<html><body><div class="page" title="Page 1">
<div class="section">
<div class="layoutArea">
<div class="column">
The Reserve Bank Board meets next week on October 4. There is little prospect of the Board deciding to move rates. 
Since rates fell to 3% in December 2012 all six subsequent cuts have been in the February/May/August months. 
Those months, along with November, allow the RBA to respond to fresh information on inflation – printing quarterly usually around one week before the Board meeting. 
Those months also coincide with the quarterly Statement on Monetary Policy where the Bank releases revised forecasts for growth and inflation. 
Forecast changes at that time are usually used to justify the decisions either revealing significant revisions to growth or inflation forecasts. Based on this recent practice it would be extraordinary to see a policy change in October. 
This meeting also marks the first time in the Chair for Governor Lowe. 
I have written extensively about the need for the new Governor of the Reserve Bank to adjust the inflation target from 2-3% to 1-3% to reflect the reality of lower global inflation relative to the mid-1990’s when the target was originally successfully adopted. 
However, as noted at the time, I held out little hope that the new Governor would take my advice. Accordingly I was not surprised to see last week’s announcement that the target had been “confirmed” as 2-3%.
However there has been a significant change from “on average over the cycle” to “over time”. The Governor also emphasised in his Statement to the House of Representatives last Thursday that “the main drafting change is to make the link between monetary policy and financial stability a little more direct”.
If we weigh those two changes together they go some way to achieving the objective that I was most concerned about. 
My concern was that the new Governor might, when confronted with an impossible task of lifting inflation to above 2.5% in order to “average” 2.5% over the cycle might unnecessarily impact asset markets. By using the vague term “over time” and linking policy directly to financial stability (read asset markets) he has allayed much of my concern on that issue. 
Markets are likely to eventually scale back prospects for further rate cuts given these developments. 
We should not be surprised that this new Governor has chosen that approach. And we should certainly not dismiss this change in approach as “window dressing”. 
Every great professional has a seminal piece of work that they can refer to as a “defining moment”. 
I would argue that such a time came for a young economist, Philip Lowe, who had been seconded from the RBA to the Bank of International Settlements in Basel in the early 2000’s. 
In July 2002 he published a paper in the BIS Working Papers series. 
He argued in his paper, that “financial imbalances can build up in a low inflation environment and that in some circumstances it is appropriate for policy to respond to contain imbalances.....while low and stable inflation promotes financial stability, it also increases the likelihood that excess demand pressures show up first in credit aggregates and asset prices, rather than in goods and services prices.
 Accordingly, in some situations, a monetary response to credit and asset markets may be appropriate to preserve both financial and monetary stability.” He further concluded that “greater co-operation between monetary and prudential authorities is important, not just in management of crises but also in preventing their emergence.” (Philip Lowe and Claudio Borio, BIS Working Papers, no. 114, July 2002).
</div>
<div class="column">
Around that time the US housing market was beginning to “stir”. Chairman Greenspan had been cutting the Federal Funds Rate in the face of weak inflation. 
The Federal Funds Rate eventually bottomed out at 1% by June 2003 (a year after Lowe’s paper was published). When Greenspan eventually got around to lifting the Federal Funds Rate in June 2004 he moved at a leisurely and predictable 0.25% per meeting until June 2006 when the Federal Funds rate peaked at 5.25%. 
In Greenspan’s defence it has been argued that lifting the Federal Funds Rate from 1% to 5.25% over 2 years should have had more traction with the bond market – the US 10 year rate only increased from 4.6% to 5.2% over the period. This muted response has generally been attributed to Chinese purchases of US Treasuries over that period as China’s foreign reserves boomed. 
Mortgage rates in the US are priced off long bond rates rather than the Federal funds rate so the response in the mortgage market to Greenspan’s policy was muted. However, if policy had been more pre- emptive, less orderly and predictable the traction with the bond market may have been much more effective. 
Greenspan had clearly ignored the signals which had been emphasised in Lowe’s work – over the 4 years from end 2000 to end 2004 US house prices (Case Schiller Index) had lifted by 46%! 
Greenspan’s response to critics who noted the build-up in pressures particularly in the US housing market was that his objective was to maintain low inflation and if there were any associated imbalances in other markets he could “clean up” in the aftermath of any asset market disturbance. Young Lowe clearly disagreed. 
That paper, all those years ago, gives us a clear insight into the values of the new Governor. Arguably, if his warnings had been heeded by Chairman Greenspan back in 2002 (note that he only started rising rates in June 2004) the world may have avoided the Global Financial Crisis. 
We expect that these values will be an important driver of future policy. Lowe’s adjustment to the agreement with the Government to include financial stability has its origins in that paper all those years ago. 
The balance between driving towards a higher inflation target and over stimulating asset markets (including housing) will take on a sharper edge than we have seen in the past. He is also likely to be open to the use of further macro prudential tools (as highlighted in that paper) should that be seen to be necessary. 
Bill Evans, Chief Economist at Westpac
</div>
</div>
</div>
</div></body></html>

bevans-rYk9SxEa4r

Insights into the new RBA governor: Westpac's Bill Evans

<html><body><div class="page" title="Page 1">
<div class="section">
<div class="layoutArea">
<div class="column">
GUEST OBSERVER
Consumer Sentiment has been remarkably stable for the last six months. Over that period the Index has averaged 100.3 so today’s reading is just 1.0 percent above this average. 
Indeed the September reading is just 1.7 percent above the average reading over the previous six month period to March as well. 
This stability over the last six months has been despite significant events that can usually be expected to impact confidence: two interest rate cuts from the Reserve Bank and associated reductions in mortgage rates; a Commonwealth Budget; a Federal election; and some major developments offshore such as the surprise UK referendum result (‘Brexit’) and the build -up leading into November’s US election. 
In the September survey we have the benefit of respondents nominating those news categories that they most recalled and whether that news was favourable or unfavourable. There have been some important trends that might explain the stability of confidence at a reasonably solid level.
<a href="/images/2016/09/14/Screen%20Shot%202016-09-15%20at%208.12.24%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/14/Screen%20Shot%202016-09-15%20at%208.12.24%20AM.png" alt="">
 
A year ago the most recalled news items were around ‘economic conditions’ (53.9 percent of respondents) and ‘international events’ (41.8 percent of respondents). Recall on these topics is now down to 21.9 percent and 11.4 percent respectively. Not surprisingly, the news is assessed to be considerably less unfavourable today than last year. Having said that there has been a marginal deterioration in the assessment of domestic economic conditions since June. That move has been more than matched by a significant improvement in the assessment of news on international conditions over the last three months. 
The most recalled news category in September was ‘Budget and taxation’ (26 percent). News on this category has been assessed as more unfavourable than in June but still less unfavourable than a year ago. 
Recall levels for news items on ‘interest rates’ (15.2 percent); ‘employment’ (11.9 percent); and ‘inflation’ (6.4 percent) have been fairly steady over the last year. However for all of these categories, we have seen significant improvements in how news has been viewed. 
That theme of improving assessment of the jobs market is supported by the Westpac Melbourne Institute Unemployment Expectations Index. This fell from 141.2 in August to 138.4 in September (down 2 percent, recalling that a lower print means fewer respondents expect the unemployment rate to rise in the year ahead). The Index is now down 11.5 percent over the last year and 10.5 percent since September 2014. The Index was stubbornly high through 2012- 2015 so it is very encouraging that confidence seems to be gradually returning to the jobs market. 
</div>
<div class="column">
Confidence in the housing market is improving. The ‘time to buy a dwelling’ index fell 2.5% in September from 112.1 in August to 109.3 in September. The Index is still 7.5 percent above its level from a year ago and 4.3 percent above its average for the last six months. Confidence in both the major markets improved over the month. Sydney lifted by 4.0 percent and Melbourne rose by 5.1 percent. 
Confirmation of a continuation of improvements in the housing market was apparent in the Westpac Melbourne Institute Consumer House Price Expectations Index which increased by 3.0 percent for the month to be up by 6.0 percent for the year. Increases were recorded in NSW, Victoria and Queensland. 
There were mixed messages around the components of the Index. Of most significance was a 3.5 percent jump in the sub-index tracking assessments of ‘family finances vs a year ago’. Readers will recall that the Reserve Bank usually highlights this component when discussing its assessment of the consumer in its quarterly Statement on Monetary Policy. Less encouraging was a 2.3 percent fall in the subindex tracking views on ‘family finances over the next 12 months’. While the overall Index is up 8 percent over the last year both ‘family finances’ components are around the same levels. 
Confidence around the economic outlook deteriorated somewhat. The sub-index tracking views on ‘economic conditions over the next 12 months’ fell by 4.6% while the ‘economic conditions over the next 5 years’ sub index increased by 1.1 percent. 
The sub-index tracking assessments of ‘time to buy major household Item’ increased by 3.5 percent to now be 16.5 percent up on a year ago. 
In this survey, we also receive information on respondents’ saving preferences .These responses are particularly important for assessing whether there has been a change in risk aversion. Consistent with ‘stability’ in the overall survey we saw little change in saving preferences. Most respondents still see bank deposits as the wisest form of saving (29.9 percent up marginally from 29.5 percent in June). That proportion compares to the 40yr peak of 39% in 2012 when risk aversion was much higher.
<div class="page" title="Page 2">
<div class="section">
<div class="layoutArea">
<div class="column">
A second measure of risk aversion is the component ‘pay down debt’. That proportion increased from 20.0 percent to 21.0 percent and compares with record high of 27 percent in 2010. However the ‘pay down debt’ component has steadily lifted over the last three years. 
The proportions favouring ‘real estate’ (15.4 percent) and ‘shares’ (8.6 percent) remained steady in September. 
The Reserve Bank Board next meets on October 4. This will be the first meeting under the new Governor Lowe. It is extremely unlikely that there will be any change to rates at that meeting. 
</div>
<div class="column">
Since the cash rate returned to its historical low of 3% in 2013 all six subsequent cuts have occurred on the meetings in February/ May/August and November when the Bank has a ‘fresh’ print on inflation and is able to communicate any forecast changes in its quarterly Statement on Monetary Policy. That really suggests that the next ‘live’ meeting will be November 1. 
We expect rates will be held steady in November as well. Signs of stability in the real economy, as signalled in this report, point to steady rates being the most appropriate policy. Of course there is always the possibility of a shock from the inflation report on October 26 but both our inflation forecasts and our assessment of current high RBA inertia to moving again this year point to stability in November. 
<a href="/images/2016/09/14/Screen%20Shot%202016-09-15%20at%208.14.34%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/14/Screen%20Shot%202016-09-15%20at%208.14.34%20AM.png" alt="">
</div>
</div>
</div>
</div>
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
</div>
</div>
</div>
</div></body></html>

Consumer sentiment stabilises at solid level: Westpac's Bill Evans

<html><body>
As expected the Board of the Reserve Bank decided to lower the cash rate by 25bps to 1.5% at its August Board meeting.
The key final paragraph which indicated the Board had no bias: “Taking all these considerations into account, the Board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting.”.
This is not surprising since the same policy approach was taken following the May meeting when the Board also cut by 25bps.
It is worth recalling that no bias was indicated at the following June meeting but was restored at the July meeting with a cut in August following.
Consequently, this decision to exclude a bias should not be seen as ruling out another move at the next ‘live’ meeting in November.
As we have been indicating to our customers the key factor behind the cut was low inflation.
In May, the Bank lowered its underlying inflation forecast for 2016 from 2.5% to 1.5% and lowered its forecast for 2017 from 2.5% to 2%.
These sharp changes, for an inflation targeting central bank, were extremely significant and certainly laid the foundation for today’s move.
Not surprisingly, therefore, the commentary around inflation remained downbeat with recent data confirming low inflation and the outlook being for low cost pressures remaining the case for some time.
The most fertile debate around prospects for this meeting centred on housing.
There was some private sector data that indicated that house prices had responded sharply to the May rate cut, potentially posing a risk to today’s decision.
The Governor’s statement has dedicated a particularly long paragraph to the housing market.
In July house prices were described as having “risen again in many parts of the country in recent months”.
However, in today’s statement, he is more downbeat, commenting that: “dwelling prices have been rising only moderately over the course of this year”.
He also notes that the pace of lending for housing has slowed this year. Finally he concludes that “the likelihood of lower interest rates exacerbating risks in the housing market has diminished”. We can conclude from this paragraph that the Bank sees limited risk from the rate cut to a resurgence in house prices.
Commentary on the exchange rate remains the same as last month with “an appreciating exchange rate could complicate this [rebalancing in the economy]”.  So there has been no attempt to talk down the currency with the power of lower rates doing the real job.
Confirmation that the recent slowdown in jobs growth has affected the Board’s thinking comes with the labour market indicators continuing to be described as “mixed … but consistent with a modest pace of expansion in employment”.
There is no explicit clarification as to whether this modest pace will be sufficient to further bring down the unemployment rate. We will get a better indication of the Bank’s likely revised outlook for the unemployment rate in the Statement on Monetary Policy on Friday.
Internationally the focus continues on China with an additional comment that “the underlying pace of China’s growth appears to be moderating”.
The outlook
Since the RBA surprised us with the May rate cut we had expected a follow up move in August.
When we saw the dimension of its inflation forecast changes that follow up move became even more likely.
The only barrier to such a decision was going to be the June quarter inflation report which would provide evidence as to whether the Bank had over-reacted to the shock in the March quarter report. While the June quarter report indicated that inflation was not as weak as in March it still confirmed that most of the disinflationary pressures apparent in March had persisted.
Our current view is that a further cut in November is not likely. With interest rates very close to their effective floor we expect that the Bank will be very patient in gathering information around the likely growth and inflation outlook. From our perspective the near term prospects for the real economy appear to be encouraging with lead indicators for the labour market improving and the lift from housing construction and services exports being sustained.
For us the real issue will be the environment in 2017 when the housing cycle will be in reverse; jobs growth may have cooled; global growth, particularly in this region, will have slowed further; and Australia’s interest rates may still be attractive to international investors. It is likely that any change in our current forecast that rates have bottomed will have been motivated by clearer prospects of those developments.Wee expect that the RBA will be similarly cautious with their assessment.
It is a little early to draw those conclusions given the unusually high degree of uncertainty, particularly around the global environment, but suffice to say that the risks to the rate outlook, particularly in 2017, are firmly to the downside. 
 
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>.
</body></html>

No surprise the RBA cut: Westpac economist Bill Evans

<html><body><div class="page" title="Page 1">
<div class="section">
<div class="layoutArea">
<div class="column">
With the major events of ‘Brexit’ and prolonged election uncertainty it is not surprising to see a fall in the Index. In fact, given these developments, this fall appears to be surprisingly modest. 
The survey was conducted over the period July 4 to July 7. 
By the time of the survey market volatility associated with ‘Brexit’ had largely settled down and media commentary was, correctly in my view, concentrating on the implications for the UK economy rather than the initial reaction which speculated on some disastrous contagion for the whole of Europe. 
However concerns would have lingered for many respondents given the blanket publicity which the ‘Brexit’ development received. 
On the other hand election uncertainty persisted throughout most of the survey period. 
Respondents would have been particularly unnerved about the prospect of an inconclusive election result given the experience during the last ‘hung’ Parliament in 2010 to 2013. 
Consequently, to see the Index fall by only 3%, back to its level of March 2016 and still 4.2% above its April level is encouraging. 
Since the end of the survey period we have seen some welcome political certainty with the prospect of a hung Parliament avoided. It is reasonable to speculate that had the survey been conducted over the last few days the results would have been more positive. 
Furthermore, we expect the Reserve Bank to move to cut rates again following its meeting on August 2. 
Following the cut in May the Index surged by 8.5% putting it firmly in positive territory above 100, indicating optimists outnumber pessimists. With 
the Index currently poised only slightly below 100 we can be reasonably confident that the Index will be back above a 100 next month despite having to negotiate two major shocks in ‘Brexit’ and election uncertainty. 
With a 3% fall in the overall Index it is not surprising that respondents were a little less confident around the labour market. 
The Westpac Melbourne Institute Index of Unemployment Expectations rose 1.9% in July but the Index is still 4% below its level in April and, most importantly, 8.0% below its level of a year ago. 
Our assessment of that Index is that it is indicating a steady improvement in the labour market. 
Reflecting market volatility and political uncertainty, both components of the Index that relate to households’ assessments of their own finances were weaker. The sub-index tracking assessments of ‘family finances compared to a year ago’ fell by 
</div>
<div class="column">
5.2% while the ‘family finances over the next 12 months’ sub- index fell by 2.7%. 
Concerns about the short term economic outlook intensified with the component ‘economic conditions over the next 12 months’ falling by 6.1% although the 5 year outlook was steady. 
The sub-index tracking vies on ‘time to buy a major household item’ fell by 1.5%. 
Over the last 12 months the overall Index has increased by a healthy 7.4%. However that improvement has been dominated by the ‘economic outlook’ components which have risen by nearly 20% on average whereas the ‘family finances’ components have only improved by an average of 2.4%. Respondents may be buoyed by reports of overall improving economic conditions but they are not feeling the same improvement in their own financial position, pointing to a less encouraging basis for boosting consumer spending than may be implied by the overall Index. 
Signals in the housing market were mixed. The ‘time to buy a dwelling’ index fell by 1.8% to 101.8. 
This Index has been markedly weaker since the middle of last year although there has been no sign of further deterioration in 2016. 
On the other hand respondents are regaining their confidence in the outlook for prices. The Westpac Melbourne Institute Index of House Price Expectations lifted by 4.3% in July to its highest level since August last year and up around 17.3% on the average of the last quarter of last year. 
The Reserve Bank Board next meets on August 2. We expect that it will decide to further reduce the overnight cash rate to 1.5%. 
This will follow the decision to lower rates by 0.25% at its Board meeting in May. 
Westpac had not expected that move because we underestimated the significance which the Board had read into the March quarter inflation report. On the basis of that report the Board lowered its forecasts of underlying inflation in 2016 from 2.5% to 1.5% and in 2017 from 2.5% to 2.0% – the bottom of the Bank’s target range.
We do not believe that it would have made such significant changes to its assessment of the inflation outlook without being prepared to cut rates further. Indeed its own forecast of 2% in 2017 incorporated the market forecast of a further rate cut.
<div class="page" title="Page 2">
<div class="section">
<div class="layoutArea">
<div class="column">
With the AUD lifting above USD 0.76 and the inflation target at risk it seems a sensible policy option to cut rates further. 
However we are mindful that despite cutting rates the Board did not lower its growth forecasts indicating that the motivation behind the May decision was entirely around the need to credibly achieve the inflation target over the forecast period. Rigid adherence to that policy in future might be questioned particularly, as hinted at in this survey, if the rate cuts spill over into excessive exuberance in asset markets. Hence we expect that this cut will, most likely, be the last in the current easing cycle. 
</div>
</div>
<div class="layoutArea">
<div class="column">
Bill Evans is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div></body></html>

Consumer sentiment falls on Brexit and election concerns: Westpac's Bill Evans

<html><body>
GUEST OBSERVER
As expected the Board of the Reserve Bank decided to leave the cash rate unchanged at 2 percent.
It also retained the key final sentence in the Governor’s statement: “Continued low inflation would provide scope for easier policy, should that be appropriate to lend support to demand.”
As we indicated in the preview by far the most important section of the statement was going to be the commentary around the Australian dollar. Since the March meeting the AUD has risen from 71.50c US to 75.75 (at the time of the meeting) having exceeded 76.50 just before the meeting. Astute observers of the Reserve Bank know that the key currency measure is the Australian trade weighted index which also had risen from 61.30 to 64.20 between meetings (an increase of 4.7%). The question was whether the Governor would attempt to ‘talk down’ the AUD along the lines he used through 2014 and up until July 2015. In fact in July 2015 when the AUD was 74.5c US and the TWI 62.5 he noted “further depreciation seems both likely and necessary”.The broad commodity price index was around the same level in July last year as it is today.
In our preview we commented that it was unlikely that the Governor would attempt to talk down the currency. In the event that proved to be correct. He certainly recognised that the AUD had risen (“somewhat”) and partly attributed it to monetary policy overseas. He also noted that an appreciating exchange rate could complicate the economic adjustment. All of these remarks are factual rather than indicating a clear intention to bring down the AUD. We can only conclude that a further substantial appreciation in the AUD would be necessary to trigger a policy response. It is interesting that the AUD lifted above 76c US in the aftermath of the statement indicating that currency markets at least were expecting stronger negative sentiment towards the recent rise in the AUD.
There has been recent talk about the importance of the upcoming inflation report due out on April 27. Westpac expects that the underlying inflation will print at 0.6%qtr consistent with the Bank’s current forecast that underlying inflation print 2.5% for the year. Surprises on inflation are always important indicators for policy and it is significant that the Governor referred to “new information … to assess the outlook for inflation”. With global financial markets settling down since the March statement the inflation report has replaced “recent financial turbulence” as the important new source of information along with labour market conditions.
A possible compromise for the Bank to put indirect downward pressure on the AUD would have been a more downbeat view on China than we saw in March. In the event the statement’s line on China was the same as March: “China’s growth rate has continued to moderate”.
Since the March meeting the Board has had the benefit of the December quarter GDP report which showed that the Australian economy grew by 3% in 2015 compared to the Bank’s forecast in February 2016 of 2.5%. Such results encouraged the Governor to continue to be reasonably upbeat about the economy: “available information suggested the economy is continuing to rebalance”; “the Board judged that there were reasonable prospects for continued growth in the economy”.
There was no change in the commentary on the housing market while the stronger growth confirmed, from the Bank’s perspective, the improved labour market conditions.
Conclusion
We are retaining our call that rates will remain on hold for the remainder of the year. That is predicated on the Australian dollar remaining broadly in the 70-76c US range. Factors that will assist the containment of the recent lift in the AUD will be a tightening by the US Federal Reserve in June and ongoing concerns about stability in China. Today’s statement certainly does not identify a trigger level for the AUD to elicit a policy response. We do not envisage a further significant surge in the AUD and remain comfortable with a steady policy outlook.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
</body></html>

Rates will remain on hold for the remainder of the year: Westpac's Bill Evans

<html><body>
GUEST OBSERVER
The Reserve Bank Board meets next week on April 5. We expect that the Board will decide to hold rates steady.
It remains our long held view that the RBA will keep rates on hold for the remainder of 2016.
Steady rates will come as no surprise to markets with the probability of a move that is priced into the curve running at just around 5 percent.
We have consistently argued that any move from here, at these low rate levels, is only likely to occur at the February, May, August, and November meetings. Those meetings precede the quarterly Statement on Monetary Policy when the Bank can release revised forecasts which are likely to be used to justify any move.
Market probabilities for the next “live” month, May, are only around 25 percent. A complication for the meeting in May is that it will now coincide with the release of the Federal Budget rather than precede the Budget by one week.
The market based probability of a cut by June has moved to 40 percent with a 100 percent probability of a cut priced in for December.
The most important market development since the last Board meeting on March 1 has been the surge in the Australian dollar. The currency has jumped from USD0.715 to USD 0.765, a 7 percent appreciation against the USD.
The Reserve Bank puts its emphasis on the Trade Weighted Index (TWI) where the movement has been from 61.3 to 64.2 (an increase of 4.7 percent).
Supporting the lift in the TWI has been a rise in Australia’s export commodity prices. Westpac ‘s Index of Commodity Export prices (including Iron Ore and Coal – WCFI) has lifted from 155 to 166 (up 7 percent) since the Board meeting in March. The spot iron ore price has surprised by increasing to US$54/t, up from $50 at the end of February and bouncing off the December low of $38 - despite plentiful supply and weak demand.
By far the most important issue around the announcement at 2:30pm next Tuesday will be whether the Governor decides to strengthen his commentary around the Australian dollar. Since August last year the commentary has been along the lines of the March Statement “the exchange rate has been adjusting to the evolving economic outlook”.
Recall that back in July last year he stated, “Further depreciation seems both likely and necessary…”. At that time the AUD was at USD 0.745 and the TWI at 62.5. Westpac’s broad commodity price Index stood at 176.
However by August he had adopted the benign, “The exchange rate has been adjusting to the significant declines in key commodity prices”.
By that time the AUD had stabilised at USD 0.74 and the TWI had settled at 62.0. Westpac’s Commodity Price Index had also held at 171.
Given there was little change between July and August the decision to soften the language in August implies that consideration must have been given to softening the language around the AUD at the July meeting. The Bank was probably looking for some sign of stability before changing the message.
Using strong language around the AUD had, arguably, proved to be a successful strategy in the period from March 2014 (when the Governor first referred to the AUD as being high by historical standards) until August 2015 when he adopted the “adjusting” commentary. Over that period the AUD had fallen from USD 0.895 to USD 0.74 (down 17 percent) while the TWI had fallen from 68.7 to 62.0 (down 11 percent).
Certainly other factors also assisted – Westpac’s Commodity Price Index fell from 304 to 171 (down 44 percent) while the Governor cut the overnight cash rate from 2.5 percent to 2.0 percent in the latter stages of that period.
Consider two points – the RBA would have assessed the “talk down” strategy as having been successful (although the AUD was little changed until November 2014 when markets started to detect a possible rate cut) and the precedent from July 2015 (TWI at 62.5; commodities at 176) compared with today (TWI at 64.2 and commodities at 166).
Those two points indicate that the Governor will certainly discuss reintroducing the strategy of “talking down” the AUD. That would imply changing the language around the AUD from “adjusting to the evolving economic outlook” to something like “a lower AUD seems both likely and necessary”.
Such a change in strategy around the AUD commentary would be very significant.
Most importantly it would alert markets that the Bank was uncomfortable with recent developments in the AUD and may be prepared to use interest rates to achieve its objective. (Arguably, the lesson from 2014, where there was little impact on AUD until markets started anticipating lower rates, points to that conclusion). Changing that commentary would certainly see markets increasing rate cut probabilities in the face of any further appreciation in the AUD.
But we also need to remember that central banks are inherently conservative institutions. We expect that, like ourselves, the RBA will be sceptical about the recent “recovery” in commodity prices and, more importantly, like ourselves, still expects the Federal Reserve to raise rates in June.
Buying some time before changing the strategy seems like the most prudent approach in the current circumstances. After all, the boost in the AUD has occurred suddenly in the space of just one month and a prudent patient approach seems the more likely policy outcome at this stage.
Accordingly, we do not expect to see any significant changes in the Governor’s Statement next week.
Bill Evans is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
</body></html>

RBA on hold, unchanged rhetoric on AUD: Westpac's Bill Evans

<html><body>
GUEST OBSERVER
The minutes of the March monetary policy meeting of the Board of the RBA provided no real surprises. When we assessed the Governor’s statement following the March meeting we pointed out that the key sentence “Members noted that continued low inflation would provide scope to ease monetary policy further, should that be appropriate to lend support to demand” had been changed from the February statement to include the word “would” instead of “may”. We interpreted that as a clear strengthening of the easing bias.
That decision may have been prompted by a concern that the December quarter GDP report that was set to be released the following day was going to show a significant slowdown in growth. As it turned out the report showed growth in 2015 to be 3%, comfortably above trend growth of 2.75%. In the minutes it is noted that it was reported to the Board that based on data available “growth appeared to have been slightly below average in the December quarter and over 2015 as a whole”. Clearly this assessment proved to be more cautious than turned out to be the final result. It is reasonable to argue that knowledge of the stronger GDP may have allowed the Board to retain its earlier more modest easing bias.
Of course we were also interested in the assessment of the surprise rise in the unemployment rate from 5.8% to 6.0% in January. The minutes while recognising that development point out that “leading indicators of employment had increased further and were consistent with employment growth in the months ahead”.
The minutes also clarified the relevance of the Capex survey. While the particularly weak Capex survey pointed out further but not surprising large falls in mining investment the picture around non-mining investment from the survey seemed to be overly pessimistic. The minutes point out that roughly half of non-mining investment is not covered by the Capex survey and that it had on occasions proved to be unreliable. Further boosting the view around business is the observation that surveys continue to point to conditions and capacity utilisation remaining above average levels.
The minutes have qualified the assessment that low wage growth points to some spare capacity in the labour market. They speculate that weak wages growth may be due to increasing globalisation. 
There is a long discussion on China, particularly around longer run economic performance and risks to growth. The discussion covers potential financial problems in China but concludes that China’s low household debt and low level of foreign currency debt gave it much more protection from a crisis than in other emerging economies.
At the time of the last meeting the AUD was around USD0.715, little changed from the February meeting. With the currency subsequently rising to USD0.75 there may have been some temptation to use this document to signal any discomfort. This has not happened and the term “responded to the evolving economic outlook” has been maintained.
Conclusion
The minutes provide some insight into expectations around GDP; reaction to the surprise rise in the unemployment rate in January; and the weak Capex report. The ‘spin’ on all of these developments indicates a Bank that is comfortably on hold. However clearly considerable attention is being paid by the Bank to developments in China and sudden adverse developments in that region would undoubtedly prompt consideration for policy change.
We will have to await new communication from the Bank to assess its degree of unrest around the recent sharp jump in the AUD.
Westpac continues to expect that the Bank will remain on hold for the remainder of the course of 2016.
Bill Evans is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
</body></html>

No surprises in RBA minutes; positive spin on key data points to rates on hold: Westpac's Bill Evans

<html><body>
GUEST OBSERVER
The minutes of the monetary policy meeting of the Reserve Bank Board for February provided no surprises given that we have recently seen the Statement on Monetary Policy (SoMP) and the Governor’s testimony to the House of Reps Standing Committee on Economics.
The key theme in those communications is repeated - that the Board will be assessing whether “the recent improvement in labour market conditions was continuing and whether recent financial market turbulence presaged weaker global and domestic demand”.
The tone of the discussion on the domestic economy was positive.
The minutes noted that domestic data had on balance been positive and that there were reasonable prospects for growth to increase gradually over the forecast period. Household consumption was seen to be growing around trend and there was evidence that the low interest rates were supporting growth in consumption and dwelling investment with the lower exchange rate boosting demand.
Whereas over the last year or so the commentary on the drag from mining investment tended to point to an intensifying of that drag the commentary now points out that the peak drag from mining investment is now likely to be in 2015-16 and the drag will lessen over subsequent years.
We are aware that the Bank has been frustrated by the lack of pick up in non mining business investment and the minutes conclude that there is now little prospect of that pick up in the near term. However, the minutes do point out that business surveys are at above average levels and business lending has picked up.
There is more information on the Banks’ liaison contacts around the economy. They note that the demand for high density housing outside Perth has been sufficient to absorb the increase in supply, although an increasing number of projects have been put on hold.
Other liaison shows that in the retail sector trading conditions had improved in the Christmas and post-Christmas periods. Low interest rates, lower petrol prices and increasing employment were expected to continue to support household consumption growth.
The minutes also provided further interpretation of the strong employment data pointing out that output growth in the services sector had been strong with this sector being more labour intensive than others. Of course the Governor indicated in his Parliamentary Q&amp;A that while he recognised there may be some technical difficulties with the current employment data he expected that the signal around the unemployment rate itself was reliable.
In the recent SoMP the Bank forecast that the unemployment rate would continue to fall from current levels. While this was the Governor’s interpretation of the strong data the minutes do balance this view somewhat by pointing out that strong employment growth in conjunction with below average GDP growth created some uncertainty.
The commentary around international conditions was broadly unchanged with the forecast for trading partner growth expected to remain a little below decade average.
The one exception to this steady commentary was around China. Here the detail seems to be more pessimistic. Longer term structural factors such as declining growth in productivity and the urban working age population were also seen to be important. Deflationary pressures were persisting and there are concerns that the interaction between slowing growth, low inflation, and high and increasing levels of debt intensified uncertainty around the outlook. The minutes even speculated on the impact of a sharp slowing in economic activity that would spill over into the region including Australia.
The minutes contained a detailed discussion of global financial markets including the challenges for the Chinese authorities in managing the exchange rate in the face of depreciation pressure from private capital outflows. However, there was no evidence or speculation that these developments would pose substantial risks for Australia including funding costs for Australian banks which “had increased a little from their low levels recently”. As was the case with the Governor in his Parliamentary presentation, the minutes pointed out that the cost of new long term wholesale funding remained below the cost of maturing debt.
Conclusion
The minutes of course repeat the “soft easing bias” stance with the words “the outlook for continued low inflation may provide scope for easier monetary policy, should that be appropriate to lend further support to demand”.
Our reading of the minutes however suggest that at the moment the Board does not believe that further support will be necessary and it will take some months to determine whether that approach should change. Although we must be mindful of the risks of the feedback to the domestic economy of the current global financial turbulence we continue to maintain the view that rates will remain on hold in 2016.
Bill Evans is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
</body></html>

RBA's positive outlook for the Australian economy: Westpac's Bill Evans

<html><body><div class="page" title="Page 1">
<div class="section">The Westpac Melbourne Institute Index of Consumer Sentiment rose by 4.2% in February to 101.3 from 97.3 in January. <div class="layoutArea">
<div class="column">
The Index has now recovered all the ground it lost in January when it fell by 3.5%. 
The Index has now returned to a level (above 100) where optimists outnumber pessimists. This is good news in that there have only been five months over the last two years when we have had optimists in the ascendency. 
Last month we interpreted the 3.5% fall in the Index as being mainly due to respondents’ concerns with the sharp falls in share markets and the oil price from the beginning of the year. 
Between the beginning of the year and the final day of the January survey Australia’s share price Index fell by around 8% and the oil price was down by 20%. 
Over the four weeks to the end of this February survey there has been little net movement in either share markets or the oil price although we have continued to see significant volatility. Respondents were clearly relieved that markets did not follow on from the steep declines we saw in early January. 
While the plunge in the oil price is disturbing from a market perspective, households are now benefitting from lower petrol prices. 
Since the survey in January “average pump price” has fallen by 8.5% providing households with a decent boost to disposable incomes. 
It is important to note that since the February survey closed on February 6 there has been renewed weakness with the Australian share market down by nearly 3% and oil prices down by 8%. 
Of course it is too early to speculate whether markets will continue to weaken over the next few weeks. 
The significant influence of markets on the recent Confidence measures is best demonstrated in the component of the Index measuring how respondents assess family finances relative to a year ago. 
In its recent Statement on Monetary Policy the Reserve Bank highlighted this component in its discussion on consumption indicators. 
In today’s survey ‘family finances relative to a year ago’ lifted by 11.3% following a 9.4% fall in January. This component of the Index is now up by 3.4% compared to a year ago. 
The other component of the Index which measures respondents’ assessments of their own financial position – ‘family finances over the next 12 months’ – was also strong – rising by 3.8%. 
The outlook for the economy improved by less than respondents’ own financial assessments. The sub-indexes tracking expectations for ‘economic conditions over the next 12 months’ fell by 0.6% and ‘economic conditions over the next 5 years’ increased by 4.0%.
<a href="/images/2016/02/10/Screen%20Shot%202016-02-10%20at%2011.26.56%20am.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/02/10/Screen%20Shot%202016-02-10%20at%2011.26.56%20am.png" alt="" width="371" height="244">
 
 
</div>
<div class="column">
Retail signals were also encouraging with the ‘time to buy a major household item’ sub-index up by 3.1%. 
There has been a disappointing deterioration in respondents’ confidence around the jobs market. Despite ongoing strong employment reports and a marked fall in the unemployment rate the Westpac Melbourne Institute Index of Unemployment Expectations increased by 1.9% to now be 7.7% above its recent low in October (recall that higher reads indicate a more pessimistic outlook for unemployment). Certainly, the Index is still below its level from a year ago by 1.7% but that compares with October when it was down by 9.2% over the previous year and was providing a signal quite consistent with the improving employment reports. 
After sending some encouraging signals in January, sentiment toward housing soured again in February. Some of this variation is likely to be seasonal. The ‘time to buy a dwelling’ index fell 12% to 99.3 after increasing by 14% in January. The Index is now back at its December level. It is 21% below its level of a year ago. 
Despite the overall Index being back at its December level there has been significant movement amongst the states with NSW and Victoria substantially above the December levels and the smaller states all well below. 
We saw a similar story for House Price Expectations. After lifting by 20.5% in January this Index fell by 12.5% in February. However the Index is still comfortably above its December lows. 
The Reserve Bank Board next meets on March 1. Following the recent turmoil, markets are convinced that the Reserve Bank will be cutting rates by May, if not earlier. Today’s report highlights that one of the Bank’s most significant concerns of whether international developments will weigh on domestic demand will need more time to resolve. Certainly the resilience of Consumer 
<div class="page" title="Page 2">
<div class="section">
<div class="layoutArea">
<div class="column">
Sentiment, and in particular, respondents’ assessments of their own financial position are not pointing to a significant deterioration in domestic demand. 
The other key issue for the Bank is whether recent momentum in the labour market can be sustained. In that regard today’s report provides a less encouraging insight with the Westpac Melbourne Institute Index of Unemployment Expectations printing a disappointing result. 
We are maintaining our call that rates will remain on hold over the course of 2016.
<a href="/images/2016/02/10/Screen%20Shot%202016-02-10%20at%2011.29.03%20am.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/02/10/Screen%20Shot%202016-02-10%20at%2011.29.03%20am.png" alt="" width="595" height="188">
 
</div>
</div>
<div class="layoutArea"> </div>
</div>
</div>
</div>
</div>
</div>
</div></body></html>

Consumer sentiment bounces back: Westpac's chief economist Bill Evans

<html><body>
GUEST OBSERVER
As expected, the Board of the Reserve Bank decided to leave the cash rate unchanged at 2.0% in February.
In a departure from recent practise the Governor highlighted the two key forces that will be most significant in the Board’s future decisions are: firstly, “whether the recent improvement in labour market conditions is continuing”; and secondly, “whether the recent financial turbulence portends weaker global and domestic demand”.
This is significant in that global market conditions have been elevated as important factors in the bank’s thinking.
However as indicated global volatility will be insufficient in its own right if there is no clear evidence of a feed through effect, particularly to domestic demand.
Measures of particular importance here will be consumer and business confidence.
To date the Bank notes that business conditions have moved to above average levels and we add that the recent 3.5% fall in the Westpac Consumer Sentiment Index, in response to market fluctuations, could well have been an over-reaction given the lack of other information available over the holiday period.
Certainly, to date the Bank appears to be gaining confidence around domestic economic momentum pointing out in today’s statement that: “the non mining parts of the economy strengthened during 2015”.
That compared with the December statement: “business surveys suggest a gradual improvement in conditions in non mining sectors over the past year.”
As we expected, the Board retained the moderate easing bias sentence: “Continued low inflation may provide scope for easier policy, should that be appropriate to lend support to demand”.
This is in fact somewhat stronger than the December statement which referred to “the outlook for inflation may afford scope ...” In fact, the commentary around inflation appears to recognise a lower inflation trajectory than indicated in December.
In December: “inflation is forecast to be consistent with the target over the next one to two years”. In today’s statement: “consumer price inflation is likely to remain low over the next year or two”.
The test of whether this wording is significantly different will come with the Bank’s inflation forecasts which are refreshed in February.
These forecasts will be released with the February Statement on Monetary Policy on February 5.
Our assessment has been that the Bank will retain the 2-3% inflation range in 2016 but there must be some doubt to this assessment based on the wording in the Governor’s statement today.
Other parts of the statement provided no surprises.
With the AUD having fallen from USD 0.73 to USD 0.71 since the December Board meeting it was expected that the Governor would continue to describe the currency as having “continued its adjustment to the evolving economic outlook”.
In December the housing market was described as: “the pace of growth in dwelling prices has moderated in Melbourne and Sydney over recent months”.
Despite a sharper than expected slowdown in prices in the last few months the description of the housing market remains the same.
In some recognition of the global volatility the Bank assesses that the global economy will grow “at a lower pace than earlier expected” highlighting weakness in emerging market economies including China.
Conclusion
Through all this market volatility and confident market pricing that RBA rate cuts could be expected as early as November last year Westpac has held the line that rates would remain on hold for the second half of 2015 and throughout 2016.
There is not enough in today’s statement for us to change that view.
In terms of the key issues highlighted by the Governor we do not expect to see a sustained continuation of current market volatility and certainly do not anticipate financial volatility substantially weakening domestic demand.
We do accept that recent job reports have run somewhat ahead of our expectations and anticipate a modest ( catch up) lift in the unemployment rate over the course of the next six months.
That development alone will continue to give markets hope that the RBA will cut rates further but we do not believe that the conditions will be there to drive that eventual result.
Bill Evans is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
</body></html>

Rates on hold through 2016: 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

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News