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EXPERT OBSERVER
Westpac now expects that the Reserve Bank will delay its next cut in the cash rate to April with the final cut to 0.25% occurring in August.
Prior to the release of the surprisingly strong December Employment Report we had expected the cuts to be timed for February and June.
Our analysis of the December Board Minutes highlighted that, with the Board committing to review its assessment of the economy in February, it seemed likely that the Board would have been prepared to cut the cash rate by 0.25% at that meeting.
However we did note that, “The flow of economic data over the next six weeks will be critical to that decision, particularly the labour market; retail sales and confidence”. (Economic Bulletin, December 17).
Although the November retail sales report printed a strong 0.9% we were comfortable to attribute much of that out performance to the “Black Friday” effect expecting a sizeable pull back in retail sales in December, (to be released on 6th of February).
The Westpac-MI Consumer Sentiment Index fell by 1.8% in January to 93.4 – consistent with a down beat consumer.
However, the Employment Report was always going to be the most important data release.
Recall that in the December minutes the Board concluded that, "The Board would continue to monitor developments, including in the labour market, and was prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time”.
The November report showed a tick down in the unemployment rate from 5.3% to 5.2% – Westpac expected that the December Report would see a reversion back to 5.3% but the actual report printed a further fall in the unemployment rate to 5.1%.
This fall in the unemployment rate is not unprecedented. Over the last five years there have been six occasions when the unemployment rate has fallen in back to back months by a total of 0.2% or more.
Read full report <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2020/January/er20200124BullDelayRBACashRate.pdf" target="_blank" data-auth="NotApplicable">'RBA delay cash rate' (PDF 74kb)</a>
BILL EVANS is the Chief Economist for Westpac
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Westpac expects RBA and USA to delay rate cuts: Bill Evans

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The Westpac-Melbourne Institute Index of Consumer Sentiment declined 1.8% to 93.4 in January from 95.1 in December.
It is entirely reasonable to have expected that the Index would have fallen during this period of devastating bushfires. Perhaps it is somewhat surprising that the fall in the Index was not more severe particularly in light of the 5.8% fall we saw during the Queensland floods in 2011.
However the fall in the Index during the floods was from 111.0 to 104.6 – overall confidence levels during that period were very high – much higher than we are currently experiencing.
Indeed, since the lows of the Global Financial Crisis where the Index averaged only 89 over a 15 month period from March 2008 to May 2009 there have only been seven monthly readings where the Index has printed below 93.4.
In short, Confidence has been further eroded by the bushfires but because the Index was starting from such a modest level it was likely that the fall in Confidence would be less than some may have expected.
Arguably, because the survey occurred in a week where there was widespread rain the negative impact of the bushfires was somewhat reduced. If the survey had been conducted a few weeks earlier then the Index is likely to have fallen by even more, notwithstanding the very low starting point.
This low level of Confidence is consistent with the generally lack lustre reports on consumer spending. The surprising jump in retail sales which was reported for November is likely to have largely reflected the “Black Friday” effect. A more widespread boost to spending will be required before there are credible grounds to dispute the downbeat signals associated with the consistently low levels of the Index.
Apart from the fires, which would have been the dominant influence on Sentiment for this survey, other factors should have been somewhat supportive. Optimism around financial markets and the global economy has lifted, with the Australian share market up by 6% since the start of the year.
Furthermore, the housing related components of the survey also pointed to ongoing confidence in the housing market.
All the economic components of the Index recorded declines in January.
The ‘economy, next five years’ sub-index fell 3.7% in January and the ‘economy, next 12 months’ sub-index fell 5.4%. Both are down sharply on a year ago (–8.9% and –11.9% respectively).
The ‘time to buy a major household item’ sub-index fell 1.8% in January. At 113.4, the sub-index is well below its long run average of 127 and 4.1% down on last year, suggesting consumers are likely to be extra cautious, particularly in December and January.
Consistent with improved performance of financial markets and housing we saw the “own finances” components remain broadly steady.
The ‘finances vs a year ago’ sub-index rose 0.7% in January and the ‘finances, next 12 months’ sub-index increased by 0.9%.These components are down by 3.1% and 3.2% respectively on a year ago.
The Westpac-Melbourne Institute Unemployment Expectations Index fell 2.9% to 134 in January, up 8.4% on this time last year (recall that higher readings indicate that more consumers expect unemployment to rise in the year ahead). The readings are consistent with a slowdown in jobs growth and steady increases in the unemployment and underemployment rates over the year ahead. Note that Westpac is expecting the unemployment rate to lift to 5.6% from 5.2% over the course of the first half of 2020.
Housing-related sentiment was strong in January, with views on time to buy lifting while price expectations continued to surge.
The ‘time to buy a dwelling’ index rose 5.7% in January to 118.8, nearing the long run average of 120. Despite the increase in this index we expect that it has peaked in this cycle. The index is down by 6.4% from its peak in August, shortly after the low point for prices which occurred in June.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/1/22/7_OBS%20graph.jpg" alt="" width="552" height="387">
Note that, similarly, the index bottomed out at 90.0 in May 2017 – coinciding with the peak in prices in the previous cycle.
On that basis (current level of 118.8 compared to low point of 90.0 in the previous cycle) it certainly appears that price gains have further to run. If, as we expect, this Index loses ground through 2020 then the pace of house price appreciation may slow. Sydney’s low point in the previous cycle was 74 in May 2017. Melbourne’s low point was 83 a little later in August 2017. Currently the Sydney index sits at 117.4 and Melbourne’s is at 105.8, off recent peaks of 130 and 133 respectively.
The Westpac-Melbourne Institute Index of House Price Expectations Index rose 8.1% in January to 151.48, up a staggering 58% over the year. While the Index has reached higher levels in previous price cycles the boost in optimism has not been as dramatic as we are witnessing in this cycle. Before, the previous peak (which had outstripped the current level of 151.48) the annual lift in the index was “only” 26.7%.
“The “Time to Buy” Index and the “House Price Expectations “Index are both likely to provide useful lead indicators of the shape of this current house price cycle. For now, the indexes are indicating that this current period of positive price action is unlikely to end in the near term.
The Reserve Bank Board next meets on February 4. Westpac expects that the Board will decide to cut the cash rate by 0.25% to 0.5%.
Markets are not convinced. Market probabilities for a rate cut are priced at around 50%.
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/1/22/7_OBS%20Table.jpg" alt="" width="847" height="295">
The other complication around this meeting is that there has, understandably, been no public communication from the Reserve Bank for the weeks of the holiday period.
The minutes of the last Board meeting therefore take on considerable importance. From our perspective the key observations were that the Board would review the outlook in February (unusual to be so specific in minutes); the ongoing concern with weak wages growth; and the emphasis on the effectiveness of monetary policy.
In fact, the Governor has previously emphasised the boost to spending from a positive wealth effect of higher house prices and the direct impact of rising housing turnover on expenditure on household goods.
There has been recent media criticism about the effectiveness of monetary policy but the Reserve Bank Board is very clear in the minutes, “While members recognised the negative confidence effects for some parts of the community arising from lower interest rates, they judged that the impact of these effects was unlikely to outweigh the stimulus to the economy from lower interest rates”.
Finally, it is always reasonable to point to the limited further scope the Reserve Bank has with respect to easing rates. However the Board has also been clear on that point, arguing that it is the level rather than the change in rates that counts, so if lower rates are needed then best to move regardless of whether there is limited further scope.
The decision to cut the cash rate in February is also expected to be supported by a downgrade in the growth forecasts for 2020.
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Consumer sentiment falls further: Bill Evans  

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EXPERT OBSERVER
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The minutes of the December monetary policy meeting of the Reserve Bank Board have made it clear that the Board will be reassessing the economic outlook next February. Whilst it seems reasonable at the end of the year to note that a review will occur at the beginning of the next year, this has not been specifically noted in December minutes in previous years.
Further evidence of the importance of this signal is that the minutes note “economic growth and the unemployment rate remain broadly consistent with the forecasts, but members agreed that it will be concerning if there were a deterioration in the outlook”.
These two observations from the minutes strongly point to the unusual importance of the data flow over the next two months.
The Board has already noted that since the November economic forecasts were finalised “The Capex survey ( showed) … non-mining investment in 2019/20 was expected to be weaker than previously envisaged”.
We were not surprised that the Board did not repeat the comment in the November minutes that “a case could be made to ease monetary policy at this meeting”. Although that language strengthens the signal that the Board is open to cutting rates further, it loses its impact if repeated for every meeting.
The Board also resolved their views on the impact of lower rates on confidence. The November minutes noted that “they recognised the negative effects of lower interest rates on savers and confidence and… that a further reduction in interest rates could have a different effect on confidence than in the past”. However, in these minutes, the Board resolved that: “the impact of these effects [negative confidence] was unlikely to outweigh the stimulus to the economy of lower interest rates”.
Concerns about weak wages growth remain central to the Board: “it was noted that the current rate of wages growth was not consistent with inflation being sustainably within the target range… nor was it consistent with consumption growth returning to trend”. It was also observed that private sector wages growth “had levelled out in recent quarters, following its gentle upward trend of the previous couple of years”.
Last month, the RBA complimented its standard stated benefits of lower rates — the exchange rate and household and business cash flow — with the boost to house prices lifting wealth and expenditure on household goods. That theme is repeated, although while higher house prices are a benefit in the near-term, it “could be become a source of concern if borrowing were to run too quickly ahead of income growth”. Note that the emphasis is on the risk of higher debt rather than actual house prices, and given the current trend for borrowers to lift repayments to contain debt levels, it is unlikely that the Board will become concerned with rising house prices for some time yet.
With the unemployment rate being such an important source of attention for the Board, it is notable that “employment intentions among the Bank’s  liaison contacts had generally been moderate”. Westpac expects that the unemployment rate will drift higher to around 5.6% in the June quarter from the current 5.3%.
On the international front, there is an improved outlook with the noting that “some of the downside risks had receded”, although the Board remains quite cautious around the outlook for China.
Conclusion
These minutes strengthen our conviction that the Board would be comfortable easing rates further at the February meeting. The flow of economic data over the next six weeks will be critical to that decision, particularly the labour market; retail sales and confidence.
Given our forecasts, Westpac is comfortable with our current view that the RBA will reduce the cash rate from 0.75% to 0.50% at the February Board meeting. 
BILL EVANS is the Chief Economist at Westpac
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RBA highlight importance of February 2020 meeting: Bill Evans

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EXPERT OBSERVER
The Australian economy grew by a disappointing 0.4% in the September quarter for annual growth of 1.7%.
Of most concern is that this represents the fifth consecutive quarter where private final demand, which declined by 0.3% in September, either contracted or was flat.
Within private final demand the most surprising undershoot was household consumption, which expanded by only 0.1%. Over the last year household consumption has grown by only 1.2%, compared to a trend pace of around 2.8%.
This soft outcome for households is despite a 2.5% lift in household disposable income in the quarter, driven by a solid lift in labour income growth (1.1%); a 6.8% fall in tax paid and a 2.5% fall in interest paid (all these measures are nominal). Consequently there was a substantial lift in the savings ratio from 2.7% in the June quarter to 4.8%.This is convincing evidence that uncertain households chose to “save” the tax and interest rate cuts, and then some.
The contraction in the dwelling construction cycle continued into the September quarter. New dwelling construction contracted by 2.8% to be down by 11.0% over the year. With businesses facing flat demand it is not surprising that new equipment investment fell by 4.5% in the quarter (-2.2% for the year) with overall business investment down 2.0% for the quarter (-1.7% for the year).
Growth continued to be boosted by public demand (+1.7% for the quarter and 5.2% for the year).
The Federal Government and the Reserve Bank will be disappointed with this result. A lift in annual output growth from 1.6% to 1.7% is hardly a “gentle turning point” when private final demand contracted by 0.3% following a 0.1% contraction in the June quarter.
Despite a solid boost to incomes, the cautious consumer has chosen to lift its savings rate and hold spending effectively flat. The lift in savings is over and above the policy stimulus - suggesting heightened risk aversion.
RBA rate cuts have had some impact with house prices lifting nationally by 2.3% (including 3.5% in Sydney and Melbourne) in the September quarter. This turnaround has clearly failed to boost spending in the quarter although any wealth effect is likely to have substantial lags, probably in the order of 12 months.
That consumer caution, along with an uncertain global outlook, has constrained business investment while the contraction in the residential construction cycle continues to unfold.
It seems likely that the Reserve Bank will need to lower its optimistic growth forecast for 2020 of 2.8% given it is underpinned by a lift in consumer spending growth to 2.4% (compared to the current 1.2%) and a 6.2% lift in business investment.
Westpac has long held the view that the RBA’s 2020 growth forecasts were overly optimistic. Our forecast for growth in 2020 has been 2.4% following a 2.3% increase in 2019.
The main areas of difference with the RBA have been around the outlook for business investment growth (2.8% compared to 6.2% for the RBA) and dwelling construction (-6.0% compared to -2.6% for the RBA).
Our forecasts for consumer spending were largely aligned (2.3% compared to 2.4% for the RBA).
Following the lower than expected growth in the September quarter and the associated evidence that the household sector is gripped in a sustained period of caution and risk aversion (average quarterly growth in consumption of 0.28% since the September quarter 2018) we have lowered our forecast annualised growth pace for consumer spending in the first half of 2020 from 2.3% to 1.6%.
That lowers our forecast for growth in consumer spending for 2020 from 2.3% to 1.8%.
Along with some other more modest downward adjustments to business investment (2.8% to 2.2% and dwelling construction (-6% to -7.1%) we have lowered our GDP growth forecast for 2020 from 2.4% to 2.1%.
As discussed, that compares with the Reserve Bank’s forecast in November of 2.8%. Accordingly we expect that the RBA, while unlikely to follow Westpac’s forecast exactly, will revise down its 2020 growth forecast from 2.8% to 2.5%. A revision in growth from trend to below trend would represent an appropriate opportunity to deliver on the next rate cut from 0.75% to 0.5%.
That growth revision (from trend to below trend) will be released following its Board meeting on February 4 and, together with an associated boost in the forecast unemployment rate (currently flat lining at 5.2% to end 2020) will make the decision to further cut the overnight cash rate to 0.50%, at that February meeting, a reasonable response.
We expect that cut will be eventually followed by a further cut in June to 0.25%, a little after the Commonwealth Budget which will be released on May 12.
Westpac has argued strongly that the Commonwealth government should bring forward the personal income tax cuts which have been legislated to begin from July 2022. Such a policy initiative would boost the consumer spending profile through the second half of 2020 and in 2021.
A key issue here will be whether the Commonwealth government believes that the bring forward can be accommodated while still delivering on the election commitment of fiscal surpluses from 2019/20.
Current Budget forecasts point to surpluses of $7bn (2019/20); $11bn (2020/21); $17.8bn (2021/2022); and $9.2bn (2022/23).
The approach would be to bring forward the $14bn in tax cuts in two suggested stages of $7bn in 2020/2021 and 2021/22. That would allow surpluses in 2020/21 and 2021/22 of $4bn and $3.8bn respectively – tight but nevertheless surpluses.
In that regard the Government’s Mid-Year Economic and Financial Outlook (MYEFO), which is scheduled to print before December 20, will be very important.
As with our expectation that the RBA will be revising down its growth forecasts in February the government may be forced to do the same in the MYEFO. Of most interest will be the impact on the fiscal outlook of a likely downward revision in the forecast for the growth rate in the Wage Price Index (currently 2.75% through 2019/2020 and 3.25% in 2020/2021). Note that the RBA is forecasting 2.3% in 2020 and 2021.
GDP growth is forecast at 2.75% ( 2019/20) and 2.75% (2020/21) compared with Westpac’s forecasts of 2.0% and 2.2% respectively.
On the other hand, the Government has forecast the iron price at USD 55 per tonne by end March 2020 – currently USD 89 per tonne and clearly a significant underestimate. The revised fiscal outlook will be important for gauging whether the government assesses that there will be sufficient fiscal scope to accommodate the bring forward of the personal income tax cuts.
Even with a bring forward of the tax cuts, we assess that the economic environment (particularly around our forecast 5.6% unemployment rate through most of 2020) will be sufficiently threatening for the RBA to see the need for a second rate cut in June 2020 to the “effective lower bound” of 0.25%.
From that point, in an environment where we expect the US Federal Reserve to be cutting rates – putting downward pressure on global rates – the RBA will need to adopt a QE style policy to contain any unwelcome boost to the AUD as well as put further downward pressure on the risk free rate. That policy is likely to take the form of a regular monthly purchase program of $2-3bn comprised of Commonwealth government bonds and probably, selected semi government securities. The program is likely to be open ended, contingent on the economic and inflation outlook.
Evidence from offshore, as set out in the Bank of International Settlements study (CGFS Papers No. 63) point to “overall, the effects have been estimated as positive for both output and inflation, but these assessments are subject to a high degree of uncertainty.”
Channels recognised in the studies refer to reductions in the risk free rate; impacts on bank lending (as reserves of the banks are increased); currency effects; and spill overs to other private sector rates.
Such a modest purchase program could be extended well into 2021 by which time we expect the economic outlook will have shown steady improvement.
BILL EVANS is the Chief Economist for Westpac
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RBA and Government likely to lower forecasts following GDP report: Bill Evans

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EXPERT OBSERVER
As expected, the Reserve Bank Board decided to leave the cash rate unchanged at 0.75%.
The key themes around the policy outlook which have been consistently promoted in these RBA statements in recent months have been repeated.
Firstly, the Board “continues to monitor developments, including in the labour market”, and secondly, “the Board is prepared to ease monetary policy further if needed”.
However, an additional theme appears in today’s Decision Statement, “long and variable lags in the transmission of monetary policy”. This is not a new observation, given that it has appeared in Board minutes in the past but being elevated to the more succinct Decision Statement gives it some enhanced prominence.
The recent surge in established house prices, particularly in Sydney and Melbourne, has attracted further interest. The Governor now notes that the lower cash rate “has also boosted asset prices, which in time should lead to increased spending, including on residential construction”.
The relevance of house prices per se, and their impact on the real economy, will be a major source of policy discussion in the first half of 2020. The only other significant change to the Decision Statement in November is a more balanced outlook for the global economy – “while the risks are still tilted to the downside, some of these risks have lessened recently”.
Other consistent themes are: “economy appears to have reached a gentle turning point”, “the main domestic uncertainty continues to be the outlook for consumption”, and “the unemployment rate… is expected to remain around this level [5¼ per cent] for some time”.
However, in a direct reference to the need for further policy stimulus, the theme that “the Australian economy can sustain lower rates of unemployment and underemployment” stands out.
Finally, in reference to the turnaround in established housing markets, the Decision Statement still notes that “new dwelling activity is still declining and growth in housing credit remains low”.
Conclusion
This Decision Statement is a little more positive than we have seen in the past, mainly through the linking of rising house prices to a potential lift in spending and residential construction. It also continues to emphasise that the Board is prepared to be patient, is monitoring developments, that policy has long and variable lags, and is prepared to ease  "if necessary”.
If we were expecting a policy move over the next month, then this Decision Statement would raise some questions. However, our forecast that there will be a cut at the February meeting looks much safer. Over the course of the next few months, there will be a clear test of the RBA’s view that the unemployment rate will hold steady. There will also be further evidence around the strength of the consumer with the national accounts to be released tomorrow as well as two more retail sales reports.
The response of the Australian dollar to any confidence that the RBA will be on hold in February will also be important. We assess that one of the factors behind the consistently low AUD is the expectation that the RBA will continue down its easing path.
Overall, despite this emphasis on “monitoring” and the slightly more upbeat discussion on the Australian economy, we still feel confident that the rate cut in February will be delivered.
Furthermore, we argue that the growth, the unemployment rate, and inflation developments through 2020 will require further attention from the RBA culminating in a final rate cut to 0.25% in June. From that point, with further easing still required, the RBA will need to move to a form of Quantitative Easing, based on the regular monthly purchase of around AUD 2-3 billion of government securities.
BILL EVANS is Chief Economist for Westpac. 
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RBA holds the cash rate steady; emphasises scope to ease further: Bill Evans

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EXPERT OBSERVER
Westpac now expects two rate cuts next year from the RBA with the cash rate cut to 0.25% in June 2020. Quantitative Easing is also expected to begin in the second half of 2020.
Westpac has not changed its rate call for the RBA since July 24 this year. At that time we envisaged two more cuts from the RBA in October 2019 and in February 2020. That would have seen the terminal cash rate in this cycle at 0.5%.
We expected that the final cut in February would have been insufficient to provide the RBA with enough comfort that the economy was moving into line with their growth; inflation; and unemployment targets.
Consequently, we expected that the RBA would have seen the need for unconventional policies, largely centred around the purchase of Australian government securities and clear forward guidance, to maintain the emphasis that it was still easing policy.
That emphasis was going to be important to maintain downward pressure on the Australian dollar, in particular.
Of course there was always the option to push the cash rate even lower than 0.5% but we assessed that the RBA would see the impact on confidence and inflationary expectations of even lower rates to be counter-productive.
The minutes of the November RBA Board meeting provided some support to our view when it was noted the Board “also discussed the possibility that a further reduction in interest rates could have a different effect on confidence than in the past, when interest rates were at higher levels”.
That observation was certainly consistent with the 5.5% fall in the Westpac MI Consumer Sentiment Index following the announcement of the rate cut in October. Concerns around the implications of ultra- low rates for the state of the economy along with negative publicity around the limited impact of rate cuts on private sector rates are likely to have largely explained that development.
Indeed, since the RBA started this current easing cycle, the Index has fallen by 4.2% to now be firmly in the range where pessimists outnumber optimists.
However in a speech to the Australian Business Economists last night the Governor stated, “Our current thinking is that QE becomes an option to be considered at a cash rate of 0.25%, but not before that.” During the presentation he noted that 0.25% represents the Effective Lower Bound of the cash rate as the interest rate paid on reserves at the RBA is 25bp under the prevailing cash rate and therefore would mean the “Reserve Bank would already be at zero”.
Read full report <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2019/November/er20191127BullRBACutCashRate.pdf">'RBA cut cash rate' (PDF 91kb)</a>
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BILL EVANS is the Chief Economist for Westpac
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RBA will cut cash rate to 0.25% by June 2020: Bill Evans

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EXPERT OBSERVER
The minutes of the November monetary policy meeting of the Reserve Bank Board give us no significant reason to change our view that the next rate cut will occur in February.
While some forecasters have been promoting the idea of a move in December, the minutes provided the flavour of a Board that is in no hurry to make the next cut. The minutes conclude that “the Board would continue to monitor developments”. It also referred to “having already delivered a substantial monetary stimulus in recent months, there was a case to wait and assess the effects of this stimulus, especially given the long and variable lags”.
Nevertheless, the minutes do not want to leave the reader in any doubt that the Board continues to have a clear easing bias. The minutes concluded that the Board “was prepared to ease monetary policy further if needed” and also noted that “members reviewed the case for a further reduction at the present meeting”.
Some commentaries interpreted the latter remark as indicating that the Board was close to cutting rates at the meeting. However, my view is that it was used to emphasise a strong easing bias, particularly aimed at containing any upward drift in the AUD rather than any serious risk of an unexpected move in November.
The second important issue around the policy outlook is the “effective lower bound” (ELB) of the cash rate. Westpac has argued since July that the ELB will prove to be 0.50% and will be reached in February 2020. One factor that has been important to our thinking has been the response of the Westpac-MI Consumer Sentiment index to the rate cuts that began in June 2019. The index has been on a clear downward trend ( see Figure 1) since that first cut and the Board has recognised that by noting that “a further reduction in interest rates could have a different effect on confidence than in the past”. Put another way, the Board “recognised the negative effects of lower interest rates on savers and confidence”.
There are two elements to this downward pressure on confidence through these recent cuts; firstly the impact on consumers of the explanation behind very low rates and, secondly, the media coverage around the banks’ responses to ultra-low rates.
In that regard, the Board was informed that it appears that banks still have adequate scope to pass on future rate cuts. The minutes noted that “while close to a quarter of deposits were estimated to be earning interest at rates between 0-50bps, most deposits earned interest at rates over 1%”. The RBA reports that banks’ response to the cumulative 75bp reduction in the cash rate was to lower interest on at-call retail deposits by an average of 60-70bps.
As noted above, this reduction in deposit rates is affecting the confidence of savers, whereas the data also showed that borrowers had been repaying existing loans at a faster pace. This observation puts one of the most important channels of monetary policy, a boost to spending from the increased cash flows of borrowers, at some risk.
<a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2019/2019-11-05" target="_blank">Read full report </a><a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2019/November/er20191122BullRBADecemberOnHold.pdf" target="_blank">'RBA December on hold' (PDF 129kb)</a><a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2019/2019-11-05" target="_blank"> </a>
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BILL EVANS is Chief Economist for Westpac
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Ideas for unconventional monetary policy: Bill Evans

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EXPERT OBSERVER
Despite a slight improvement in the month, the Leading Index growth rate remains materially below trend and continues to point to weak economic momentum carrying well into 2020.
This below trend "theme" for the Australian economy is consistent with Westpac’s current forecast for GDP growth in 2020 of 2.4%, compared to a trend growth rate of 2.75%.
The Reserve Bank has recently released its revised growth forecasts for 2019, 2020 and 2021. It has maintained its view that year on year growth in 2020 will return to trend, at 2.8%, for the first calendar year since 2016.
The main differences between Westpac and the RBA are around the timing and extent of the recovery in residential dwelling investment and the outlook for business investment.
We are broadly in agreement that another below trend year for household expenditure can be expected with the outlook particularly dependent on policy responses and the risks being to the downside.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/11/20/Westpac%20Leading%20Index.jpg" alt="">
The Leading Index growth rate has deteriorated over the last six months from –0.53% in May to –0.91% in October. The main components driving the 0.39ppt shift have been a sell-off in commodity prices (–0.43ppts); a more mixed performance on the Australian sharemarket (–0.20ppts); a deterioration in consumers’ unemployment expectations (–0.17ppts), in consumer expectations more generally (–0.10ppts); and a slowdown in monthly hours worked (–0.07ppts).
These negatives have been partially offset by a further improvement in the yield spread following the RBA’s October rate cut (+0.31ppts) and marginal improvements in US industrial production (+0.17ppts) and dwelling approvals (+0.11ppts).
The Reserve Bank Board next meets on December 3. Westpac expects the Board to hold the cash rate steady at that meeting. The minutes of the November Board meeting signalled that the Board continues to hold a clear easing bias while, for now, remaining in ‘monitor mode’.
We expect that by next February the Board will have received enough information on the impact of the three cuts we have seen since June to acknowledge the need to reduce the cash rate by a further 0.25%, maintain a clear easing bias and consider introducing unconventional policies.
BILL EVANS is the Chief Economist at Westpac.
This was first published on <a href="https://westpaciq.westpac.com.au/Article/41208/14186/" target="_blank">Westpac IQ</a>.
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Westpac's Leading Index remains below trend

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The minutes of the November monetary policy meeting of the Reserve Bank Board give us no significant reason to change our view that the next rate cut will occur in February.
While some forecasters have been promoting the idea of a move in December, these minutes provide the flavour of a Board that is in no hurry to make the next cut.
The minutes conclude that “the Board would continue to monitor developments”. It also referred to “having already delivered a substantial monetary stimulus in recent months, there was a case to wait and assess the effects of this stimulus, especially given the long and variable lags”.
Nevertheless, the minutes do not want to leave the reader in any doubt that the Board continues to have a clear easing bias.
The minutes concluded that the Board “was prepared to ease monetary policy further if needed” and also noted that “members reviewed the case for a further reduction at the present meeting”.
The second important issue around the policy outlook is the “effective lower bound” (ELB) of the cash rate.
Westpac has argued since July that the ELB will prove to be 0.50% and will be reached in February 2020. One factor that has been important to our thinking has been the response of the Westpac-MI Consumer Sentiment index to the rate cuts that began in June 2019.
The index has been on a clear downward trend since and the Board has recognised that by noting that “a further reduction in interest rates could have a different effect on confidence than in the past”. Put another way, the Board “recognised the negative effects of lower interest rates on savers and confidence”.
On the other hand, the Board was informed that it appears that Banks still have adequate scope to pass on future rate cuts. The minutes noted that “while close to a quarter of deposits were estimated to be earning interest at rates between 0-50bps, most deposits earned interest at rates over 1%”.
The Banks’ response to the cumulative 75bp reduction in the cash rate was to lower interest on at-call retail deposits by an average of 60-70bps.
As noted above, this reduction in deposit rates is affecting the confidence of savers, whereas the data also showed that borrowers had been repaying existing loans at a faster pace. This observation puts one of the most important channels of monetary policy, a boost to spending from the increased cash flows of borrowers, at some risk.
In our preview to these minutes, we were hopeful that the minutes might cast some light on the sentence in the November Statement on Monetary Policy (SMP), “the Board was mindful that rates were already very low, and that each further cut brings closer the point at which other policy options might come into play”.
The issue here is whether these “other policy options” refer to unconventional monetary policy, fiscal policy, or both. It is most likely “both”. So more details on the unconventional side would have been helpful. The Governor is speaking on “Unconventional Monetary Policy: Some Lessons from Overseas” on November 26.
No doubt, he will cast some light on his thinking in that speech. It is also the last day before the blackout for the December RBA Board meeting.
If he wanted to signal to the market that the very disappointing labour force and wages reports from last week, which printed after the November Board meeting, had swayed his thinking towards a December move, that speech would be the time. However, we would be very surprised, given the earlier discussion about these minutes, to see such a move from the Governor.
The November Board meeting also discusses the Staff’s revised growth outlook. As we noted in the discussion of the SMP, there were very few changes in the RBA’s forecasts. The RBA continues to forecast trend growth (2.8%) in 2020, and above-trend growth (3.1%) in 2021.
Westpac is forecasting 2.4% growth in 2020, with the major differences being around the outlook for business investment and dwelling construction. In fact, the minutes highlight that the RBA remains uncertain about the pace of recovery in the dwelling cycle with one of the key factors being the impact of rising prices in the established market on new construction.
Commentary around the international outlook continues to point to risks being tilted to the downside. However, a key reason justifying the decision not to move in November was around the “decline in pessimism” which had been signalled by global financial markets.
A further reason to delay any more cuts is to await outcomes for the global economy, with the developments around the US-China trade conflict being front of mind.
Conclusion
The case for a December rate cut is heavily downplayed in these minutes, although, as discussed, the meeting occurred before the disappointing wages and employment prints from last week.
We certainly do not believe that those prints will be sufficient to move the RBA away from its current “monitoring” approach and so confirm our forecast that the next cut will occur in February 2020.
The discussion around the impact of low rates on confidence is clearly very significant and gives some support to our view that 0.5% will be the effective lower bound of the cash rate in this cycle. 
<a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2019/2019-11-05" target="_blank">Read the full RBA Minutes</a>.
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BILL EVANS is Chief Economist for Westpac
 
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RBA minutes signal that the Board is in "monitoring" mode: Bill Evans

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EXPERT OBSERVER
The Reserve Bank has released its quarterly Statement on Monetary Policy (SMP). The two key areas of most interest in the Statement are around further policy insights and the RBA’s growth, unemployment and inflation outlook.
The discussion on policy was particularly interesting. The Overview for the Statement, which we expect largely reflects the Governor’s own views, provides the most open analysis of policy options that we have seen. In outlining the policy decision in October, the Overview noted “the Board was mindful that rates were already very low and that each further cut brings closer the point at which other policy options come into play”. This represents a more open approach to the discussion around unconventional policies. To date, that discussion has been characterised by comments such as “unlikely”, whereas this wording indicates almost an automatic move from cash rate policy to other policy options. To be sure, there is no firm commitment to move in that direction but the wording indicates that such a transition to other options may be considered to be a normal approach to policy.
Other issues around a very low cash rate, including that it may “unintentionally convey an overly negative view of the economic outlook” and “the usual channels of policy transmission might be less effective”, also signal that the cash rate cut cycle is nearing an end. That said, lower rates are seen as having some impact. Indeed, the usual channels of lower exchange rate and boosting household disposable income are pointed out. However, a new channel, “higher asset prices”, has been added to the list. Arguably, given that Sydney and Melbourne house prices bottomed out in May, the June and July rate cuts played a significant role in turning those markets. It is of some interest that the SMP highlights this channel as a constructive aspect of interest rate policy.
Commentary on the current policy position signals that rates are almost certain to remain on hold at the December Board meeting. Since the decision in November was part of a plan to allow time to assess the effects of the recent easing of monetary policy as well as global developments, no doubt the RBA’s observation that the low point in global pessimism may have passed is an important aspect of the current policy standing.
On balance, Westpac believes that its assessment that with the unemployment rate still well above the RBA’s target (4.5%) and the RBA seeing that there is a balance between the benefits and costs of lower rates, our view that 0.5% is the effective lower bound and that some transition to unconventional policies is likely is supported by this SMP.
The second point of interest in the SMP is around the RBA’s forecasts. As we anticipated in our preview to this SMP, the key growth forecasts for 2020 of 2.8% which was adopted in August, has been retained in this SMP. That is much higher than Westpac’s forecast of 2.4%. Surprisingly, the forecast in November includes a more optimistic outlook for dwelling construction for 2020 (-2.6%, upgraded from -3.3%) and business investment (+6.2% upgraded from +5.8%). Partially offsetting that more optimistic view is the lowering in growth of public demand from +3.2% to +2.9%. These forecasts for 2020 contrasts with Westpac’s forecast of 2.4% for GDP growth, -6% for dwelling investment, and +2.8% for business investment. Overall, Westpac’s forecast for growth in GNE of 2.3% in 2020 compares to 2.8% from the RBA. Looking further out, the RBA has retained its optimistic growth forecast for 2021 of 3.1% compared to our forecast of 2.7% with a substantial part of the difference being explained by the RBA seeing a much more rapid recovery in the dwelling investment cycle.
This substantial difference between Westpac and the RBA on the construction cycle partly hinges around the link between established house prices and construction activity. Furthermore, even the RBA points out that the current expected pipeline of construction may be overstating actual activity.
There have been some modest downward revisions to the inflation and wages outlook. Even though the unemployment rate profile of 5.2% in December 2020 and 4.9% by December 2021 is unchanged from August, wages growth for December 2021 has been cut from 2.4% to 2.3% (“wages growth is no longer expected to pick up”) and growth in the trimmed mean inflation measure has been cut from 2.1% to 1.9%. It must be particularly uncomfortable for the RBA to be forecasting that underlying and headline inflation will remain below the bottom of the 2-3% target band right out into 2021.
Readers will be aware that on November 6, Westpac advocated the bringing forward of the legislated personal income tax cuts, which had been timed for June 2022, to June 2020 and June 2021 (evenly distributed). If the Federal Government were to take up that policy option, then Westpac’s forecasts for consumer spending, housing activity and business investment will be lifted.
Conclusion
The November SMP provides the clearest insight yet into the RBA’s thinking about policy in 2020. The acceptance that, after rates reach a certain threshold, other policy options “might come into play” is quite significant. The recognition that asset prices are an additional channel of monetary policy and are assessed to be a positive channel is also important.
The overview of the RBA’s growth outlook, while largely unchanged from August, still appears to be overly optimistic, particularly around the residential construction cycle and business investment. On the other hand, the downbeat view on wages, inflation and the unemployment rate make it clear that the RBA does not believe that its job is done and so we can expect further policy action from the RBA in 2020. Westpac continues to expect the RBA to cut to 0.50% in February 2020 and to move to unconventional policies at an appropriate time.
BILL EVANS is the Chief Economist at Westpac
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RBA openly discusses the risks from very low rates: Bill Evans

Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

Bill Evans

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