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EXPERT OBSERVATION 
The RBA minutes clearly indicate that they are willing to cut the cash rate and have set out the conditions that need to be fulfilled for it to occur.
We are encouraged by this new detail, and continue to believe the RBA will cut the cash rate in August and November this year.
The minutes of the April monetary policy meeting of the Reserve Bank Board have provided the clearest signal yet that the Bank would be prepared to cut the cash rate.
Firstly, the final section “Considerations for Monetary Policy” states “a lower level of interest rates could still be expected to support the economy through a depreciation of the exchange rate and via reducing required interest payments on borrowing, freeing up cash for other expenditure”.
The Board even sets out the conditions for a rate cut, “members also discussed the scenario where inflation did not move any higher and unemployment trended up, noting that a decrease in the cash rate would likely be appropriate in these circumstances”.
The Board also notes that “members agreed that there was not a strong case for a near-term adjustment in monetary policy”. We would interpret the “near-term” concept as referring to the next Board meeting in May. We do not believe that statement excludes the possibility of our target timing of August for the first rate cut.
Of course, while the Board refers to “continued strength in the labour market data and moderating GDP growth sending different signals”, it would appear that the labour market data has a higher weighting from a policy perspective.
We are somewhat perplexed by that approach, given that employment is seen to be a lagging variable, and while the lags may be longer in this cycle, we think it is reasonable that the slowdown in expenditure and income growth will eventually weigh on jobs growth.
The minutes even refer to the evidence around forward looking indicators of labour demand being mixed with job advertisements having eased but job vacancies having increased as a share of the labour force. What is unclear is whether businesses, in a climate of softening demand, actually intend filling these vacancies.
We were interested that the Governor excluded his standard growth forecast for the current year in his Statement immediately following the April Board meeting. The minutes also exclude that forecast while pointing out that the 2018 growth rate of 2.3% was “below the forecasts presented in the February Statement on Monetary Policy”.
It appears almost certain that the RBA will lower its growth forecast for 2019 from 3% (above-trend) to 2.75% (around trend). Of course, the RBA has consistently argued that growth in 2020 will be a 0.25% below 2019 due to a slowdown in the contribution to growth from LNG exports. If it is to be true to that approach then it will have to forecast growth in 2020 at 2.5% (below trend).
Traditionally, central banks which are forecasting below trend growth should at the least be adopting an easing bias.
The tension between growth and the labour market data may allow a looser interpretation of the policy stance. Certainly, the approach taken in these minutes appears to point to a bias towards lower rather than higher rates, although ongoing strength in the labour market will keep rates on hold, at least for the time being.
Further support for this ‘bias’ interpretation comes with the observation that “financial market pricing implied that the cash rate was expected to be lowered in the second half of 2019 and then again in 2020”.
While in previous commentaries, the RBA was dismissive of a significant wealth effect, or a near-term downturn in dwelling construction, these minutes are more realistic.
Weakness in consumption, is noted to be concentrated in those items that are historically most correlated with housing prices and housing turnover, and the RBA’s liaison suggested that growth in housing related consumption had remained soft in recent months.
Dwelling investment is noted to be past its peak but there is still uncertainty about how quickly dwelling investment might decline with a large amount of work still in the pipeline. Westpac expects a contraction in new dwelling investment of around 10% in 2019.
Conditions in the established housing market are noted to have remained weak in recent months, with house prices continuing to fall in Sydney, Melbourne and Perth, and even declining in most other capital cities and regional areas.
The RBA offers no forward guidance as to how far this cycle has to run. Westpac expects that this market will remain soft throughout the course of 2019 and well into 2020.
Conclusion
We have been encouraged by these minutes from the perspective of our rate cut call.
The Board has made a clear case for the benefits of lower interest rates, discounting arguments to suggest that it sees little benefit from lowering rates given the very low starting point.
The Board also lays out clearly the conditions for lowering those rates around inflation and the labour market. It appears that it has resolved the uncertainty around the conflicting signals between growth and employment by favouring the labour market.
That is disappointing for us, given that the previous policy responses have been linked to growth forecasts, although we expect that persistently slow growth should begin weigh on the labour market.
While prospects for a policy response in May have disappeared, there is still ample time and data releases to justify our timing that there will be cash rate cuts in August and November.
BILL EVANS is Chief Economist for Westpac.
You can read the full <a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2019/2019-04-02">RBA Statement here</a>.
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RBA Board minutes set out the conditions for a rate cut: Westpac's Bill Evans 

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EXPERT OBSERVER
The Australian dollar has held within a narrow range of USD0.704 to USD0.716 over the month.
Key commodity prices, particularly iron ore, have been stable over the month with spot at around US$90/t. General expectations have been for this price to adjust downwards. For example the government’s forecast for the iron ore price (fob) by March 2020 is US$55/t (Westpac expects US$74/t spot).
Supporting the iron ore price has been ongoing reports from Vale of likely decommissioning of supply following the collapse of the tailings dam in Brumadinho – general expectation is that Vale will decommission around 40t of production lowering overall annual production from 400Mt to 360Mt.
However markets are expecting even larger production cuts to eventuate. Another major producer, Rio Tinto, has also recently been impacted by a supply shock.
On the demand side, confidence is rising in response to China’s commitment to stabilising growth through lifting credit; easing restrictions on the shadow banking sector; supporting bond issues by local governments to finance new infrastructure investment; tax cuts; and some support to housing in selective regions.
This stability at high levels for key commodity prices is providing solid support to the Australian dollar – indeed the fair value of the AUD as measured by commodity prices, is currently holding well in excess of current spot.
On the other hand, interest rate differentials continue to weigh on the AUD. When on February 21, Westpac moved to forecast the RBA would cut the cash rate by 25bps in August and November this year, markets were not anticipating a cut until April next year.
That pricing has now moved forward to August/September with 75% of a second cut priced by mid next year. (pricing COB Wednesday).
However in a Q&amp;A follow-up to a speech on Wednesday to the American Chamber of Commerce in Australia, Deputy Governor Debelle is reported to have noted “Our expectation is that we will see decent growth in the economy…so we won’t have to get to that point [of cutting rates]”.
A test of that assertion will be when the RBA releases its revised growth; inflation and employment forecasts in the May Statement on Monetary Policy on 10 May. Currently, the RBA is forecasting GDP growth of 3% in 2019 and 2.75% in 2020. The lower growth rate in 2020 is largely explained by a reduced contribution from resource exports – particularly LNG.
Those forecasts were released for the February Statement on Monetary Policy when the RBA was forecasting growth of 2.75% for 2018. Subsequently, growth printed at 2.3% for 2018.
BILL EVANS is the Chief Economist at Westpac
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Australian dollar holds as commodities remain stable: Bill Evans

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EXPERT OBSERVER
While the month to month rise in sentiment is fairly muted, the survey detail suggests the Budget was well-received.
Sentiment over the course of the week showed a clear boost, with sentiment amongst those surveyed post-Budget 7.7% higher than sentiment amongst those surveyed prebudget – the most positive turnaround since we began tracking pre and post Budget responses in 2011.
The key issue will be whether this boost from the Budget is sustained. Certainly the ‘pre Budget’ print of 96.8 showed a further deterioration in sentiment from the previous print of 98.8, despite what was already quite a sharp 4.8% fall in March.
Persistent weak wages growth; falling house prices; and the perceived rising cost of living are all weighing on consumers.
This is best captured in the component of the Index – ‘family finances compared to a year ago’ – which declined 4.9% in April (showing little movement between pre and post Budget responses) and is down 9.6% on a year ago.
Click here <a href="https://www.propertyobserver.com.au/images/2019/4/10/Sent1.jpg" target="_blank">to enlarge</a>.
<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/2019/4/10/Sent1.jpg" alt="">
That compares to the headline Index which is only down by 1.6% over the same period. The month’s survey included an additional question asking consumers about the impact they expect the Budget to have on their finances over the next 12 months. Responses again suggest the 2019 Budget was well-received. Around 15% of consumers expected it to improve their finances; 51% expected no change; and 22% expected it to worsen their finances.
While the overall balance is negative, consumers appear to carry a consistent negative view around budget assessments. At –8.5% the net improve/worsen reading is less negative than last year’s net –10.4% and easily the ‘best’ response we have seen since we began running this question in 2010 (the average reading being –26.6%).
Tax relief was again a key feature of this year’s Federal Budget with new measures building on the seven–year personal income tax plan announced last year.
The main near term measures are clearly targeted at ‘low and middle income earners’. Accordingly it is no surprise that sentiment showed more positive responses amongst consumers in these income groups – both the post-Budget lift and assessed impact on family finances were markedly more positive amongst consumers with incomes in the $60–100k a year range.
Click here <a href="https://www.propertyobserver.com.au/images/2019/4/10/Sent2.jpg" target="_blank">to enlarge</a>.
<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/2019/4/10/Sent2.jpg" alt="">
Other factors that may have impacted sentiment in April include: a continued lift in the ASX, now up nearly 10% from its late 2018 levels; but negatives around petrol prices (average pump prices nationally up 18¢/litre since early February) and continued declines in house prices.
The month to month gain in sentiment was driven by a solid rise in expectations for the economy and family finances with some offsetting drag from weaker assessments around current finances and ‘time to buy a major household item’. 10 April 2019 
The Budget appeared to shore up confidence around the economy, which has had a shaky start to the year with choppy reads in the previous three months.
The ‘economic outlook, next 12 months’ sub-index rose 6.2% in April, regaining most of the ground lost in March.
The ‘economic outlook, next five years’ sub-index also rose 5.9%, retracing all of the previous month’s decline. Both sub-indexes are again in net positive territory above 100 and well above long run averages. Consumer views on family finances were much more mixed.
The ‘finances next 12 months’ sub-index posted a solid 4.1% lift, no doubt reflecting the tax measures at the centre of this year’s Budget. However, as discussed, the sub-index tracking assessments of ‘finances vs a year ago’ posted a sharp 4.9% decline in April to be down 9.6% on a year ago and at its lowest level since August 2017.
Attitudes towards spending also cooled notably with the ‘time to buy a major household item’ sub-index declining 2.0% to 115.5 in April (despite a 10.5% post-Budget lift). While that is still a positive read, it is below the levels seen a year ago and well below the long run average of 127. The readings around both current finances and ‘time to buy a major item’ remain consistent with the weak consumer spending growth seen through the second half of 2018.
Renewed confidence around the economy eased job loss fears a little in April. The Westpac-Melbourne Institute Unemployment Expectations Index recorded a 2.5% decline, retracing part of last month’s sharp 8.9% jump. Recall that lower readings indicate that fewer consumers expect unemployment to rise in the year ahead. At 127.4 the index is back below the long run average of 130”. Sentiment around housing improved in April. The ‘time to buy a dwelling’ index rose a further 2.4% to 119.4 in April, a four year high.
The index has now risen 33% from its mid-2017 low and is back around its long run average of 120. Improving affordability continues to see a lift in buyer sentiment in NSW and Victoria although in both cases there is still some way to go before buyer sentiment returns to long run average levels.
More surprisingly, the Westpac-Melbourne Institute Index of House Price Expectations posted a strong 11.9% rise to 95.6 in April, boosted by a sharp increase in New South Wales.
The Index is coming off a March reading that was the lowest level since we began compiling this index in 2009. The Reserve Bank Board next meets on May 7.
The Governor’s Statement following the April meeting saw a change in the wording of the key final paragraph. From our perspective, that change indicated a more flexible approach to interest rate policy than the ‘on hold’ stance we have seen since September 2016. The Board meeting in May will consider the staff’s revised growth forecasts for 2019 and 2020.
We expect these to be markedly lower than when last reported in February with growth tracking around or below potential. In those circumstances it is reasonable to expect the Board to move to a more formal easing bias in preparation for the first rate cut, which we expect to be delivered in August.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
 
 
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Westpac consumer sentiment shows the Budget has been well received

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EXPERT OBSERVATION
As expected, the Reserve Bank Board decided to leave the cash rate unchanged at 1.50%.
However, our research shows that there has been a very significant change in the Governor’s Statement for this month. Recall that Governor Lowe has not changed monetary policy since he became Governor in September 2016.
Also note that the key concluding sentence, which has been used in every Statement since October 2016 has been “the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time”. The clear implication behind that statement is an expectation that policy was likely to be on hold for a considerable period. As we have seen, that was an accurate assessment.
In the April Statement, he has changed this language for the first time ever. He still notes that “the Board judged that it was appropriate to hold the stance of policy unchanged at this meeting”. However, he then changes tact with a new sentence. “The Board will continue to monitor developments and set monetary policy to support sustainable growth in the economy and achieve the inflation target over time”. Although, a cursory glance at this sentence might not indicate any change in stance, it does give greater emphasis to the fluidity of the current situation. If this change was not intended, then clearly he would have continued with the approach that has marked his time as Governor.
Therefore this change appears to be a very clear intention to signal that policy is much more ‘live’ than has been the case since the Governor was appointed.
This signal is consistent with Westpac’s expectation that the Board is likely to adopt an easing bias following the May Board meeting. Our thinking behind that approach has been that the Statement on Monetary Policy for May will include a downward revision of the Bank’s growth forecasts. Further support for this view is apparent in the exclusion of the RBA’s current growth forecasts in the April Governor’s Statement. Arguably, this indicates an uneasiness with the 3% for 2019 and the 2 ¾% for 2020.
In the RBA’s defence, note that the March Governor’s Statement came before the release of the December quarter National Accounts, which showed that six month annualised growth had slowed to 1% in the second half of 2018. We expect that the RBA will lower its 2019 growth forecast from 3% to 2 ¾%, and the 2020 forecast from 2 ¾% to 2 ½%. Those forecasts are either at or below ‘potential growth’ (assessed as 2 ¾%).
In commenting on the low growth rate for 2018 of 2.3%, the Governor pointed out “the GDP data paint a softer picture of the economy than do the labour market data”. Arguably, the RBA may hold off from a specific easing bias( despite forecasting below trend growth), attributing this tension in the data as key to the outlook for policy.
Westpac has argued that the actual rate cut will not occur until August, when a further downward revision of forecast growth will be required and evidence will be building of a slowdown in the labour market.
Last week, we wrote on the potential impact of tonight’s Federal Budget on monetary policy. If the Governor saw the Budget as a significant swing factor in his thinking, it is unlikely that he would have chosen to change the language in the Statement just before the announcement.
It is our view that a boost to disposable income from tax cuts will certainly be of some assistance to the economy, but is unlikely to sufficiently offset the near term drag on incomes and spending from the negative wealth effect from falling house prices; weak wages growth; and a major downturn in activity in the housing market.
We were a little surprised with the Governor’s change in stance but find it consistent with our general view that the RBA is on track to adopt an easing bias in May and cut the overnight cash rate in August and November.
BILL EVANS is Chief Economist for Westpac.
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Why one small change could signal a big shift in the RBA's thinking: Bill Evans

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EXPERT OBSERVER
Visiting customers, officials and other economists in Hong Kong and Singapore in the past week, three insights about China were clear.  Firstly, there is a strong degree of confidence that China will implement stimulus packages to stabilise the economy following the slowdown in growth over the course of 2018.  The second big issue is around trade policy.  Clearly, there is great degree of uncertainty as to exactly how the trade negotiations with the US will get resolved and few people were particularly confident a compromise is in sight in the near term.  Finally, China seems to be heading towards a current account and trade deficit. The concern would be if China tried to take some direct steps to deal with that problem, particularly around students and tourists, which could be damaging to Australia’s economy if growth in arrivals slowed.  Given the size of China’s economy and Australia’s close trading relationship, how these developments unfold will be important in 2019. 
BILL EVANS is the chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
 
 
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What we need to know about China: Westpac's Bill Evans

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EXPERT OBSERVER
The six month annualised growth rate in the Westpac– Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, fell from –0.37% in January to –0.56% in February.
The Index has now registered three consecutive months in which the growth rate has been negative. This is a strengthening signal that growth through the first two to three quarters of 2019 is likely to be below trend.
The signal from the Index is certainly consistent with the weak momentum in the second half of 2018 revealed in the print of the December quarter national accounts. In the second half of 2018 growth momentum slowed to an annualised pace of 1% from a 4% pace in the first half of the year.
Westpac expects growth in the Australian economy in 2019 to be around 2.2% – significantly below trend which is generally assessed as 2.75%.
Key to the ongoing slow growth will be a challenged consumer as households adjust to much slower wages growth than anticipated and falling house prices. That will be supplemented by a continuation of the contraction in residential house building activity that appears to have begun in the September quarter of 2018.
We have consistently highlighted these risks which are likely to coincide with a slowdown in jobs growth and investment spending as both political uncertainty and global volatility weigh on firms’ employment and investment decisions.
The Index growth rate has shown a significant deterioration over the last six months, declining from +0.47% in September to –0.56% in February. Five components have driven the deterioration: US industrial production (–0.31ppts); the S&amp;P/ASX200 (–0.30ppts); the Westpac-MI Unemployment Expectations index (–0.22ppts); the yield spread (–0.19ppts); and dwelling approvals (–0.10ppts).
The only component providing a partially offset is the commodity prices in Australian dollar terms (+0.12ppts). The contribution from the remaining components – monthly hours worked and the Westpac MI CSI expectations index – has been largely unchanged.
<a href="https://www.propertyobserver.com.au/images/2019/3/21/westpac%20.jpg" target="_blank">Click here </a>to enlarge:
<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/2019/3/21/westpac%20.jpg" alt="">
The Reserve Bank Board next meets on April 2. The minutes of the March Board meeting highlight the importance of data releases going forward with the key issue being the “tension” between soft activity indicators and strong labour market data. It will take time for the Bank to resolve those tensions but we expect that by the August meeting the case for lower rates will be clear.
At present the Bank is forecasting growth of 3% in 2019 and 2.75% in 2020. The signals, some of which are discussed in this release, are pointing to much slower growth. We expect the Bank’s growth forecasts to be lowered in both May and August with the forecasts in August being consistent with the need for easier policy.
Westpac expects rate cuts of 25 basis points in both August and November.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
 
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Leading Index growth rate firmly in negative territory: Bill Evans

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EXPERT OBSERVER
The RBA Board has taken a step closer to cutting rates by emphasising the near-term importance of data releases. Westpac sees this approach as consistent with its expected timetable of rate cuts in August and November.
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The Minutes of the March Reserve Bank Board meeting emphasise the Board’s uncertainty around the slowdown in output data while labour market data remains robust.
In the final paragraph of the section on the policy outlook, the Board noted “they assessed that it would be appropriate to hold the cash rate steady while new information became available that could help resolve the current tensions in the domestic economic data”.
Presumably, the release of the December quarter national accounts the day after the Board meeting will have further accentuated this tension. In the minutes, the Board speculated that “GDP growth over 2018 had been a little lower than anticipated at the time of the February Statement on Monetary Policy”. In fact, annual GDP growth in 2018 printed 2.3% compared to the RBA’s estimate in February of 2.75% - hardly consistent with the description “a little lower”. The minutes also noted that the accounts were likely to confirm a “markedly slower pace of growth in the second half of 2018 than in the first half”. In fact, the accounts printed a 4% annualised pace in the first half, down to a 1% annualised pace in the second half.
The tension that the minutes refer to is around conditions in the labour market, which “had continued to improve”, while “leading indicators continued to suggest that employment growth was likely to remain above average, although some indicators have turned down a little recently”.
Based on the key policy conclusion, developments in the monthly labour market series and associated lead indicators will be very important for the policy response, although the sharper than expected slowdown in 2018 H2 will probably make the RBA more prepared to act than appears to be the mindset in these minutes.
Because the forecasts are only reviewed every three months, it is entirely unsurprising  that the minutes confirm the current GDP growth forecast in 2019 of 3 per cent and a further decline in the unemployment rate to 4 ¾ per cent over the next couple of years. With the momentum in the economy having slowed to a 1% pace in the second half of 2018, it remains a courageous call that growth could lift to 3% in 2019. Westpac expects that the RBA will lower its forecast for 2019 to 2.75% and to 2.5% in 2020 in its May Statement on Monetary Policy and adopt a specific easing bias.
We are disappointed to note that the RBA is persisting with a view that “the pipeline of work to be done remained large and was expected to support dwelling investment through 2019”. It appears that dwelling investment peaked in mid-2018 with around a 6 per cent fall in the second half of 2018. We support the RBA’s expectation for a “marked slowing in dwelling investment”, but expect that this has come earlier than their expectation of “in 1-2 years’ time”.
Nervousness around consumer spending remains a consistent theme in these minutes. Indeed, the expectation was that “consumption was expected to have contributed more to growth in the December quarter than in the September quarter”. In fact, December’s consumption growth of 0.4% was only slightly greater than the 0.3% reported for September. A 1.5% annualised growth pace for consumption is around half the expected trend.
The discussion around housing remains quite understated, “the process of adjustment in the housing market had continued”, although there is some recognition of the spill-over of housing prices to activity, “some part of the slowdown in retail and motor vehicle spending in NSW was likely to have been related to declines in housing prices”.
We are always interested in how the Board describes market pricing. According to our pricing model, the market was giving an 88% probability of a rate cut of a full 25bps by December 2019 as at 4 March. In contrast, the minutes note “financial market pricing implied the cash rate was expected to remain unchanged in 2019, but a reduction in the cash rate was expected by early 2020”.
Finally, it is important to note that “members noted significant uncertainties around the forecasts remain, with scenarios where an increase in the cash rate would be appropriate at some point, and other scenarios where a decrease in the cash rate would be appropriate”. As the Federal Reserve likes to emphasise, policy has become “data-dependent”.
Conclusion
The Board has raised the importance of data releases over the next few months and has left open the possibility to cut rates should those releases disappoint. Certainly, the December quarter national accounts would have fitted into that category, although the emphasis remains on the labour market data.
Westpac does expect that consistent with the slowdown in spending and deterioration in both business and consumer confidence, we will see emerging evidence of a slowing labour market over the course of the next six months.
Westpac’s timetable for policy action remains a 25bps cut in August to be followed by a second 25bps cut in November. These dates will give the RBA appropriate scope to explain their decisions in the context of weaker growth, employment and inflation forecasts in an orderly fashion, rather than be seen to overreact to any particular data report.
BILL EVANS is Chief Economist at Westpac
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Reserve Bank Board minutes emphasise importance of data releases: Bill Evans

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EXPERT OBSERVER
Changes to the Governor’s Statement were minimal with the issues around growth developments and the housing market still in flux.
As expected, the Reserve Bank Board decided to leave the Cash Rate unchanged at 1.50%.
There were minimal changes in the wording from the Statement following the February Board meeting.
In fact, at least in the February Board meeting, it was recognised that “some downside risks have increased” for the domestic economy. In this Statement, that downside risk is not mentioned. The Governor does point out that “other indicators suggest growth in the Australian economy slowed over the second half of 2018”.
Of course, the extent of this slowing will be revealed in the GDP report which prints at 11:30 am tomorrow. Westpac expects that the six month annualised growth pace in the economy will slow from 4 per cent in 2018 H1 to 1 per cent in 2018 H2. This spectacular slowing, even if at 1.5% in H2, is surely worthy of stronger language than seen in this Statement.
It is also no surprise that the Board still forecasts growth around 3 per cent this year. Any change will only be made following the May Board meeting.
There has been considerable uncertainty as to whether the Bank assesses falling house prices as a threat to household consumption. Some official comments deny the existence of significant wealth effects.
Today’s Statement seems to confirm that there is a concern of a wealth effect, “the main domestic uncertainty continues to be the strength of household consumption in the context of weak growth in household income and falling house prices in some cities”. That seems to indicate recognition of a wealth effect.
Commentary around the housing market is, surprisingly, slightly more constructive. In February, the markets were described as “weakened further”, whereas today’s Statement notes “conditions remain soft”. The data would indicate further deterioration.
The labour market continues to be described as “strong”, and the unemployment rate forecast of 4 ¾ per cent over the next couple of years is confirmed. Westpac expects that given a much softer growth environment, there will be a modest increase in the unemployment rate through 2019.
Conclusion
We are not surprised that the Governor chose not to repeat his commentary in a recent speech that prospects for interest rates are now evenly balanced. This commentary and the ‘rate hike’ commentary has never appeared in the Governor’s Statement and was limited to Board minutes; Statement on Monetary Policy; and some speeches.
We have to recognise that the Statement today is slightly more upbeat than we saw in February. As we later found out, the Board decided in February to restate the risks around interest rates to be more symmetric than had been the consistent practice through 2018.
Perhaps, that significant change required strong language, whereas today, despite no real encouragement from the data, it was considered more appropriate to be circumspect.
Nevertheless the changes are very small and the real issues around growth developments and the housing market are yet to unfold.
Westpac confirms its view that the RBA Board will decide to cut rates by 25bps in both August and November 2019.
BILL EVANS is the Chief Economist for Westpac
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Westpac still expecting RBA to cut rates in August and November: Westpac's Bill Evans

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EXPERT OBSERVATION
Westpac now expects the Reserve Bank to cut the cash rate by 25bps in both August and November this year.
We have revised down our GDP growth forecasts for 2019 and 2020 from 2.6% to 2.2%. With the slower growth profile we now expect to see the unemployment rate lift to 5.5% by late 2019. That makes a strong case for official rate cuts to cushion the downturn and, in turn, meet the RBA’s medium term objectives.
The Reserve Bank recently revised down its growth forecasts for 2019 and 2020 from 3.25% and 3.0% to 3.0% and 2.75% respectively. It also cut its estimate for 2018 from 3.5% to 2.75%.
Momentum in 2018 slowed dramatically through the year. The annualised growth rate in the first half was 4% whereas in the second half we estimate that the pace slowed to 1.5%.
Moving from a 1.5% pace to a 3% pace in 2019 seems to be a very large stretch.
Westpac’s growth forecast in 2019 and 2020 has been a much weaker 2.6% in each year but even that number now appears too high.
Our new forecast for GDP growth in 2019 and 2020 is 2.2%.
In particular, we have been expecting only a modest impact on consumer spending from the likely negative wealth effect associated with falling house prices in Sydney and Melbourne.
Our growth forecasts have assumed a lift in the savings rate across 2019 from 2.4% to 2.9%. That would be consistent with consumption growth of 2.4%. Note that we expect momentum in consumption growth in the second half of 2018 to be closer to 1.5%.
A more reasonable assessment of the lift in the savings rate in 2019 is from 2.4% to 3.5% with a lift towards 5.0% expected in 2020. Those savings rates imply consumer spending growth around 2%.
That lift assumes that house prices in Sydney and Melbourne will continue to fall through 2019. Our estimates of the need to restore affordability and the impact of tighter lending standards on prices point to falls of around 5%-10% in Sydney and Melbourne over the course of 2019 complemented by softness in other markets.
Absent any policy response from the RBA we expect that further falls will be necessary in 2020 before stability in these markets will be achieved.
These headwinds for the housing market and activity are also apparent in developments around credit. In the second half of 2018 new lending for housing fell by 14.9% with both investors (-15.5%) and owner occupiers (-14.7%) being affected. This is a sharper correction than
we had anticipated. These falls are a combination of both demand (concerns around falling prices and stretched affordability) and supply (new regulations and caution from some lenders in a falling market).
We expect these falls, albeit at a much slower pace, to continue through 2019 representing a negative feedback loop to prices.
That negative wealth effect is therefore likely to persist through 2020 with a further extension of the soft profile for consumer spending.
Other important dynamics will be around the sharp downturn in residential housing construction. We have revised down our forecast for residential housing construction in 2019 to –10% from –7% and –5% in 2020 from –3%. We also envisage a weaker profile for business equipment investment as businesses adjust their plans to a softening growth environment.
Overall we have revised down our GDP growth rates in 2019 and 2020 from 2.6% in both years to 2.2% respectively.
Consumer spending; residential housing construction and equipment investment are all key to the outlook for jobs growth.
With reasonable estimates for the participation rate our weaker jobs growth profile has the unemployment rate lifting to 5.5% in the second half of 2019 and further by end 2020.
Our process for forecasting monetary policy has always been to assume that the economy will evolve as we expect and then to anticipate the policy response once the authorities react to the new reality.
The decision by the Reserve Bank Board to accept the possibility that interest rates could fall further, despite the current record low levels, is profoundly important.
We can now be confident that if our growth profile does evolve the Reserve Bank will be prepared to act. Prior to this more balanced approach to rates it was reasonable to assume that it was most reluctant to lower rates. The view seemed to be that the adjustment in the housing market was a necessary development with limited spill over effects on the rest of the economy.
Lowering rates, as we last saw in 2016, would only disrupt that adjustment while the rest of the economy was not in need of further stimulus.
The approach now seems to be that the spill over effects to the rest of the economy are real and the “adjustment” process may be more substantial than earlier anticipated. Certainly the collapse in new lending and sharp falls in house prices would be attracting considerable attention.
Note that the current view of the Reserve Bank is GDP growth of 3% in 2019; and 2.75% in 2020. That profile is, in their view, consistent with a gradual fall in the unemployment rate from 5.0% to 4.75% by end 2020.
The rise in the unemployment rate which we envisage through 2019 will not be severe since unit labour costs are contained and labour enjoys a relative cost advantage over capital. However it will be contrary to the Reserve Bank’s expectations and prompt a significant revision to the 4.75% forecast for 2020.
When might this decision be taken?
The forces around a slowing economy, falling house prices, and weak consumer spending are already apparent. However the current forecasts do not indicate that the Bank expects these conditions to persist.
Recognition of this persistence is likely to take some time, but not too much time. Our preferred estimate would be the August Board meeting. A full explanation of the reasons behind the decision can be set out in the August Statement on Monetary Policy.
That timing will also allow two more inflation prints to confirm that the further widening of the output gap, as growth remains stuck well below trend, is constraining inflation with little likelihood of achieving the current forecast of 2.25% inflation in 2020.
A second cut at the November Board meeting is likely to follow.
Unlike the response of the markets in 2016 to two rate cuts we do not expect that these two cuts will immediately stabilise housing markets. However there will be sufficient progress for the Reserve Bank to resume its cautious stance.
Adjustments will also be accommodated by the Australian dollar, possibly in lieu of even lower rates.
Partially offsetting our weaker profile for the AUD will be more “patience” on the part of the Federal Reserve with the federal funds rate. Following my trip to the US over the last few weeks where I met with a number of officials and market participants it is clear that even if the Federal Reserve decides that higher rates will be necessary it will take considerable time to make the case.
Accordingly we have eliminated our forecast for hikes in the federal funds rate in June and September leaving one more hike in December to recognise the need to finally settle on the neutral rate setting.
The net impact of these forecast changes is for a further 25bp deterioration in the overnight cash rate differential. That puts downside risks to our current target of USD 0.68 for the AUD in the second half of 2019 particularly if the expected cuts from the Reserve Bank are ineffective in settling markets.
The Risks to This Rate Outlook
Housing markets may stabilise more quickly than we anticipate and the extended negative wealth effect may not materialise.
The labour market may hold up more strongly than we expect. (Note the January Employment Report showing 39,000 new jobs). Certainly evidence from other countries points to unusually strong labour markets despite other less constructive developments in these countries. A relative improvement in the cost of labour may hold up labour markets despite soft demand conditions. Unit labour costs in Australia have been flat for many years.
We may be overestimating the appetite of the RBA to respond to the environment we are describing.
Wages growth may lift more quickly than we expect, boosting household incomes and supporting spending despite a negative wealth effect. That lift may be supplemented by unexpected increases in the terms of trade as China boosts its own growth through housing and infrastructure. On the other hand while this is a perfectly reasonable scenario, there is still likely to be little flow through from higher commodity prices to household incomes as mining companies remain cautious. Mining wages continue to languish highlighting the limited effect a strong terms of trade has on the broader economy.
There is mixed evidence around wealth effects in other countries although the scale of the adjustment in house prices in Sydney and Melbourne is too large to downplay.
Conclusion
Since the last rate cut in August 2016 Westpac has consistently held the line that the RBA cash rate would remain on hold for the foreseeable future (a standard two to three year window). That has been despite markets, the RBA and most economists expecting higher rates.
To an extent this view was influenced by the perception that the Bank welcomed the adjustment in the housing markets and saw insignificant spill over effects to the rest of the economy.
The recent change of rhetoric from the Bank on that issue is important.
Our revised growth, inflation and unemployment forecasts now make a convincing case for lower rates.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Westpac now expects the RBA to cut the cash rate twice: Bill Evans

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The minutes of the Reserve Bank Board meeting for February have largely confirmed the themes which were set out in the February Statement on Monetary Policy.
Key to these themes is “the probabilities around these scenarios were now more evenly balanced than they had been over the preceding year when an eventual increase in the cash rate had appeared more likely”. Of course, the two scenarios relate to an eventual increase and an eventual decrease in the cash rate.
The policy outlook is firmly linked to progress in reducing the unemployment rate and moving the inflation rate back into the 2-3% policy band.
The risks around the outlook centre on the household sector and dwelling investment. The Bank remains generally comfortable with the outlook for business investment; government spending and external conditions.
Clearly, developments in the housing market, particularly in Sydney and Melbourne, are attracting considerably more attention than we had seen in the minutes of meetings held in 2018. In particular, the Bank’s current position that the effect of recent price falls on overall economic activity was expected to be relatively small is noted.
However, in a very significant warning around the policy outlook, the minutes state “if prices were to fall much further, consumption could be weaker than forecast, which would result in lower GDP growth, higher unemployment and lower inflation than forecast”. This statement directly links developments in house prices to the Bank’s key policy forecasts.
The causal mechanism would be around a larger wealth effect than currently expected impacting consumer spending, and a sharper downturn in residential building activity than has been recognised, even in the Bank’s new much more subdued forecasts relative to the November Statement on Monetary Policy.
Note that for the record, the RBA’s GDP growth is forecast at 3% in 2019 and 2.75% in 2020. These forecasts are down from 3.25% in 2019, and 3% in 2020. The downward revisions are largely attributed to softer consumption growth and a sharper downturn in dwelling investment.
Westpac has long argued that the RBA’s previous growth forecasts were too high, and indeed, our current forecasts for 2019 and 2020 of 2.6% are still below the RBA’s numbers.
The RBA’s handle on the outlook for housing prices in Sydney and Melbourne appears tenuous. The minutes note that the recent falls “were relatively large by historical standards, and that it was unusual for housing prices to fall significantly in an environment of low mortgage interest rates and a declining unemployment rate”.
Note that in previous periods of falling house prices, large interest rate cuts have followed, and were successful in stabilising the markets.
The current period of low mortgage rates means that the usual policy response to stabilise markets with large rate cuts will not be possible, and it is therefore not unreasonable to expect that further falls in house prices may occur.
Based on the comments in these minutes, such an outcome is likely to lead to further downward revisions in the RBA’s forecasts.
Conclusion
The minutes note that financial market pricing implied that the Australian cash rate was expected to remain unchanged for a considerable period with some expectation of a decrease by late 2019.
Over most of last year when markets; the RBA, and most economists were forecasting higher rates, Westpac’s view was consistently that rates would remain on hold in 2019 and 2020. That was largely because our growth, inflation and employment forecasts did not justify higher rates.
Our current forecasts remain lower than those of the RBA and we therefore expect that, over time, the RBA will further revise down their forecasts.
However  we do not think that those downward revisions will be sufficient to trigger a rate cut. As usual, our forecasts will continue to be reviewed.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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RBA emphasises the importance of house prices: 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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