – over the year has been spectacular. The Queensland index has lifted by 15.9 percent since last November compared to falls in the other major states – NSW (–2.6 percent); Victoria (–5.4 percent) and WA (–7.2 percent).
Disappointment in the jobs market has been signalled in the Westpac Melbourne Institute Index of Unemployment Expectations. The Index rose by 1.4 percent from 138.2 to 140.2. It is now up by 2.9 percent over the last six months and slightly above the level a year ago. Recall that higher reads mean more consumers expect unemployment to rise over the next 12 months and hence mark a deterioration.
Four of the five components of the Index fell slightly in the month. Both measures of family finances were down a little – the sub- index tracking views on ‘family finances compared to year ago’ fell by 1.3 percent while the sub-index tracking expectations for finances over the next 12 months fell by 0.8 percent. ‘Economic conditions over the next 12 months’ increased by 0.6 percent but ‘economic conditions over the next 5 years’ fell by 1.4 percent.
In a slight disappointment for the outlook for Xmas spending there was a 2.4 percent fall in the ‘time to buy a major household item’ sub-index.
In November we traditionally gauge respondents’ Christmas spending intentions. The question is “Do you think that you will spend less, about the same, or more on Christmas gifts compared to last year?” Last year we recorded a net balance – the proportion expecting to spend more minus the proportion expecting to spend less – of minus 13 percent. This year the net balance has declined to minus 20.1 percent. That is around the average since we started asking the question in 2009. That is a disappointing result given the promising improvement in spending plans in 2015.
Confidence in housing has also deteriorated. The ‘time to buy a dwelling’ index fell by 5.1 percent from 105.7 in October to 100.3 in November. We saw significant falls in NSW; Victoria; and Queensland.
Despite confidence in housing deteriorating house price expectations continue to rise. The Westpac Melbourne Institute Index of House Price Expectations increased by 1.3 percent to be up 23 percent on a year ago and reach its highest level since July 2015.
The Reserve Bank Board next meets on December 6. There is little chance of any change in rates at this meeting. The key issue is whether the Bank decides to further cut rates in 2017. Whereas lower than expected inflation was the driver of the two cuts in 2016 the decisions in 2017 will be determined by developments in housing and labour markets.
Westpac is expecting economic growth and employment growth to lift in 2017 boosted by higher commodity prices; ongoing strong residential construction; and booming exports. While the pace of house price appreciation can be expected to slow the case for lower rates under those circumstances does not seem to be strong.
We expect rates to remain on hold in 2017. 
 
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Consumer sentiment dips a little, Christmas spending plans disappoint: Bill Evans

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GUEST OBSERVATION
The new governor of the Reserve Bank Philip Lowe has used the minutes to the December board meeting to clearly lay out his delicate policy challenge over the next year.
We have been used to monetary policy being largely driven by changes in the inflation outlook or prospects for economic growth.
While these factors remain entirely relevant for the bank, the minutes note that the board members took time to assess the policy decisions made since the latest easing cycle began in late 2011.
The key issue for discussion was around the impact of lower interest rates on asset prices and borrowing decisions.
The definitive quote is: “Over recent years the board had sought to balance the benefits of lower interest rates in supporting growth and achieving the inflation target with the potential risks to household balance sheets. Members recognised that this balance would need to be kept under review.”
I think this observation, which figures so prominently in the minutes, is signalling that the hurdle to even lower rates which would be aimed at boosting demand is very high.
With housing markets in the south-east remaining vibrant the risks of further cutting rates appear to be quite concerning for the board.
That view has certainly been a key aspect of our view that the cash rate was likely to remain on  hold for an extended period following the (inflation-motivated) rate cut in August.
Observations around the economy were broadly in line with the governor’s statement on December 6.
At the time of the meeting the board was unaware that the Australian economy contracted by 0.5% in the September quarter.
However it was aware that growth in the September quarter was likely to be weak and certainly weaker than had been expected at the time of the November statement on monetary policy.
However, as we saw in the government’s mid-year economic and fiscal outlook which printed yesterday the official forecasts (not necessarily exactly held by the RBA) imply average quarterly growth rates of 0.8% in the December(2016), March ( 2017) and June (2017) quarters.
Hence the minutes still refer to “growth picking up to be above potential later in the forecast period”.
The views on the labour market are less confident than we saw in the last set of minutes – “there was still considerable uncertainty about the momentum in the labour market”.
Having noted this quote it is however interesting that the detailed discussion on the labour market seeks to align the fall in the unemployment rate with a similar hours-based measure, providing more credibility to that fall.
The commentary on the housing market remains upbeat while recognising that there was considerable variation across the country and between houses and apartments.
There is also some positive commentary around the consumer.
We now know that consumer spending in the September quarter was well below average but the minutes point out that since then retail sales have grown at an above average pace and liaison with retailers suggested that trading conditions had remained “steady”.
The minutes are also seeking to paint a better picture for non-mining investment than the downbeat capital expenditure survey that printed in late November – “Over the past few years the national accounts had tended to report stronger outcomes [than the capex survey]”.
The commentary around China remains unchanged with activity being supported by accommodative policy although longer term risks associated with rising debt remain elevated.
The minutes had no real insights into the outlook for the US or markets. Uncertainty around Mr Trump’s policy agenda remains the challenge.
With the negative GDP print for September not being known at the time of the meeting this was always going to be a difficult set of minutes to write.
In the event the board has chosen to highlight in the minutes aspects of the discussion that provide a reasonably upbeat assessment of the economy: growth is expected to bounce back; spare capacity in the labour market, while ongoing, appears to have been reduced; the housing market has strengthened; consumer spending and non- mining investment prospects have improved.
However of most significance is the policy commentary that, I believe, implies a fairly clear signal that monetary policy is now representing asymmetric forward risks with the benefits to spending from the lower rates not compensating for instability in asset markets. Of most concern here are the elevated levels of household debt.
It has been Westpac’s view for some time that rates are likely to remain on hold through 2017 and 2018 and the discussion in these minutes gives no reason to qualify that view.
Bill Evans is the chief economist with Westpac.
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RBA won't risk financial stability with another rate cut in 2017: Bill Evans

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On August 22, I wrote a note in which I concluded:
<ol>
<li>Record low interest rates have not been effective in stimulating investment to close the savings/investment imbalance. A change in policy from governments on infrastructure and structural reform is urgently required. 
</li>
<li>Central banks are exacerbating the imbalance with (quantitative easing (QE) policies. With these policies now generating negative yields and pressuring the banking system while sending confusing signals on risk free rates there is an urgent need for these policies to be reviewed and abandoned.} 
</li>
<li>When these QE policies are finally abandoned, as they surely must be, there will be a huge re-pricing of risk free assets with rates heading in the direction of nominal GDP growth, although the pace of this adjustment will still depend on the other progress which governments have made in closing the savings/ investment imbalance.</li>
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At that time the US 10 year bond rate was 1.54% while the Australian 10 year bond rate was 1.9%. Today these rates stand at 2.35% and 2.75% respectively.
I nominated nominal GDP growth in the US at around 4% (2% real growth and 2% inflation).
The US bond rate has risen about a third of the way towards what I would call that “equilibrium” despite no clear progress on lifting investment although, of course, markets are pre-emptive.
In the period 1992-2002 when we had more of an alignment between savings and investment, and bond rates were broadly in line with nominal GDP growth, we saw that investment in the US was growing at around 8% compared to the average growth rate in recent years of around zero.
The recent rise in bond rates can be considered in two periods – before and after the Presidential election.
The US bond rate started to rise from around late September from 1.55% to reach 1.85% on the eve of the US presidential election.
A key catalyst for that move was a change in tone from both the Bank of Japan (BOJ) and the European Central Bank (ECB). In the case of Japan policy was adjusted to target a level of the 10 year Japanese Government Bond (0%) rather than continuing to expand the balance sheet.
In the case of the ECB, prospects of further increasing the €80 billion of monthly asset purchases took a downturn and while there is no signal from the Board that tapering is imminent the debate around the effectiveness of QE and negative interest rates has been vigorous both in the market and amongst the officials.
Finally, I expect that markets believed that whoever was elected to the presidency we would see a measure of fiscal stimulus.
Since the election of Mr Trump, the US 10 year Treasury bond rate has risen from 1.85% to 2.35% - the total increase in bond rates, from the lows (80 basis points), represents about a third of the move towards my “equilibrium” target of 4% (250 basis points). As we expect with markets, this adjustment has occurred purely through a change in expectations. I would not expect this to progress much further until we see concrete evidence around progress on infrastructure and reform.
So what else in my “wish list” apart from a significant change in ECB and BOJ approaches has occurred?
The second part of the “wish list” was “change in policy from governments on infrastructure and structural reform”.
Do Mr Trump’s policies provide some comfort in that direction?
Recall that the first policy he referred to in his acceptance speech was to “rebuild” America. Given my emphasis on the need for aggressive infrastructure investment to lightening rod the US economy out of secular stagnation, I was impressed.
Until I looked into the details of his infrastructure policy. The current policy is to invest US$1 trillion (around 5% of GDP) in public infrastructure, over 10 years, with 85% to be financed from the private sector. Unless his team is aware of a massive list of public assets that could be privatised with the funds being used to finance the road/bridge/inner city spend, this policy is likely to fail due to a lack of support from the private sector.
My view is that he needs to redirect a large amount of the tax package towards direct infrastructure investment. The current tax package, which includes reducing the corporate tax rate from 35% to 15%, is estimated to cost (according to the <a href="https://crfb.org/donald-trump" target="_blank">Committee for a Responsible Federal Budget</a>) around US$5-6 trillion over 10 years. The corporate component is around 75% of the total package cost with the remainder representing the cost of lowering personal tax rates. But the <a href="https://www.taxpolicycenter.org/publications/analysis-donald-trumps-tax-plan/full" target="_blank">Tax Policy Centre estimates</a> that 47% of the benefits of the personal cuts will go to the top 1% of income earners.
The starting point for the total government debt position also threatens the tax package. When Reagan adopted his “supply side” economic policies, government debt stood at 24% of GDP compared to 78% today. The tax package could lift debt to around 110% of GDP over the next 10 years.
So my view on policy as it stands is that a much larger and realistic infrastructure package needs to be embraced at the expense of a significantly more modest tax package.
What about reform?
Reform is required to convince businesses that growth is in prospect and therefore investment should be lifted.
US firms pay US taxes on income generated anywhere in the world while allowing the firms to defer tax on these earnings by keeping the money offshore. Trump has considered offering companies a window tax “holiday” to repatriate some of the $2 trillion held outside the US. Such reform would 'spark' new investment if firms anticipated stronger growth in the US. An angle might be to 'link' the tax savings to the proposed private funding of infrastructure.
Currently there is some market belief in his claim to “clean up regulation”, with the unwinding of Dodd-Frank (a complex banking regulation) being the most comprehensive. Policies to unwind excessive regulation and some early successes in that regard will be just as crucial as a much more aggressive infrastructure policy to lift confidence in growth prospects.
The moderated approach to QE and negative interest rates by the ECB and BOJ started the move away from unrealistically low rates.
The emphasis in the Trump rhetoric on infrastructure and reform has been a very welcome development. However, at this stage, Trump’s policies do not signal a clear commitment to infrastructure and there does not appear to be a list of “achievable” reform initiatives.
Markets and firms will need to see clear evidence of Trump’s ability to implement ambitious policies before I could declare that we are on a steady path towards equilibrium and 4% bond rates.
Bill Evans is chief economist at Westpac.
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Trump needs to find balance between infrastructure and tax priorities: Westpac's Bill Evans

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GUEST OBSERVER
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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 +0.63 percent in September to +0.43 percent in October. 
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The October reading is the third consecutive above trend result and follows fifteen months of persistent below trend reads. Although the growth rate has slowed a little, it is still a clear positive signal for the near term economic outlook. That signal is broadly consistent with Westpac’s forecast for growth to hold around a 3 percent pace over the course of this year and to lift to 3.3 percent in 2017.
Westpac has recently lifted its growth forecast for 2017 from 3 percent to 3.3 percent. That reflects the recent improvement in the terms of trade following the sustained boost in bulk commodity prices; a more confident assessment of the sustainability of the residential construction cycle and continuing evidence of a strong outlook for growth in both resource and services exports.
The Leading Index growth rate has lifted over the last six months from a 0.34 percent below trend reading in May to the current 0.43% above trend result. 
Offshore factors continue to dominate the sources of improvement in the Index. Of the net 77 basis points in improvement over the last six months, three of the four externally driven components contributed 90 basis points – commodity prices (45 basis points); US industrial production (25 basis points); and a steepening yield curve (25 basis points). The other component of the Index which is heavily influenced by global forces (ASX 200) actually subtracted 8 basis points from the overall movement over the six months. Of course we can expect another story in November following the post-election boom in the share market.
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Contributions from the domestic components of the Index were mixed over the six month period. Aggregate hours worked have improved, contributing 31 basis points to the lift. However, confidence measures have weighed on the Index. The Westpac-MI Consumer Expectations Index subtracted 14 basis points and the Westpac-MI Unemployment Expectations Index subtracted 13 basis points. A slowdown in dwelling approvals has also seen this component subtract 13 basis points.
The Reserve Bank Board next meets on December 6. There is virtually no chance of a policy move coming from that meeting. 
The minutes from the November meeting signalled that the Bank is in a ‘wait and see’ mode. There was an air of uncertainty around both the housing market and the labour market. Considerable time will be required before the picture around both becomes clearer. From our perspective we expect stability in the housing market and some gradual pick-up in labour market conditions as stronger overall growth lifts it out of the current ‘slow patch’. 
Consequently, we expect that a central bank, which must be questioning the effectiveness of yet more monetary stimulus, will be unlikely to see the need to adjust policy throughout the entire run of 2017. 
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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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No chance of a policy move from RBA in December: Westpac's Bill Evans

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GUEST OBSERVER
The minutes of the November monetary policy meeting of the Reserve Bank Board provided no real surprises. 
This is to be expected given that we have seen the Statement on Monetary Policy only a week or so ago.
The three areas worthy of attention in the minutes are: the Bank’s take on the recent lift in bulk commodity prices; its assessment of the trends in the labour market; and any update on its sentiment towards the housing market.
The commentary around the commodity story appears to be more positive – “the terms of trade had risen for the first time in two and a half years and had been revised higher over the forecast period.” As with most observers of this recent development the minutes emphasise “uncertainty” about the outlook for the terms of trade. However the Board offers no speculation as to the sustainability of these increases.
There is a much longer than normal discussion around the labour market. The Board noted that “the current experience of relatively strong growth in part time employment (compared to full time employment) was unusual insofar as such a pattern was typically associated with rising unemployment rates." The discussion also clarified the Board’s view on the state of spare capacity in the labour market emphasising that it depended up “how many additional hours workers were seeking” which they concluded was not readily available data. The minutes confirmed that the unemployment rate is expected to edge lower although forecasts incorporated a small downward revision to the outlook for employment growth and more than compensated by a fall in the participation rate.
Just as there is uncertainty around the outlook for the labour market, the Board has become more ambivalent around the housing market: “Members noted that assessing conditions in the housing market had become more complicated.… housing price growth had picked up notably in Sydney and Melbourne but turnover had slowed.” The Bank continues to make the statement of fact: “A considerable supply of apartments is scheduled to come on stream in the next few years” but provides no guidance as to its view on the implications for both prices and the medium term outlook for activity. We are, at least, pleased however that the Board recognises that building activity is likely to support growth “for some time yet.”
The views on inflation are more confident. The forecast that underlying inflation will lift from 1½% in 2016 to 2% in 2017 is supported by the key assertions that firstly that the slowdown in labour costs has bottomed out and secondly that the disinflationary effect of retail competition is expected to dissipate. On the other hand, low rental inflation is expected to persist while the inflationary effect of the fall in the AUD appears to have run its course.
Internationally, the turning point in government bond rates is recognised partly because expectations of further increases in asset purchases by the ECB and BoJ have been toned down. (The Board meeting occurred before the US election had taken place).
On the growth front downside risks to the near term outlook for China have diminished although the Board continues to note that longer term risks to China’s economy associated with high and rising debt remain.
The conclusion in the key “Considerations for Monetary Policy” section emphasises the ongoing neutral policy bias.
Conclusion
Westpac has consistently argued that, following the rate cut in August, the Bank was likely to keep rates on hold through-out the course of 2016 and 2017. The risk to that view remains to the downside associated with an unexpected extended deterioration in the labour market. As discussed, the Board is not confident about the outlook for the labour market. The forecast that the unemployment rate will remain steady is qualified by a number of conditions particularly around the assessment that the data for the best measure of spare capacity is “not readily available.”
Our view on the growth and employment outlook is more positive and we expect that the probability of the type of adverse development in the labour market that would trigger a further policy response remains quite low.
While markets have substantially priced out the prospect of rate cuts next year, in line with our view, there is some evidence that they are flirting with the possibility of a tightening in the second half of 2017. From our perspective that prospect is extremely remote, particularly given the inflation outlook and given our own forecasts for economic growth.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Reserve Bank minutes highlight uncertainty around the labour market, housing: Westpac's Bill Evans

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GUEST OBSERVER
The Westpac Melbourne Institute Index of Consumer Sentiment fell by 1.1 percent in November from 102.4 in October to 101.3 in November.
The Index continues to hold in a very tight band. Over the last six months the Index has held within the range of 99.1 to 102.4.
However if you compare the average level during this period with the average over the comparable six month period in 2015 there has been a clear lift in the Index of 4.7 percent.
Most of that improvement has been in the components of the Index that measure expectations which are up by an average of 7.3 percent on last year, whereas the components which measure current conditions have increased by only 1.2 percent.
Developments of note over the month have included weakness in the share market as investors dealt with the uncertainties around the US election (ASX down by 4.4 percent since the October survey); a spectacular surge in coking coal prices (spot prices are up around 150 percent since August); a disappointing jobs report (annual employment growth slowing to 1.4 percent); and an unchanged rate decision from the Reserve Bank.
Markets had been giving a decent chance to a November rate cut in earlier months so the fall in confidence amongst respondents holding a mortgage of 3.1 percent was somewhat understandable.
Although down 3.4 percent in the latest month the lift in confidence in Queensland – the ‘Sunshine and Coal’ state – over the year has been spectacular. The Queensland index has lifted by 15.9 percent since last November compared to falls in the other major states – NSW (–2.6 percent); Victoria (–5.4 percent) and WA (–7.2 percent).
Disappointment in the jobs market has been signalled in the Westpac Melbourne Institute Index of Unemployment Expectations. The Index rose by 1.4 percent from 138.2 to 140.2. It is now up by 2.9 percent over the last six months and slightly above the level a year ago. Recall that higher reads mean more consumers expect unemployment to rise over the next 12 months and hence mark a deterioration.
Four of the five components of the Index fell slightly in the month. Both measures of family finances were down a little – the sub- index tracking views on ‘family finances compared to year ago’ fell by 1.3 percent while the sub-index tracking expectations for finances over the next 12 months fell by 0.8 percent. ‘Economic conditions over the next 12 months’ increased by 0.6 percent but ‘economic conditions over the next 5 years’ fell by 1.4 percent.
In a slight disappointment for the outlook for Xmas spending there was a 2.4 percent fall in the ‘time to buy a major household item’ sub-index. 
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In November we traditionally gauge respondents’ Christmas spending intentions. The question is “Do you think that you will spend less, about the same, or more on Christmas gifts compared to last year?” Last year we recorded a net balance – the proportion expecting to spend more minus the proportion expecting to spend less – of minus 13 percent. This year the net balance has declined to minus 20.1 percent. That is around the average since we started asking the question in 2009. That is a disappointing result given the promising improvement in spending plans in 2015. 
Confidence in housing has also deteriorated. The ‘time to buy a dwelling’ index fell by 5.1 percent from 105.7 in October to 100.3 in November. We saw significant falls in NSW; Victoria; and Queensland. 
Despite confidence in housing deteriorating house price expectations continue to rise. The Westpac Melbourne Institute Index of House Price Expectations increased by 1.3 percent to be up 23 percent on a year ago and reach its highest level since July 2015. 
The Reserve Bank Board next meets on December 6. There is little chance of any change in rates at this meeting. The key issue is whether the Bank decides to further cut rates in 2017. Whereas lower than expected inflation was the driver of the two cuts in 2016 the decisions in 2017 will be determined by developments in housing and labour markets.
Westpac is expecting economic growth and employment growth to lift in 2017 boosted by higher commodity prices; ongoing strong residential construction; and booming exports. While the pace of house price appreciation can be expected to slow the case for lower rates under those circumstances does not seem to be strong.
We expect rates to remain on hold in 2017. 
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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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Consumer sentiment dips a little, Christmas spending plans disappoint: Westpac's Bill Evans

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

The Eveleigh brings house-like apartments to Broadbeach

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

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

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

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

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

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

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