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GUEST OBSERVER
As widely expected, the RBA left the official cash rate unchanged at 1.50 percent at its July meeting. The Governor’s decision statement was also largely the same as in June with no substantive changes to the key closing paragraphs and other tweaks mostly minor and even-handed in terms of policy implications.
Indeed, there are only really four changes between the June and July decisions statements:
On commodity prices, last month’s observation that “prices of iron ore and coal have declined over recent months as expected” is dropped with the July statement simply noting the “rise in commodity prices over the past year has boosted Australia’s national income”;
On the global inflation backdrop, the Governor has added a line noting that “wage growth remains subdued in most countries, as does core inflation”;
On growth domestically, the statement seems to take a less positive view: the slowdown in the March quarter which was previously viewed as “reflecting … quarter to quarter variation” now described as only “partly reflecting temporary factors”; consumption growth viewed as subdued and reflecting slow growth in real wages and high household debt; and the line reaffirming the Bank’s positive medium term outlook for growth to increase gradually to “a little above 3 per cent” was dropped (although this may simply reflect the fact that the Bank will be making a full reassessment of its forecasts leading into the August Statement on Monetary Policy).
On labour market conditions, the Governor’s statement removes last month’s observation that “growth in hours worked remains weak”.
The closing three paragraphs – on financial conditions (“outlook … supported by the low level of interest rates”; “an appreciating exchange rate would complicate” the transition following the mining investment boom”); housing markets (varying “considerably around the country”; “additional supply of apartments ... scheduled to come on stream”; “recent supervisory measures should help address risks”); and the policy view (no guidance) – are almost completely unchanged from June.
Notably absent from the Governor’s decision statement is any hawkishness around the medium term policy outlook. With several other developed economy central banks showing a surprisingly hawkish turn of rhetoric in recent weeks the market seemed to toy with the idea the RBA might say something similar – particularly given recent comments from an ex RBA Board member that a significant increase in the cash rate might be required over the medium term to return rates to ‘neutral’.
Also notable in our view is the absence of commentary around labour market slack – aside from solid gains in jobs and hours worked, the May labour force survey also showed a surprise fall in the unemployment rate to 5.5% and in wider measures of labour market slack that include underemployed workers. That suggests the Bank may be wary of making too much of these latest observations, particularly given the more uncertain link to wages growth.
Conclusion
Overall the July decision and Governor’s statement gives little additional information with only incremental changes in commentary. The minutes may provide some additional insight, particularly if medium term policy normalisation issues were discussed. However, we suspect the Bank will continue to hold a pointedly neutral stance on policy guidance.
The August meeting could see a more material review of its commentary, with a key update on CPI inflation due July 26 and the Bank reassessing its economic forecasts ahead of the August Statement on Monetary Policy (due out August 4).
However, even with some potential downgrade to 2018 growth forecasts (Westpac continues to expect growth of 2.5%, well below the Bank’s 3.25% mid-point forecast) none of this is likely to present enough of a case to establish an explicit policy bias. All up, we continue to see no reason to change our current view that the official cash rate will remain on hold throughout 2017 and 2018.
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/">Westpac</a>.
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Only minor changes to RBA Governor’s decision statement on housing: Matthew Hassan

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The minutes to the RBA’s June monetary policy meeting mainly reiterated the key points from the Governor’s decision statement and the additional ‘message’ from previous minutes – that the Bank’s main focus was on developments in labour and housing markets.
That said, there were some notable details: an intriguing new paragraph on financial stability in the ‘Considerations for Monetary Policy’ section; a slightly more bullish/hawkish discussion of international conditions; and several useful snippets from the detailed discussion including those gleaned from the Bank’s liaison programme.
As per the Governor’s decision statement, the slower growth picture for the March quarter was acknowledged but attributed to “quarter to quarter variation” with the Bank’s positive medium term outlook for growth to rise to a little above 3 percent reaffirmed.
The labour market commentary in the minutes was perhaps a little more positive than in the Governor’s statement which explicitly described indicators as “mixed”. The minutes do not use this particular term although the rest of the discussion is the same. Note that the RBA meeting took place well before the surprisingly strong May labour force report released last Thursday.
The more constructive view around business investment that appeared in the decision statement was largely repeated, the detailed discussion downplaying the disappointing forward view from the Capex survey, citing its limited coverage and more positive tone from approvals, liaison feedback and business surveys.
On housing, the decision statement repeated the Governor’s statement comment that price pressures were starting to ease in markets that had seen brisk price rises. The minutes also note that housing credit growth had been steady with some slowing in growth in investor housing credit. However, “APRA’s recent prudential supervision measures … were yet to have their full effect”.
As in both April and May, the minutes concluded with the line that: “the Board continued to judge that developments in the labour and housing markets warranted careful monitoring”. Note that this line does not appear in the Governor’s decision statement, perhaps to avoid the appearance of giving some sort of policy guidance, e.g. these areas warrant monitoring but are not in a situation where they would draw an immediate policy response.
Turning to the ‘notable details’, the new paragraph on financial stability added to the ‘considerations’ section notes this aspect of the RBA’s role sits within its wider medium term inflation targeting framework, the effect of monetary policy decisions within this framework and the role of prudential supervision. It stresses the importance of cooperation and coordination across agencies facilitated by the Council of Financial Regulators.
While there are no ‘overt’ messages in the discussion, its inclusion is intriguing. Is it, for example, implying that a coordinated approach may also apply if the RBA were to consider additional rate cuts? Alternatively, is it simply restating the clear message the Bank has already given about the importance of financial stability concerns for policy and a broad endorsement of the current status quo?
The June meeting minutes sounded less wary on international conditions and more alert to a potential lift in inflation. Whereas previous minutes regularly noted risks to China around residential property markets and rising leverage in the Chinese economy, this line did not feature in June which ran with simpler observations including that the “recovery in residential construction had continued despite the Chinese authorities having again tightened policy measures aimed at reducing speculative activity”. 
More pointedly, the minutes also note that “globally, headline inflation had picked up” and that while this largely reflects higher oil prices with core inflation still low, “unemployment rates in many major advanced economies had been around or below levels that could be associated with a build-up in wage pressures”, with some signs that both wages growth (increasing in the US and Japan) and growth in unit labour costs (above average in the US, Japan and Germany) may be starting to respond.
The general theme is not new – last month’s minutes included the line that “core inflation was expected to rise gradually in the major advanced economies as spare capacity in labour markets declined further” – but the tone seems more hawkish.
Other useful snippets in the detailed discussion mainly come via the Bank’s liaison programme which included: “retail trading conditions had remained challenging”; “isolated reports of localised and skills-specific labour shortages feeding into higher wages”; and “identified a range of commercial property projects that are under consideration for the year ahead” that have yet to appear in the approvals data.
Conclusion
Monetary policy clearly remains firmly on hold as the Board assesses developments in housing and labour markets. The strong May labour force report released the week after the Bank’s June meeting would have eased some of its concerns on this front, although weak wages growth is likely still a factor (indeed this is one aspect of current conditions that could have received more discussion in the minutes which simply noted the link to consumer incomes and spending). It may also be becoming more comfortable around housing market risks as well although the situation here is clearly still evolving.
Overall there appears to be little shifting the Bank away from its positive medium term view on growth. Westpac’s more downbeat forecast for 2018 – based on a more significant drag from housing construction and falling commodity prices – will take time to become apparent and, in our view, will not be sufficient to draw an RBA interest rate response, particularly given its concerns about potential financial stability risks. As such we remain comfortable with our view that rates will remain on hold for the remainder of 2017 and 2018.
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Interesting detail in June RBA minutes: Matthew Hassan

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GUEST OBSERVER
The March housing finance approvals report was largely in line with expectations.
The number of approvals for owner occupier loans dipped 0.5 percent/mth but were flat ex refi. The consensus forecast was for a flat result. Approvals ex refi were up 3.8 percent yr. The value of investor loans rose 0.8 percent after a sharp 5.7 percent pull back in Feb, annual growth coming in at 14.2 percent/yr.
<a href="https://www.propertyobserver.com.au/images/2017/05/15/Screen%20Shot%202017-05-16%20at%208.39.38%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/15/Screen%20Shot%202017-05-16%20at%208.39.38%20AM.png" alt="">
All up the data was largely as expected – note that the latest round of macro prudential tightening was only announced in late March with impacts likely to come through in Apr-Sep. That said, the more moderate reads on investor loans in Feb-Mar suggest lenders were already reining activity in this segment to keep within APRA’s existing 10 percent limit on investor credit growth (i.e. growth in the total stock of loans).
 
<a href="https://www.propertyobserver.com.au/images/2017/05/15/Screen%20Shot%202017-05-16%20at%208.40.34%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/15/Screen%20Shot%202017-05-16%20at%208.40.34%20AM.png" alt="">
The detail showed, ex refi, a solid gain in owner occupier approvals in NSW (+2.9 percent/mth) offset by falls in the other major states ranging from –1.3 percent/mth in Vic and –1.8 percent/mth in SA to –3.4 percent/mth in Qld and –4.4 percent/mth in WA. Annual growth remains positive for all states except WA.
Construction-related finance approvals posted a solid 4.3 percent/mth rise led by a 10 percent bounce in finance for the purchase of newly built dwellings (which includes apartments and ‘off the plan’ purchases). This segment showed a similar sized fall in Feb.
The total value of loans ex refi rose 1.3 percent, partially reversing Feb's 2.2 percent fall. Annual growth edged up to 10 percent.
<a href="https://www.propertyobserver.com.au/images/2017/05/15/Screen%20Shot%202017-05-16%20at%208.41.36%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/15/Screen%20Shot%202017-05-16%20at%208.41.36%20AM.png" alt="">
More recent data from weekly auction activity suggests housing market conditions steadied a touch in Apr-May after cooling off earlier in the year from a very strong finish to 2016. Auction volumes remain high although turnover via other channels looks to be very weak. Note that these measures only provide meaningful gauges for the Sydney and Melbourne markets.
Looking ahead, the exact impact of new regulatory guidelines is unclear. The specific limit for investor credit growth was unchanged at 10 percent although lenders were instructed to keep growth 'comfortably below' the target. The main new measure was a 30 percent limit on the 'interest only' share of new loans (currently running at 38  percent overall and 65 percent of investor loans), particularly those with high LVRs.
<a href="https://www.propertyobserver.com.au/images/2017/05/15/Screen%20Shot%202017-05-16%20at%208.42.29%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/15/Screen%20Shot%202017-05-16%20at%208.42.29%20AM.png" alt="">
Lenders have responded with increased rates on both investor and owner occupier loans with larger increases for 'interest only' products (+30bps on average for investor loans, +15bps for owner occupier loans). It remains to be seen how borrowers react but the mix suggests both owner occupier and investor finance approvals will be impacted, perhaps with some 'product switching' refinance flows in the mix as well. 
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/">Westpac</a>.
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Approvals for owner occupier loans dip: Matthew Hassan

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GUEST OBSERVER
The minutes of the Reserve Bank Board’s March monetary policy meeting conveyed a more downbeat tone than the Governor’s decision statement, the commentary sounding a little more concerned about labour market conditions, household incomes and risks in the housing market.
Recall that the Governor’s decision statement included a mix of positive and negative changes vs February – business and consumer confidence at or above average and the global backdrop more constructive but the picture around household incomes and labour markets less encouraging. Changes to the commentary on housing were limited to a note that “supervisory measures have contributed to some strengthening of lending standards.”
The fuller discussion in the minutes presents a little differently. 
The Bank’s central case is still constructive: “Looking forward, year-ended growth … expected to pick up gradually to be above its potential rate over the forecast period” with spare capacity expected to decline slowly and underlying inflation to gradually rise.
The global backdrop is also noted as a clear upside with a marginally more constructive view on commodity prices (“the recent improvement in global demand suggested that higher commodity prices could be more persistent than previously anticipated”).
However, links back to domestic demand are again questioned with the boost to mining sector profits seen flowing more to dividends than spending with significant ‘leakage’ to non-resident shareholders. Interestingly, comments in the detail also note that “the terms of trade had played an important role in households’ saving and spending decisions” in recent decade, perhaps suggesting that the Bank suspects any ‘windfall’ gains for consumers may tend to be saved rather than spent.
The overall theme is still of upside risks from global growth and commodity prices near term but a likely muted pass through to local conditions and question marks beyond 2017.  
Business and consumer confidence rates less of a mention, with just a watered down comment “household perceptions of their personal finances had also been around average”. The Westpac-Melbourne Institute Consumer survey has shown a material weakening in this component in recent months.
The minutes seem much less certain about labour markets. For example, whereas the Governor’s decision statement noted “forward–looking indicators point to continued expansion in employment over the year ahead” the minutes are more tentative saying they “suggested that there could be some pick-up in employment growth near term“ also suggesting that the labour market “may not be quite as strong as the headline employment and unemployment rate figures indicated”.
The minutes strike a different tone on housing as well, referring to “a build-up of risks associated with the housing market”. That language seems a little more urgent. Also notable is the link drawn between incomes and housing risks:”… household income growth had been low, which, if it were to persist, would have implications for consumption growth and the risks posed by the level of household debt.”
Members also noted that “although credit growth was lower than in previous decades, it had been faster than the subdued growth in household incomes”.
This is important from the point of view of potential changes to macro-prudential policy. Recall that the main ‘macro’ measure introduced in the 2014-15 changes was a 10 percent guide for annual growth in investor credit. In considering the risks around household debt levels, the RBA is really thinking in terms of leverage, i.e. the ‘debt to income ratio’.
Under this framework, if incomes are now seen as growing at a permanently slower pace then the trajectory for credit growth would need to be lowered. The RBA’s next Financial Stability Review, due April 13 may provide more elaboration on these comments. 
Conclusion
While still presenting a constructive growth view on global and local growth prospects, the minutes to the March RBA meeting place more emphasis on weaknesses around labour markets and the consumer and downplay the potential upside from rising commodity prices. They also sound a touch more urgent around risks in the housing market. 
That mix points to an RBA that is slightly more dovish stance on rates but potentially mulling ‘macro-prudential’ policy changes to manage risks. 
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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RBA shows a little more concern around housing risks: Matthew Hassan

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GUEST OBSERVER
Approvals rose 1.8 percent in Jan, retracing most of a downwardly revised 2.5 percent fall in Dec.
The result was above market expectations of a 0.5 percent dip.
As always, January housing data should be treated with extra caution as the summer low season amplified what are already volatile month to month estimates.
Adding to this, the detail showed the Jan monthly gain was driven by ‘units’ – the lumpier, more volatile component up 6.2 percent/mth. In contrast, private detached house approvals were down 3 percent.
Looking by state, the rebound was led by a 24 percent jump in NSW, again suggesting volatility and seasonal adjustment are exaggerating the picture here.
Notably, the weakness in private sector house approvals was broadly-based with all the major eastern states recording declines. 
Details  Private houses  -3%mth, -9.4%yr Private 'units'    6.2%mth, -14%yr          
NSW     24%mth, 9.4%yr Vic       -5.3%mth, 1.5%yr Qld       -11.9%mth, -45.4%yr WA       3.5%mth, -21.8%yr SA        6.5%mth, -16.9%yr       
Alteration &amp; additions^   -17.7%mth, 2.4%yr Non-residential^                         -14%mth, -13.8%yr ^ value 
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Australian dwelling approvals approvals rise 1.8 percent in Jan: Matthew Hassan

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GUEST OBSERVER
Despite another modest lift this month consumer sentiment remains below its October-November levels.
At just below 100 the Index is in slightly pessimistic territory with consumers reporting family finances under pressure and a mixed outlook for the economy.
All components of the headline Index improved this month. The sub-index tracking views on ‘family finances vs a year ago’ posted the biggest gain, up 4 percent but coming from a weak starting point after a 10.6 percent slide over the previous three months.
The sub-index tracking expectations for ‘finances over the next 12 months’ has been steadier in recent months, posting a small 1.1 percent gain in February. On a combined basis, consumer views on family finances are still down 6.5% on a year ago and are 5.4 percent below their long run average.
<a href="https://www.propertyobserver.com.au/images/2017/02/16/Screen%20Shot%202017-02-16%20at%208.23.29%20AM.png" target="_blank">Click to enlarge</a>
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Consumers are more positive on the economy. Near term expectations posted a solid gain, the ‘economic conditions, next 12 months’ sub-index up 2.8 percent, recovering all of the ground lost following the surprisingly weak September quarter national accounts. 
Recent commentary from the RBA may have helped ease concerns with the Bank re-affirming it positive growth outlook. Consumers are less convinced about medium term prospects though, the ‘economic conditions, next 5 years’ sub- index posting a milder 1.6 percent gain to be only slightly above its long run average read. 
Consumers are a little more inclined towards making major purchases. The ‘time to buy major household item’ sub-index rose 2.2 percent, building on a 4.9 percent bounce in January to be back near November levels. The rebound is a hopeful sign that the soft patch in retail sales late last year has not extended into 2017. 
While sentiment improved in February, the month saw renewed labour market concerns. The Westpac Melbourne Institute Unemployment Expectations Index rose 3.1 percent, the higher read meaning more consumers expect unemployment to rise in the year ahead. 
Notably, consumers are also wary about the outlook for interest rates. In our special question around the outlook for mortgage rates, 60 percent of respondents rates to be higher in 12 months; 35 percent expect rates to be steady; and just 5 percent expect further rate cuts. That compares to just 37 percent expecting higher rates when the question was last run back in August. 
Concerns about potential interest rate increases may have impacted sentiment towards housing. The ‘time to buy a dwelling’ index fell sharply, declining 7.8 percent. The index is now at its lowest 
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level since May 2010 when the RBA was near the end of its last tightening cycle. Victoria, Queensland and WA all recorded 10 percent plus declines in the month although the NSW Index remains the weakest across the states. The fall points to a shaky start to the new year for housing markets. 
Most consumers still expect house prices to move higher. The Westpac Melbourne Institute Index of House Price Expectations rose 0.1 percent, holding on to last month’s 11 percent bounce. Over 64 percent of consumers expect price gains over the next 12 months compared to just 39 percent this time last year. In NSW and Victoria, where market conditions and price gains have been strongest, 70–75 percent of consumers expect prices to rise further in 2017 with one in ten expecting double digit price growth. 
The Reserve Bank Board next meets on March 7. We expect the Board will again decide to keep the official cash rate on hold. Recent commentary clearly sets out the Bank’s current policy approach. That is, to hold rates steady in anticipation of a gradual lift in growth and inflation while imbalances in the housing market remain contained. We expect this thinking will be sustained throughout 2017, being supported by a rising terms of trade, a peaking construction cycle and a gradually falling unemployment rate with rates remaining on hold. 
We expect a similar policy stance in 2018 despite clear preferences in the market for the beginning of a tightening cycle. Indeed, Westpac’s view of a slowdown to below trend growth pitches the risks to the ‘on hold’ call in 2018 to the downside, in clear contrast to current market views.
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/">Westpac</a>.
 
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Consumer sentiment posts modest lift: Matthew Hassan

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GUEST OBSERVER
Retailers enjoyed a rare gain in August, sales lifting 0.4 percent in the month, the result coming in a touch above Westpac’s 0.3 percent forecast and the consensus expectation of a 0.2 percent gain.
While a win vs expectations and the best monthly gain since October last year, that is not saying much – ‘par’ for retail sales is about 0.5 percent a month.
Annual sales growth is still running at an insipid 2.8%yr with trend sales growth tracking an even poorer 1.7 percent annualised pace.
The detail was in line with expectations as well. As mentioned in our preview, July sales were ‘held back’ by an abnormally large 5.8% fall for department stores that reflected the earlier timing of winter sales. Sales in this category rebounded 3.5 percent in August – ‘normalising’ but still to a weak underlying trend reflecting the specific challenges facing this type of retailing.
Across the other categories: food was up 0.3 percent and household goods up 0.2 percent (another disappointing read given the current boom in housing construction that should be boosting spending in housing related categories).
Both clothing (–0.4 percent/mth) and ‘other’ retail (–0.6 percent/mth) had a soft August. However cafes and restaurants saw another solid gain up 1.2 percent/mth following a 1.4 percent rise in July.
By state, better gains for NSW (0.5 percent), Vic (0.7 percent), Qld (0.7 percent) were partially offset by a 0.5 percent fall in WA.
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Australian retail sales growth still insipid: Westpac's Matthew Hassan

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Dwelling approvals were stronger than expected in April, posting a 3 percent rise against expectations of a 3 percent fall.
Approvals have risen 6 percent over the last 2mths with the monthly trend rate lifting back to 1.2 percent, an double-digit annualised pace.
However, the detail carries a strong warning that this renewed uptrend is unlikely to sustain and may be prone to a sharp reversal in coming months. 
All of the gain is coming from a resurgence in ‘high rise’ approvals, up an estimated 16% in April alone and nearly 40% since Feb (Westpac estimates of seasonally adjusted approvals).
That is unlikely to continue both in light of the segment’s typically ‘lumpy’ monthly profile and its exposure to investor activity – a segment currently coming under additional pressure from tightening lending conditions domestically and efforts to rein in non-resident purchases.
Meanwhile, other segments are looking much more subdued: private detached house approvals declined 2.3 percent mth and ‘low-mid-rise’ unit approvals posted a small rise but coming off a sharp fall in March (Westpac estimates of seasonally adjusted approvals).
The state detail shows the high rise increase was concentrated in NSW and Qld.
Ex high-rise, approvals are showing tentative signs of stabilising in NSW and WA and are continuing to track higher in Qld and Vic, giving a very mixed read on trends overall.  The value of renovation and non res building approvals both posted strong gains in April, lifting trend growth into strong positive for renovations but just flat for non res building.
Overall, approvals continue to surprise to the upside but the detail is much less positive given the extent to which high rise approvals are driving gains. Details  Private houses  –2.3%mth, –8.9%yr      
Private 'units'    8.7%mth, 13%yr                       
NSW     10.4%mth, 18.8%yr   Vic       –2.7%mth, –4.6%yr   Qld       6.7%mth, 16.8%yr     WA       –0.6%mth, –28.4%yr SA        13.7%mth, 30%yr                  
Alteration &amp; additions^   18.7%mth, 13.7%yr     Non-residential^                         47.3%mth, 32.4%yr       ^ value      
 
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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High-rise resurgence offsetting slowdown in other housing segments: Westpac's Matthew Hassan

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Australian housing finance approvals firmed in Dec. The number of new approvals for owner occupiers rose 2.6%, broadly in line with market expectations and consolidating on a 1.9% gain in Nov to be up 9.8%yr. Ex-refi, the number of 'new' loan approvals was up 1.6%mth, 4.6%yr.
Note that changes in lending criteria and borrowing rates for investor loans is indirectly boosting owner occupier activity. Although the bulk of the initial ‘switching’ effect seemed to come through between June and Sep. On the other side of this effect, the value of loans to investors dropped 19% between April and Oct but stabilised in the closing months of 2015, rising 1% in Nov and a further 0.6% in Dec (though still down 13.6%yr).
The total combined value of loans – our preferred gauge of housing demand at the moment given the aforementioned category switching – was up 0.8%mth, 6.4%yr. Growth is significantly flatter once refinance is excluded – the value of refi approvals surged 36% over the year to Dec 2015, accounting for almost all of the growth in the total value of new loans (ex refi, the value of loans is up just 0.2%yr).
Construction-related finance approvals posted a particularly strong month, up 5.2%mth led by 12.4% jump in approvals for the purchase of newly-built dwellings, which incudes 'off the plan' purchases. Note that many of these loans will be post the completion of building rather than a forward indicator of future work. That said, loans for construction were also up 1.8%mth, suggesting a degree of resilience outside the 'high rise' segment that has driven the declinein dwelling construction approvals to date.
Unfortunately, the state detail from the report is of limited use as the value of investor loans and total loans is not available until additional data is published next week. That said, the number of owner-occupier loans ex refi is showing strong gains across both NSW and Vic, with WA the only state showing material weakness.
Overall the picture is of some stabilisation after a sharp investor-led softening over the second half of last year. This weekend’s auction results will be the first meaningful reading on how much this may have carried into 2016. This week's update on consumer sentiment showed assessments of 'time to buy a dwelling' at still weak levels, albeit with some improvement in NSW &amp; Vic. Price measures hint at some firming in recent months although the summer holiday hiatus makes this and other housing data notoriously unreliable over Jan-Feb period.
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Australian housing finance December 2015: Westpac's Matthew Hassan

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GUEST OBSERVER
Dwelling approvals posted a better than expected rebound in Dec with a surprisingly strong rise in detached house approvals aiding an expected partial recovery in units from a big fall in Nov. Total approvals rose 9.2%, well above the consensus expectations of +4%. While approvals are still down 4.3% over the 2mths, the Dec detail was positive.
In particular, private detached house approvals posted a surprisingly strong 5.4% gain (+4.5%yr). This segment is typically more stable than total approvals and for most of 2015 was drifting lower at 0.6% a month. The gain accounted for the upside surprise vs expectations in Dec.
In contrast, the ‘other housing’ segment, i.e. units, posted a solid 12.8% rebound in line with expectations following the 22% slump in Nov (approvals down 6.5%yr). The detail shows a ‘modest’ partial rebound in high rise approvals (we estimate +12% in seasonally adjusted terms vs a 33% drop in Nov) with a slight gain in ‘low-mid-rise’ approvals. Interestingly, on a combined basis, detached housing and non-high rise units are now showing a reasonable uptrend running around +4% in annualised terms.
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Looking by state, the bulk of the monthly volatility was in Vic which whipped around ±35% in Nov-Dec. Approvals posted a solid 2.1% gain in NSW, pulled back 4.6% in Qld (though following a strong gain in Nov) and jumped in WA (though still down 29%yr). The state detail on detached houses showed gains in all states with a very strong 13.9% surge in Qld. The latter suggests some of the Dec gain in total detached housing could be an anomaly (Qld accounted for 2.1ppts of the 5.4%mth surge). 
The value of renovation approvals rose 3.5% in Dec to be up 11%yr, a reasonably solid uptrend in place albeit heavily concentrated in NSW where approvals recorded a big jump in Dec (+9.8%mth, +28.6%yr).
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In stark contrast, the value of non res building approvals continues to bump around a weak level with unconvincing momentum. A 6.1% fall in Dec left approvals flat vs a year ago with quarterly results suggesting activity will pull back sharply once current projects start to wind down.
Looking at 2015 as a whole, the calendar year saw a record 232k dwellings approved, a 13.7% jump on 2014 and blitzing previous records (prior to 2014, the record high was 201k in 1973). For the first time ever there was virtually a 50:50 split between detached houses and unit approvals with the latter accounting for almost all of the growth in the year.
The Dec report showed a better than expected finish to the hear, also hinting at some residual momentum in non-high rise sectors holding the construction cycle up. More generally, the concentration of units and longer time required for these projects points to another significant leg higher in actual construction work before an eventual peak comes in late 2016.
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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2015 saw a record 232,000 dwellings approved: Westpac's Matthew Hassan

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]

Matthew Hassan

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