<html><body>
<p>EXPERT OBSERVATION</p>
<p>Retail sales rose 0.1% in January, a disappointing result compared to consensus expectations of a 0.3% gain. Retail was coming off a 0.4% fall in the final month of 2018, so the muted January rise speaks to continued weakness carrying into early 2019.</p>
<p>Annual sales growth has slowed to 2.7%yr with the trend pace over the last six months closer to 2%yr.</p>
<p>The detail showed gains were confined to food sub-categories – both basic food and cafes &amp; restaurants up 0.3%mth – with non food categories down 0.1%mth on a combined basis. Within the latter: department stores booked another sizeable decline (–2.1%mth following –1.3% in Dec and a muted 0.4% gain in Nov); clothing was down 0.3% coming off a 3% fall in Dec but a strong 4.4% gain over Oct-Nov; and household goods retail was flat, coming off 0.8% gains in Nov and Dec. The 'other retail' category - mainly 'small ticket' discretionary items – posted a 0.7% gain.</p>
<p>The picture by state did have one slight positive with a solid 0.7% rise in NSW. The state had shown a much weaker finish to 2018, raising concerns that wealth effect drags were starting to bite harder. The Jan gain pares that weakness back a bit although trend sales are still weaker, flat lining vs slight 0.2% a month gains in most other states.</p>
<p>Looking by channel, online sales look to have posted a 2-3% gain for the month, with retail ex online down slightly (–0.1%mth).</p>
<p>By retailer size, small retailers reported a 0.6% fall with non food retailers driving the monthly gain amongst larger retailers. Despite this, large food retailers have still seen the best growth over the last year, sales up 4.9%yr on a combined basis, some of which relates to firmer pricing.</p>
<p>Separate data on vehicle sales have been mixed in early 2019. Our estimates suggest monthly seasonally adjusted sales rose in Jan but slipped back a touch in Feb. Seasonal adjustment is more problematic around this time of year so these moves should be treated with caution. Sales are still down about 10%yr. The Q4 national accounts detail showed a 1.5%qtr decline in consumer vehicle purchases, tracking a 6% annual pace of declines over the last three quarters of 2018.</p>
<p>Overall the slight gain in January retail sales indicates that the soft spending conditions over the second half of 2018 have extended into 2019. While sales may not be contracting in nominal terms they are likely to be down in volume terms once price changes are excluded.</p>
<p><em>MATTHEW HASSAN is a Senior Economist for Westpac</em></p>
</body></html>

Matthew_Hassan-HHWHptmrw4

Australian retail sales tick up, just: Westpac's Matthew Hassan

<html><body>
<p><span><span>EXPERT OBSERVATION</span></span></p>
<p><span><span>While Sydney and Melbourne remain at the centre of the current housing correction there are some significant differences between the two, in terms of the timing, scale and spread of price declines.</span></span></p>
<p><span><span>Melbourne’s price correction started later in the piece but has gathered pace since mid-2018. Prices are now down 8.7% from their peak but have been tracking closer to a 10%+ annual pace of decline over the last 6mths.</span></span></p>
<p><span><span>Notably, the price correction has shown much bigger differences across segments and tiers. For Sydney, there is about a 4ppt wedge between price declines across houses and units, and across different market tiers. For Melbourne, it’s a much larger 8-12pt wedge with units and bottom tier areas holding up much better (indeed, prices across the bottom 25% properties are essentially flat).</span></span></p>
<p><span><span>This theme is also apparent across sub-regions. The big movers over the second half of 2018 were Melbourne’s Inner East and Inner South, with the Inner City and West holding up considerably better. Prices are also performing better across the regional Victoria.</span></span></p>
<p><span><span>Some of this difference may relate to differences in the supply-demand balance across part of Melbourne. Overall, the city’s rental market remains tight with vacancy rates holding around 2%. However, parts of the city are seeing a significant surge in apartment completions, from around 10k a year mid-decade to 17-18k a year currently. </span></span></p>
<p><span><span>Meanwhile, rental vacancy rates are extremely tight across Victoria’s regions, having fallen from 2% in late 2017 to just 1.2% in early 2019. This in turn suggests the uneven performance is likely to continue.</span></span></p>
<p><img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/Housing_Pulse/Housing_Pulse_Bites/2019-02/Housing-pulse-bite-2019-02-6.jpg" alt="">  </p>
<p><em>MATTHEW HASSAN is a Senior Economist for Westpac</em></p>
</body></html>

Melbourne's uneven price correction: Matthew Hassan

<html><body><div>
<div>
<div>
<div>
<div>
<p>EXPERT OBSERVATION</p>
<p>Housing finance approvals posted a very weak finish to 2018 with sizeable declines across all components.</p>
<p>The headline number of owner occupier loans fell 6.1%, much weaker than the consensus forecast of a 2% decline. Ex-refi, the number of approvals were down a hefty 8.2% in the final month of 2018, to be off 14.4% for the year. Notably, what was initially an investor-led cycle is now seeing clear weakness in owner occupier activity – both the value and number of loans.</p>
<p>The value of investor loans also declined, a 4.8% fall taking this segment down 21.8% for the year. Note that survey changes mean this measure now excludes investor loans for ‘construction of dwellings for rent or resale’ and for ‘purchase of dwellings by others for rent or resale’ – components that previously accounted for around 15% of the value of investor approvals. Helpfully, the ABS also now provides an ‘ex refi’ measure for the value of investor loans, which dropped 4.6% in the month but is down more substantially by 27.8% over the year.</p>
<p>The combined total value of housing finance approvals including investors but excluding refi declined 5.9%mth to be down 19.8%yr.</p>
<p>Construction finance approvals fared a little better, recording a 2.4% decline but still down over 10% for the full year. Approvals for the purchase of newly built dwellings, including 'off the plan apartment sales' were down more sharply, –5.5%mth, –20.2%yr.</p>
<p>All major states recorded declines in the December month, the number of owner occupier approvals excl refi down 6.1% in NSW, 10.4% in Vic, 6% in Qld, 7% in WA and 3.4% in SA. The value of dwelling approvals including investor loans and excluding refi (estimates of which are now provided on a more timely basis) confirm the wide spread as well with large declines in NSW, Vic, Qld and WA, all down around 20%yr.</p>
<p>There were some notable details in the mix. First home buyer activity, a segment that has been supported by state government incentives, are also starting to show signs of slowing. However, the detail around average loan sizes suggests the biggest decline is coming in the 'upgrader' segment, suggesting changes to borrower assessments and perhaps the impact of lower prices on existing home equity may be impacting.</p>
<p>All up, the December finance approvals data shows a very weak finish to 2018 with weakness coming across the board, confirming the message from other market measures.</p>
<p><em>MATTHEW HASSAN is a senior economist at Westpac</em></p>
</div>
</div>
</div>
</div>
</div></body></html>

Australian housing finance had a broad-based fall late 2018: Matthew Hassan

<html><body>
<p class="article-details">EXPERT OBSERVER</p>
<p class="article-details">Despite the material correction in housing markets, residential property investors remain markedly more optimistic than non-investors.</p>
<div>
<p>Investors sit front and centre in the housing market correction currently unfolding in Australia. For the first time, the<em><strong> </strong>Westpac Melbourne Institute Consumer Sentiment survey</em> provides some insight into who this segment is and how they are assessing things.</p>
<p>An additional classification question added to the survey in Dec now allows us to separately identify consumers that own residential investment properties. The first results show an interesting breakdown on both the characteristics of this sub-group and their sentiment – the latter of particular interest given both the investor-driven housing market downturn and associated concerns about potential ‘wealth effect’ spillovers to demand.</p>
<p>At the aggregate level, 18.7% of respondents reported owning a residential investment property, broadly in line with official statistics.</p>
<p>Consumers in NSW, WA and Vic were slightly more likely to be housing investors while those in Qld showed the lowest incidence (15%). Not surprisingly the share of investors rises steadily across age groups, peaking at 27% for those aged 55-64, dropping back sharply to 14% for those over 65 (noting that this group is less likely to be accessing the tax benefits of negative gearing).</p>
<p>Again in line with the official statistics, the incidence of investor housing ownership is higher for those on high incomes (31%) and amongst consumers that are owner occupiers (24%). So-called ‘rentvesters’ account for just 7% of tenants.</p>
<p>Turning to the sentiment readings, housing investors are markedly more optimistic than non investors with an average sentiment read over Dec-Jan of 114.7 vs 101 for non investors and 103.7 for all consumers.</p>
<p>Note that this does not appear to be a by-product of income differences – across every income band, housing investors have more positive sentiment reads than non investors.</p>
<p>The positive spread is across all index components but is most pronounced for ‘finances vs a year ago’ (+16pts) and least pronounced for ‘finances, next 12mths’ (+6pts) – an intriguing mix that suggests investors have been unperturbed by price falls over the last year but that expectations of further declines may be curbing optimism for the year ahead.</p>
<p>On housing, investors are more positive on ‘time to buy’ but more negative on the price outlook. They also view ‘real estate’ more favourably as the ‘wisest place for savings’, particularly compared to ‘deposits’, but are slightly more inclined towards repaying debt than non investors.</p>
<p>Read the full report: <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2019/January/WestpacRedBookJanuary2019.pdf" target="_blank">'Red Book January 2019' (PDF 453kb)</a></p>
<p><img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/The_Red_Book/Red_Book_bites/Redbook-bite-20190131-2.jpg" alt=""></p>
<p><em>MATTHEW HASSAN is a Senior Economist for Westpac</em></p>
</div>
</body></html>

Sentiment of housing investors more optimistic than non-investors: Matthew Hassan

<html><body>
<p>EXPERT OBSERVER</p>
<p>Housing weakness in late 2019 was clearly not confined to just turnover and prices with new dwelling approvals sliding sharply into year end – down 26% between Sep and Dec, the last month marking the lowest level for monthly approvals since June 2013. For Q4 as a whole, approvals were down 10.9%qtr and 23.7%yr.</p>
<p>Approvals are now signalling an unambiguous further weakening that will clearly see declining new dwelling investment detract from Australia’s growth in 2019. Westpac expects new dwelling investment to decline 8% in the year with a further 5% contraction in 2020.</p>
<p>The composition of the approvals decline points to downside risks to this outlook. Units continue to drive the cycle with a further 18.8% drop in Dec to be down 38%yr. Within this segment, ‘high rise’ approvals look to be down a further 16% in the month and by over a third in Q4 as a whole. That is outpacing our assumed path of a cumulative 40% decline by the end of 2019, suggesting weakness may be more pronounced and/or 'front loaded'.</p>
<p>More importantly, there continues to be significant weakness in other segments as well – medium density approvals down over 10% in the month and private detached house approvals down –2.2%mth, –11.3%yr. The shorter ‘lags’ on non high rise work means these declines will likely impact activity through the first three quarters of 2019.</p>
<p>The state breakdown shows weakness spread across the major eastern states: NSW –8.1%mth, –21%yr; and Vic –8.1%mth, –23%yr; and Qld –5.8%mth, –29.7%yr. WA posted a slight gain but is also down 30%yr.</p>
<p>The total value of renovation approvals rose 3.1% to be about flat on a year ago but with a modest uptrend in place. While the rise is mild, it is coming across all the major states.</p>
<p>The total value of non res building approvals fell 9.8% to be down about 15%yr. Latest monthly reads have been choppy around a flat trend, albeit with better gains for NSW and Vic and, by sector, for education-related building in the public sector.</p>
<p>Overall the December approvals update clearly challenges the RBA's view from the November Statement on Monetary Policy that "... dwelling investment is expected to decline gradually" and suggests that, as well as incorporating the weaker starting point from the Q3 national accounts, its revised forecasts to be released in Friday's February Statement on Monetary Policy will also need to materially lower the near term outlook for dwelling investment.</p>
<p>Even if the Reserve Bank maintains its view that the negative 'wealth effect' spillovers from falling house prices will be limited, there is a clear ‘real economy’ negative coming through via new dwelling investment.</p>
<p><em>MATTHEW HASSAN is a senior economist at Westpac</em></p>
</body></html>

A clear ‘real economy’ negative coming through via new dwelling investment: Matthew Hassan

<html><body>
<p>EXPERT OBSERVER</p>
<p>Dwelling approvals declined 1.5% in October, in line with the consensus forecast but with both the headline and detail a touch better than we had been expecting.</p>
<p>Approvals remain locked in a clear downtrend but this month's update eases some of the downside risks that had been emerging around non high rise approvals in particular.</p>
<p>Recall that the September approvals report showed a solid headline rise (+5.5% revised up from +3.3% previously) that concealed a much weaker underlying picture.</p>
<p>All of the monthly gain was due to a jump in Vic high rise approvals – excluding this segment, approvals were down 7.5% (since revised to –4.5%).</p>
<p>Moreover, that weak underlying picture followed a sharp 14% drop in approvals over July-August.</p>
<p>Going into the October update we were expecting headline approvals to reconnect with this clear downtrend. Instead the decline is somewhat milder and detail mixed rather than weak.</p>
<p>Private detached house approvals rose 2.7% in October with the previous month's fall pared back to from –2.7% to –1.5%.</p>
<p>The decline in this segment from June's peak is now a much milder 3.5% vs the 7.3% fall presented in September.</p>
<p>Private units posted a 4.8% drop, continuing a volatile run: +13% in September; –23% in August; and –7% in July.</p>
<p>Most of this is due to ‘high rise’ approvals which dropped 40% over July-August, spiked 60% in September and dropped back 40% again in October.</p>
<p>Forward indicators continue to point to a weak outlook for this segment, site purchases in particular.</p>
<p>For the month of October, a strong rise in 'medium density' unit approvals provided a material offset, this small segment up about 25% in the month, reversing a similar sized decline in September.</p>
<p>All states recorded declines in October, Vic showing less of a pull back than might have been expected (–2.6%mth, –13.7%yr) given last month's high rise spike; and SA notably weaker (–17%mth, –24.8%yr).</p>
<p>Across the other majors: NSW approvals were down –0.5%mth, –16.5%yr; Qld –1.1%mth, –13.3%yr; and WA –0.1%mth, –23.1%yr.</p>
<p>The total value of renovation approvals edged up 0.5% but are still down 10%yr with the trend showing no real direction.</p>
<p>The total value of non res building approvals rose 4% but were still down 25%yr.</p>
<p>While trends remain very difficult to discern, recent weakness has been most pronounced across offices.</p>
<p>By state, weakness over the last 3mths has centred on Qld and WA rather than NSW and Vic.</p>
<p>Overall, the October approvals report is weak but not quite as weak as we had feared.</p>
<p>While the detail eases some of the downside risks to the outlook our view remains that residential building will see a significant 5% decline in 2019.</p>
<p><em>MATTHEW HASSAN is a senior economist at Westpac</em></p>
</body></html>

Australian dwelling approvals, another soft month: Matthew Hassan

<html><body>
<p>EXPERT OBSERVATION</p>
<p>Dwelling approvals rose 3.3% in September, reversing part of the 13% slide over the previous two months but with the monthly move a touch below the consensus expectations of a 3.8% rise.</p>
<p>Despite this, the detail was weak. The monthly gain centred on the famously volatile high rise unit segment, which had fallen sharply over the previous two months. The September high rise bounce was also heavily concentrated in Victoria. Approvals outside of this narrow state segment were significantly weaker (our estimates suggest total dwelling approvals ex Vic high rise were down about 7.5%).</p>
<p>Private detached house approvals declined 2.7% to be down 7.3% since June – a significant shift for what is usually a more stable segment.</p>
<p>Private units in total posted a 9.2% bounce, retracing some of the 20% decline over the previous two months. With-in this, ‘high rise’ approvals jumped 40-50% although this looks to be exaggerated by seasonal adjustment. A sharp fall in 'medium density' partially offset the gain.</p>
<p>By state, the Vic recorded an outsized 30.5% gain but was softer ex high rise (we estimate down 2.3% in seasonally adjusted terms). The other major states recorded big falls, NSW down 6.8%, Qld down 10.5% and WA down 19%.</p>
<p>The total value of renovations edged up 0.8%, the slight trend decline over the first half of the year showing signs of leveling out. Notably, trend approvals in NSW and Vic are down 7.6% since the start of the year.</p>
<p>The total value of non res building approvals declined 3.8%. Trends remain difficult to pick out due to high volatility but the segment looks to be tracking lower in most states.</p>
<p>Overall, the headline gain in dwelling approvals this month is a 'head fake'. Excluding a sharp spike in Vic high rise, something that is very unlikely to sustain, reveals a fairly broad based picture of weakness. Tightening credit conditions are clearly impacting both residential and non residential sectors. The pace of decline remains hard to pin-point but building activity is more clearly tracking towards a contraction in activity heading into 2019.</p>
<p><em>Matthew Hassan is a Senior Economist for Westpac</em></p>
</body></html>

Australian dwelling approvals had an unconvincing bounce: Matthew Hassan

<html><body>
<p>EXPERT OBSERVATION</p>
<p>Consumer sentiment has tracked back to neutral as the earlier tax cut boost wanes and a variety of negatives impact. The housing market correction is in the mix but the detail suggests the impact on sentiment has been small so far.</p>
<p>The Westpac Melbourne Institute Index of Consumer Sentiment has weakened over the last 3 months, falling 4.2% and retracing all of the gains seen through the middle of the year.</p>
<p>At 100.5, the Index is now broadly unchanged on a year ago and only just above the 100 line, indicating a near even mix of optimists and pessimists.</p>
<p>A waning boost from the income tax cuts announced in May, renewed political instability, mortgage rate increases, further declines in house prices, rising petrol prices and unsettled financial market conditions all look to have contributed to the softer reads. Indeed, given the range of negatives, the pull back in sentiment has arguably been mild.</p>
<p>There is some evidence that positives around economic growth, the labour market and more balanced conditions across states have provided some underlying supports.</p>
<p>A key area of interest is the extent to which the house price correction is having spillover effects on the consumer. Assessments of family finances remain a notable weak spot.</p>
<p>Concerns around interest rates and house prices are both apparent – sentiment amongst households with a mortgage falling 6.4% over Sep-Oct.</p>
<p>That said, the more pronounced house price corrections in Sydney and Melbourne do not appear to be weighing more heavily on sentiment in these regions, at least not yet.</p>
<p><img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/The_Red_Book/Red_Book_bites/Redbook-bite-20181023-1.jpg" alt=""> </p>
<p><em><strong>Matthew Hassan</strong> is a Senior Economist for Westpac.</em></p>
</body></html>

Housing market correction impact on consumer sentiment small so far: Matthew Hassan

<html><body>
<p>EXPERT OBSERVER</p>
<p>Australia’s housing market has continued to weaken. Conditions still vary widely across cities but are soft overall, with price corrections underway in the previously strong Sydney and Melbourne markets and Perth's longer running period of price declines also continuing.</p>
<p>The three months to August have seen the Westpac Housing Consumer Sentiment Index (a composite measure based on four housing–related components of the Westpac Consumer Sentiment survey) soften a touch but remain consistent with stabilising demand. The main driver of the lift continues to be less downbeat reads on ‘time to buy’, partly reflecting an improvement in affordability. Small positives around jobs and risk aversion have been offset by weakening price expectations.</p>
<p>Turnover remains very low. Whereas earlier estimates had suggested activity might have been stabilising in the first half of 2018, revised and updated data now show turnover nationally down 6.2% over the year to July. The annual pace of decline has moderated and the most recent monthly figures hint at stabilisation but, without a revival, annual growth is likely to stay negative through to year end.</p>
<p>The continued decline in turnover suggests other factors such as tightening loan criteria and falling investor activity are weighing on activity, essentially preventing what would likely have been a stabilisation in conditions by now.</p>
<p> <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/2018/8/28/WESTPAC.jpg" alt=""></p>
<div> </div>
<div><em>Matthew Hassan is a Senior Economist at Westpac.</em></div>
</body></html>

Housing sentiment stable but markets still weakening: Matthew Hassan

<html><body>
<p>EXPERT OBSERVER</p>
<p>The minutes of the Reserve Bank Board’s July monetary policy meeting provide some significant additional colour around the Bank’s current thinking.</p>
<p>The main points of interest are: 1) a slightly more tentative tone around the outlook; 2) the reinstated line that the next cash rate move “would more likely be an increase than a decrease” but with a clearer qualification that this would not be any time soon; 3) expanded comments on the rise in bank funding costs, albeit without any strong conclusions; and 4) additional commentary about a ‘special paper’ prepared for the meeting on Australian household debt.</p>
<div>As to be expected, the main discussion was as per the Governor’s post-meeting decision statement: a little less positive on the global front, acknowledging uncertainty around trade policy abroad and rising short term wholesale interest rates locally, but assessing the Australian data flow as in line with the Bank’s above trend growth view, with a slightly firmer outlook for labour markets but key uncertainties still hanging on the outlook for the consumer.</div>
<div> </div>
<div>However, there were some notable shifts in the closing paragraphs of the ‘Considerations for Monetary Policy’ section, which sets out the decision rationale and framework for policy decisions going forward.</div>
<div> </div>
<div>Usually this just reprises the closing paragraphs from the Governor’s decision statement.</div>
<div> </div>
<div>However, the July minutes provide quite a bit more colour.</div>
<div> </div>
<div>The outlook comes across as a little more tentative – whereas the July decision statement and June minutes carried the simple line that: “Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual”, the July minutes couched this as something “Members continued to view the strengthening economy as likely to deliver”.</div>
<div> </div>
<div>The commentary provides a clearer framework for future policy as well.</div>
<div> </div>
<div>Back in April-May the minutes included a slightly surprising line that: “In the current circumstances, members agreed that it was more likely that the next move in the cash rate would be up, rather than down.” This line was dropped in the June minutes but reinstated in the July minutes.</div>
<div> </div>
<div>However, it was given an important qualifier that “since progress … was likely to be gradual, [members] also agreed there was no strong case for a near-term adjustment in monetary policy” and that “it would be appropriate to hold the cash rate steady … while this progress unfolds”.</div>
<div> </div>
<div>This brings the minutes into line with recent commentary from the RBA Governor, and in particular a speech on June 13 in which he noted that “the environment in which interest rates are increasing is also likely to be one in which people's incomes are growing more quickly than they are now”.</div>
<div> </div>
<div>The bottom line is that official rates are not moving up any time soon.</div>
<div> </div>
<div>One area of keen interest going into the minutes was how they would handle an expanded discussion of the rise in wholesale interest rates.</div>
<div> </div>
<div>The Governor’s decision statement had acknowledged that gains in recent months were due to more than just developments in the US but stopped short of describing the ‘other factors’ at work.</div>
<div> </div>
<div>The minutes go a little further, members noting the tendency for pressures to rise at the end of the quarter and that major bank funding costs had risen “a little over 2018”.</div>
<div> </div>
<div>While the Board clearly remains uncertain about how persistent these pressures will be, the phrasing and the consistent note that “the average mortgage interest rate on outstanding loans had been declining for some time” given more prominence in the minutes and Governor’s statements in recent months suggests the Bank is not overly concerned about the current situation.</div>
<div> </div>
<div>We look forward to a fuller assessment in the RBA’s August Statement on Monetary Policy.</div>
<div> </div>
<div>The July minutes included an extended discussion on Australian household debt levels, with a ‘special paper’ prepared for the meeting.</div>
<div> </div>
<div>Key points were fairly familiar although some comments were notable, in particular that “members recognised that a material share of household debt is held by lower-income households, which generally have higher debt relative to their income”.</div>
<div> </div>
<div>The same group however were seen as likely to have ‘asymmetric’ responses to interest rate moves –sensitive to increases but less likely to borrow more when rates fall.</div>
<div><strong> </strong></div>
<div><strong>Conclusion</strong></div>
<div><strong> </strong></div>
<div>There were many other points of interest in the remainder of the minutes, which were the longest in word count terms since the RBA began publishing full meeting minutes in 2006.</div>
<div> </div>
<div>Many of these were more optimistic than the comments we have singled out – household labour incomes and labour market vacancy rates for example were noted as positives domestically, as were the contributions from public sector activity, infrastructure investment, non-mining business investment more generally, a rise in the terms of trade and evidence of rising wage pressures in major economies abroad.</div>
<div> </div>
<div>Overall though the additional colour from the July meeting minutes again underscores that policy is firmly on hold. We remain of the view that the RBA will leave the cash rate unchanged throughout 2018 and 2019.</div>
<div> </div>
<div><em>Matthew Hassan is a Senior Economist at Westpac.</em></div>
</body></html>

RBA's July board meeting confirms the cash rate isn't changing: Matthew Hassan

<p>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.</p>

<p>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;</p>

<p>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;</p>

<p>“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;</p>

<p>[smartcode_project:default project_id=110291 project_image_fid=302785]</p>

<h2>Affordable product leads, premium demand remains resilient</h2>

<p>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;</p>

<p>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;</p>

<p>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.</p>

<p>Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.</p>

<p>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;</p>

<p>[smartcode_project:default project_id=148957 project_image_fid=364102]</p>

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

<p>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.</p>

<p>David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.</p>

<p>“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;</p>

<p>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.</p>

<p>[smartcode_project:default project_id=108869 project_image_fid=317905]</p>

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

<p>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;</p>

<p>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;</p>

<p>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”.</p>

<p>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;</p>


Joel Robinson

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

<p><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.</p>

<p>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.</p>

<p>Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.</p>

<p>“Brisbane was the right step for Sammut,” Sammut said.</p>

<p>“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.”</p>

<p><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" /></p>

<p>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.</p>

<p>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.</p>

<p>“We are DA approved now which is very exciting,” Sammut said.</p>

<p>“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.”</p>

<p><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" /></p>

<p>Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.</p>

<p>“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.</p>

<p>The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.</p>

<p>“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.”</p>

<p>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.</p>

<p>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.</p>


Sammut secures approval for debut Brisbane apartment development in Toowong

<p>Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.</p>

<p>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.</p>

<p>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.</p>

<p>“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.</p>

<p>“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.</p>

<p>“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.”</p>

<p>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.</p>

<p>“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.”</p>

<p>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.</p>

<p>“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.”</p>

<p>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.</p>

<p>“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.</p>

<p>Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.</p>

<p>“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.</p>

<p>“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”</p>

<p>The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.</p>

<p>“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.</p>

<p>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.</p>

<p>&nbsp;</p>


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

<p>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.</p>

<p>The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.</p>

<p>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.</p>

<p>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.</p>

<p>“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.</p>

<p>“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.”</p>

<p><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" /></p>

<p>GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.</p>

<p>“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.”</p>

<p>Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.</p>

<p>“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.</p>

<p><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" /></p>

<p>&nbsp;</p>

<p>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.</p>

<p>Green praised local policy settings.</p>

<p>“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.”</p>

<p>One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.</p>

<p>“The way we will be able to achieve economies of scale is through size,” Green added.</p>


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

<p>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.</p>

<p>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.</p>

<p>Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be</p>

<p data-end="683" data-start="511">"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.</p>

<p data-end="882" data-start="690">"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."</p>

<p data-end="882" data-start="690">[smartcode_project:default project_id=134646 project_image_fid=6109]</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6110]</p>

<p>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.</p>

<p>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.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6116]</p>

<p data-end="247" data-is-last-node="" data-is-only-node="" data-start="0">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.</p>

<p>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.</p>

<p>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.</p>

<p>[smartcode_project_cta:default project_id=134646]</p>


Matthew Hassan

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News