The residential transformation of St Kilda Road is set to continue into with more new apartment plans for the sought-after boulevard.

Wing Tai Asia has lodged plans for a major residential tower at 464-466 St Kilda Road, replacing the former VACC House with an 18-storey mixed-use development designed around a retained heritage podium and a sculpted contemporary tower.

The proposal, prepared under Victoria’s Significant Residential Development with Affordable Housing pathway, would deliver 325 apartments and ground-floor retail across the prominent 4,653 sqm boulevard site in Melbourne’s St Kilda Road North Precinct.

The project centres on the adaptive reuse of the site’s heritage-listed VACC Building, an eight-storey office designed by Bernard Evans that has occupied the address for decades. Planning documents state the development would involve “carefully dismantling and conserving off-site the original metal fabric of the podium visible from St Kilda Road,” before reinstating it as the defining frontage of the new scheme.

Above the restored podium, Wing Tai is proposing a curvilinear residential tower. The scheme includes 172 one-bedroom apartments, 63 two-bedroom apartments, 66 three-bedroom apartments, and 24 four-bedroom apartments, alongside two ground-floor food and beverage tenancies fronting St Kilda Road.

The tower has been designed with substantial articulation and variable setbacks to minimise perceived bulk and maintain view corridors along the boulevard. Urbis, which prepared the planning report, said the design “has been significantly articulated through a curvilinear design” with “an interplay with materials, façade expression and depth” to create visual separation and visual interest.

The proposal also includes 254 basement car spaces, landscaped pedestrian links connecting St Kilda Road and Queens Lane, and a biophilic landscape strategy featuring canopy trees, raised planters, cascading greenery and a glass oculus pool overlooking the eastern frontage.

Planning documents confirm the $270.1 million development will contribute 3 per cent of project costs to the Social Housing Growth Fund as part of the application process.

Wing Tai acquired the St Kilda Road property in 2018 alongside Abacus Property Group for $95.38 million, before later consolidating ownership of the site. The property previously served as the Victorian Automobile Chamber of Commerce headquarters for around 60 years.

The transformation of the St Kilda Rd boulevard is already beginning to materialise, with a number of high-profile projects recently completed, launched, or approaching launch as developers continue to back the long-term appeal of the precinct.

Among the most notable recent completions is Louise by Samuel Property Group, just off the strip on Queens Lane, the same pocket Hirsch &amp; Faigen recently launched The Queensbury. Mirvac is too on the same street with The Albertine, which is approaching completion.

Dexus recently secured approval for its slice of St Kilda Road, while Gurner also has approved plans for the precinct.

Joel Robinson

Wing Tai unveils 325-apartment St Kilda Road tower on former VACC House site

Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

First look: SP Setia targets St Leonards skyline with 40-storey TOD tower

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

First look: Urban Property Group unveils Newcastle’s latest tower at Wickham interchange

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

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The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
</section>
</section>

[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

Sydney’s property market is known for high prices, competitive bidding, and mounting pressure on first home buyers. But change is on the horizon.

From late 2025, eligible first home buyers in New South Wales will have access to a new federal government initiative aimed at addressing affordability: the Help to Buy Scheme.&nbsp;

<h2>What is the Help to Buy Scheme?</h2>

The program introduces a shared equity model intended to reduce the upfront cost of entering the property market, particularly in high-demand urban areas such as Sydney.

The scheme operates under a shared ownership structure in which the federal government takes an equity stake of up to 40 per cent for new homes, or 30 per cent for existing dwellings. This arrangement allows eligible buyers to significantly reduce their loan size and avoid the added cost of Lenders Mortgage Insurance (LMI).

Under this model, purchasers can enter the property market with as little as a two per cent deposit, well below the traditional 10 to 20 per cent usually required. The government’s contribution is not a loan but a co-ownership stake in the property. As such, there is no interest or rent charged on its portion.

Because the government’s equity combined with the buyer’s deposit typically meets or exceeds the 20 per cent threshold, LMI does not apply. The remaining balance, generally between 60 and 70 per cent of the property’s value, is financed through a standard home loan with a participating lender.

The government's equity in the property remains in place until the buyer chooses to repay it voluntarily or until the property is sold. Buyers can buy back the government’s share over time, in increments of at least five per cent, depending on their financial situation.

There is no fixed repayment timeline, but the amount to be repaid will be based on the property's market value at the time of repayment, not the original purchase price.

<h2>How do you qualify for the&nbsp;Help to Buy Scheme?</h2>

To qualify for the Help to Buy Scheme, applicants must meet the following conditions:

<ul>
	<li>Be an Australian citizen at least 18 years of age.</li>
	<li>Be a first-home buyer who does not currently own property.</li>
	<li>Intend to live in the property as their primary residence.</li>
	<li>Earn less than $100,000 per year for individuals, or $160,000 for couples.</li>
	<li>Purchase a property within the regional price caps, currently $950,000 in Sydney, though this is expected to rise to approximately $1.3 million ahead of the program’s launch.</li>
</ul>

While the Help to Buy Scheme does not solve affordability challenges across the board, it does offer a more accessible pathway for a defined segment of the market, particularly younger buyers with moderate incomes who have been priced out of traditional lending routes.

The scheme is expected to commence in NSW in late 2025, as part of a national rollout.

Under the new model, purchasers can enter the property market with as little as a two per cent deposit, well below the traditional 10 to 20 per cent usually required

Help to Buy Scheme: What first home buyers in NSW need to know

The First Home Owners Grant (FHOG) is a government initiative designed to help eligible first-time home buyers by offering financial assistance towards the purchase or construction of a new home.

While the FHOG is a nationwide program, it is administered separately by each state and territory, meaning the eligibility criteria, grant amounts, and property requirements can vary depending on your location. This means that the amount available and the conditions attached to the grant will differ, so it is important to check the specific guidelines for your state or territory.

It’s important to note that the FHOG is just one of several incentives available to first home buyers. In most states and territories, the grant is not linked to stamp duty exemptions or concessions, with the exception of the Australian Capital Territory (ACT). The FHOG is typically a one-off payment, reducing the overall cost of purchasing or building a new home before any stamp duty concessions are applied.

Below, we provide a breakdown of the First Home Owner Grants available across Australia, outlining the specific details for each state and territory.

<h2>New South Wales First Home Owner Grant</h2>

First Home Owner Grant: Offers a $10,000 grant for new homes valued up to $600,000. For land purchases and owner-builders, the threshold extends to $750,000.

Stamp Duty Benefits: Provides full stamp duty exemption for homes valued up to $800,000, with concessions available for properties up to $1 million.

<h2>Victoria South Wales First Home Owner Grant</h2>

First Home Owner Grant: Provides a $10,000 grant for first-home buyers purchasing or building new homes valued up to $750,000.

Stamp Duty Benefits: Offers full stamp duty exemption for properties up to $600,000, with concessions available up to $750,000.

<h2>Queensland First Home Owner Grant</h2>

First Home Owner Grant: Offers $30,000 for contracts signed between 20 November 2023 and 30 June 2025. The FHOG applies to new homes valued up to $750,000.

Stamp Duty Concessions: Provides additional concessions for properties valued up to $800,000.

<h2>Western Australia First Home Owner Grant</h2>

&nbsp;

First Home Owner Grant: Offers a $10,000 grant for new homes valued up to $750,000 in the southern regions and up to $1 million in the northern regions.

Stamp Duty Concessions: Available for homes valued up to $600,000 for transactions entered into on or after 9 May 2024.

<h2>Australian Capital Territory First Home Owner Grant</h2>

First Home Owner Grant: Replaced by the Home Buyer Concession Scheme, offering full stamp duty concessions for eligible buyers.

<h2>South Australia First Home Owner Grant</h2>

First Home Owner Grant: Provides up to $15,000 for new homes, including houses, apartments, and townhouses. As of 6 June 2024, there is no property value cap for eligibility.

Stamp Duty Relief: Available for new homes and vacant land purchases.

<h2>Tasmania First Home Owner Grant</h2>

First Home Owner Grant: Offers a $10,000 grant for new homes and off the plan purchases.

Stamp Duty Exemption: Between 18 February 2024 and 30 June 2026, first home buyers of established homes valued up to $750,000 receive a full exemption on property transfer duty.

<h2>Northern Territory First Home Owner Grant</h2>

First Home Owner Grant: The Northern Territory provides a $10,000 grant for new homes only. Additional government grants and concessions are available for first home buyers.

Stamp Duty Exemption: The only stamp duty exemption available to property buyers is the House and Land Package Exemption (HLPE).

Eligibility criteria and application processes differ across states. Prospective buyers should refer to their respective state revenue offices for full details on grant availability, conditions, and additional concessions.

Every First Home Owner Grant for new property by state

In the ever-evolving landscape of sustainable architecture and environmentally conscious design, systems and ratings in place can help determine the energy efficiency of residential buildings in Australia.

Australia has multiple building rating systems that evaluate energy efficiency and sustainability in existing and new building designs.

Some systems assess individual building components, while others provide an overall rating for the entire structure.

A rating system ensures that homes are comfortable and energy-efficient, whether you are buying, renovating, or building.

NatHERS (Nationwide House Energy Rating Scheme) is a common way for new homes to meet energy efficiency requirements.

As new developments continue to shape the urban environment, understanding NatHERS ratings becomes essential for developers and homeowners. This article delves into the concept of NatHERS ratings, their significance, and how they contribute to creating energy-efficient homes.

<h2>What is NatHERS?</h2>

NatHERS is a national initiative implemented by the Australian government to promote energy efficiency in residential buildings. The scheme aims to provide a standardised method for assessing the thermal performance of homes, considering factors such as insulation, orientation, ventilation, and building materials.&nbsp;

NatHERS ratings are the most common way new homes meet the National Construction Code's (NCC's) minimum energy efficiency requirements.&nbsp;

NatHERS assessments provide thermal and whole-home ratings for new homes, townhouses, and apartments.

The rating helps evaluate the energy performance of buildings, guides homeowners and developers to make informed decisions about the energy efficiency of their properties, and encourages the construction of more sustainable, comfortable, and cost-effective homes.

<h2>How NatHERS Ratings Work</h2>

NatHERS ratings are determined through four accredited software tools (AccuRate, BERS Pro, FirstRate5, HERO) using a calculation engine CSIRO developed to predict building temperature based on various factors.

The tools can model complex effects of building mass, insulation, window size, and other elements.

The outcome is a star rating that reflects the building's overall thermal efficiency, indicating how well it can maintain a comfortable indoor temperature without excessive reliance on heating or cooling systems.

The star rating scale ranges from 0 to 10, with a 6-star rating being the minimum requirement for compliance with the National Construction Code (NCC).&nbsp;

Achieving a higher star rating demonstrates a commitment to energy efficiency and sustainability, as the building is better equipped to minimise its environmental impact and reduce long-term energy costs.

Anyone can use NatHERS tools, but accredited assessors can provide certified ratings and professional advice.

<h2>Benefits of Higher NatHERS Ratings</h2>

Energy Efficiency: Buildings with higher NatHERS ratings are more energy-efficient, requiring less heating and cooling energy. This reduces the structure's carbon footprint and lowers occupants' energy bills.

Cost Savings: Homes with higher NatHERS ratings are generally more energy-efficient, resulting in reduced energy consumption for heating and cooling. This translates to lower energy bills for homeowners, making sustainable living environmentally friendly and economically viable in the long run.

Environmental Impact: Lower energy consumption directly translates to a reduced environmental impact. Buildings with higher NatHERS ratings contribute to the overall goal of mitigating climate change by lowering greenhouse gas emissions associated with heating and cooling systems.

Improved Comfort: Buildings with high NatHERS ratings offer better thermal comfort to occupants. Proper insulation, well-designed ventilation, and optimal orientation maintain a consistent and comfortable indoor temperature, providing occupants with a more enjoyable and healthier space.

Market Value and Desirability: Higher NatHERS ratings can enhance the market value of a property. As energy efficiency becomes a more significant consideration for homebuyers, a well-rated building may attract a premium price and stand out in the real estate market.

Compliance with Building Codes: NatHERS ratings are a vital component of the National Construction Code (NCC), and compliance with these ratings is often a mandatory requirement for new developments. Local councils and planning authorities may set minimum energy efficiency standards that must be met to obtain development approval.

The Nationwide House Energy Rating Scheme (NatHERS) is a crucial initiative shaping the future of energy-efficient, resilient, and cost-effective homes. With its recent upgrades, NatHERS has evolved into a world-leading tool for the building sector, supporting the global commitment to achieving net-zero emissions by 2050.

Staff Writer

What is a NatHERS rating in new off the plan apartment developments?

Mixed-use developments have gained significant popularity across Australia in recent years due to their unique blend of residential, commercial, and recreational spaces.

Unlike traditional single-purpose developments, mixed-use projects offer a harmonious integration of various functions within a single locale.

Residential units seamlessly coexist with commercial establishments, retail outlets, dining venues, entertainment hubs, and recreational facilities, with the combination not only enhances convenience but also fosters a vibrant lifestyle and a sense of community.

<h3>Convenience and accessibility</h3>

Mixed-use developments are designed with convenience in mind. They often integrate residential units with commercial spaces, retail outlets, restaurants, and recreational facilities, creating a self-contained community.

[smartcode_project:default project_id=114215 project_image_fid=204874]

The proximity allows residents to enjoy the convenience of having essential amenities and services within walking distance. Whether it's grabbing a cup of coffee, going grocery shopping, or accessing healthcare services, everything is conveniently located, saving residents time and effort.

<h3>Vibrant lifestyle and community</h3>

One of the major advantages of mixed-use developments is the vibrant lifestyle they offer. With a diverse range of amenities and communal spaces, residents have ample opportunities to interact, socialise, and build a sense of community.

[smartcode_project:default project_id=107714 project_image_fid=214122]

The presence of parks, community centres, and shared spaces fosters a lively atmosphere, encouraging residents to engage in various activities and events. The vibrant lifestyle within these developments creates a unique sense of belonging and camaraderie among the residents.

<h3>Potential for higher rental yields and property value appreciation</h3>

Mixed-use developments tend to attract a broad range of tenants and buyers due to their versatile nature. This high demand can result in higher rental yields for investors and potentially lead to property value appreciation over time.

[smartcode_project:default project_id=139989 project_image_fid=212887]

The integration of commercial and retail spaces attracts businesses, which can provide a stable rental income stream. Additionally, the popularity of mixed-use developments often drives up property values, making them a potentially lucrative investment in the long term.

<h3>Enhanced security and maintenance</h3>

Mixed-use developments typically have comprehensive security measures in place. With controlled access points, CCTV surveillance, and professional security staff, residents can enjoy enhanced safety and peace of mind.

[smartcode_project:default project_id=108019 project_image_fid=212658]

Additionally, these developments often have dedicated maintenance teams responsible for the upkeep of common areas, landscaping, and infrastructure. This ensures that the overall appearance and functionality of the development are well-maintained, creating a pleasant living environment for residents.

<h3>Live-work-play balance</h3>

One of the key attractions of mixed-use developments is the ability to achieve a desirable live-work-play balance. The integration of residential and commercial spaces allows residents to live closer to their workplaces, reducing commuting time and improving work-life balance.

The proximity to various amenities and recreational facilities encourages an active and healthy lifestyle. Residents can easily access fitness centres, parks, restaurants, and entertainment options, all within the same development, leading to a more fulfilling and convenient way of life.

alisonwarters@gmail.com

The top five reasons to buy in a mixed-use development

When buying a property, everyone needs to be aware of the additional costs that come as part of the buying process.

Often the largest outlay, after the deposit which goes to the bank, is stamp duty.

<h2 style="line-height: 1.38;">What is Stamp Duty?</h2>

Stamp duty is an extra tax to pay the government when you buy land, a property, and other certain assets.

It happens when the legal ownership is transferred. It can also be known as property transfer duty or transfer duty.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="415" src="https://www.youtube.com/embed/C32BWkB5--c" title="YouTube video player" width="660"></iframe>

<h2>Who pays Stamp Duty?</h2>

In some circumstances, you may get an exemption. For some states, you won’t have to pay for stamp duty if you are a first home buyer or a pensioner for houses under a particular price. There are also stamp duty concessions, where you may be entitled to a discount.

<h2>How much does Stamp Duty cost?</h2>

Each state has different rules which affect how much you need to pay. These rules can affect the rate you pay, and the timeframe you will need to pay in. Before you buy land or a property, make sure you check the up-to-date information for your state’s stamp duty.

You can use a free stamp duty calculator online to see approximately how much you’ll need to pay. Find out if you’re eligible for an exemption by enquiring on a project via Urban!

Overall, the stamp duty you need to pay will depend on:

<ul>
	<li aria-level="1">How much your land/property is worth</li>
	<li aria-level="1">Where your land/property is located</li>
	<li aria-level="1">What type of land/property it is</li>
</ul>

Want to find out more? <a href="https://www.youtube.com/@UrbanAustralia?utm_source=YouTube&amp;utm_medium=Video&amp;utm_campaign=Subscribe&amp;utm_id=Subscribe">Subscribe to our YouTube channel</a> for more property videos.

Ellen Walker

Off-the-plan property explained: What is stamp duty?

National Australia Bank (NAB) has brought forward the timing of the first RBA cash rate cut by three months.

NAB is now expecting a cut in February, in line with ANZ and Westpac, having initially thought a cut wouldn't come until May.

Commonwealth Bank, the nation's largest lender, still thinks the first cut will come in December.

NAB changed its call following the August monthly inflation figures that were released at the end of September, showing it had dropped to 2.7 per cent.

"The risk has been skewed to a first cut earlier in 2025, and today’s change acknowledges the balance of risks has likely shifted sufficiently for the RBA to feel comfortable cutting a little sooner than we earlier expected," NAB noted in its latest update.

They added that the cadence of the cuts may be faster than its central profile.

"Domestic inflation pressures are cooling, but only gradually, and we continue to expect the conditions for a cut will not be in place this year.

NAB believes the easing cycle will end at 3.1 per cent by early 2026, which is five cuts from the current 4.35 per cent cash rate.&nbsp;

CBA also thinks 3.1 per cent will mark the end of the cutting cycle, while Westpac is forecasting 3.35 per cent, and ANZ is the most pessimistic at 3.6 per cent, which would be just three interest rate cuts.

<h2>What would a rate cut in February look like for borrowers?</h2>

According to&nbsp;<a data-saferedirecturl="https://www.google.com/url?q=https://link.mediaoutreach.meltwater.com/ls/click?upn%3Du001.IVvjJ-2BPT0A8C3VxtqKc6e3bj5hBuw27WFEYqovsYs7kPsgFulYrdOzeP8gI7CybJOya3_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20hPXdLlPP9yD7DvFFDBM5yrTqxvcCiMfAsW1onD-2FcriL628eYdhNQE7bwzYrxcOYnmaYfRhGl-2FEHQ6eK2uQcLxs6Cbu6Dx0bYvpi5A6enmxMWU5TkcRYrP6Z8GbXZYtc5qSoKu6eWFBQR9K7fsjXwHMmby3D3X6Yx-2BxcDcdRruTG&amp;source=gmail&amp;ust=1727774368149000&amp;usg=AOvVaw2vK2ujS77CHs9VRvSSXzLC" href="https://link.mediaoutreach.meltwater.com/ls/click?upn=u001.IVvjJ-2BPT0A8C3VxtqKc6e3bj5hBuw27WFEYqovsYs7kPsgFulYrdOzeP8gI7CybJOya3_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20hPXdLlPP9yD7DvFFDBM5yrTqxvcCiMfAsW1onD-2FcriL628eYdhNQE7bwzYrxcOYnmaYfRhGl-2FEHQ6eK2uQcLxs6Cbu6Dx0bYvpi5A6enmxMWU5TkcRYrP6Z8GbXZYtc5qSoKu6eWFBQR9K7fsjXwHMmby3D3X6Yx-2BxcDcdRruTG" target="_blank">Canstar</a>, if there is a cut in February, a borrower with a $600,000 loan today and 25 years remaining would see their monthly repayments drop by $92.&nbsp;

<table border="1" cellpadding="0" cellspacing="0">
	<tbody>
		<tr>
			<td colspan="3">
			Impact of 0.25% pt cut in February 2025
			</td>
		</tr>
		<tr>
			<td>
			Current loan size
			</td>
			<td>
			Drop in monthly repayment
			</td>
			<td>
			New monthly repayment
			</td>
		</tr>
		<tr>
			<td>
			$600,000
			</td>
			<td>
			-$92
			</td>
			<td>
			$3,907
			</td>
		</tr>
		<tr>
			<td>
			$750,000
			</td>
			<td>
			-$114
			</td>
			<td>
			$4,884
			</td>
		</tr>
		<tr>
			<td>
			$1M
			</td>
			<td>
			-$153
			</td>
			<td>
			$6,512
			</td>
		</tr>
		<tr>
			<td colspan="3">
			Source:&nbsp;<a data-saferedirecturl="https://www.google.com/url?q=https://link.mediaoutreach.meltwater.com/ls/click?upn%3Du001.xWMOP9hChsvn-2BC9O-2FebBihXIZ4cEzbiuENdxm-2Bx3-2FYEEgYMhZlKWNj5Zzy1YZ56RuASD_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20v2akwr6-2BqLyRrlEgkJ4J-2BCCyY0x189xEHZA4Ylf8c7ChBqNIkhmftZzoFuZKFn43pw3oJVg2o1gumrpdA-2B7MB-2FBtmL2rFCI-2FXORATQHySCLVOMg7Vywv-2BqnnQUAtDz6XkvpwxdHFXh70VwKazzhJsICilEYOvP4ju0sIfi5g6TL&amp;source=gmail&amp;ust=1727774368149000&amp;usg=AOvVaw2qVnp6oqATgqDUi2Frm22q" href="https://link.mediaoutreach.meltwater.com/ls/click?upn=u001.xWMOP9hChsvn-2BC9O-2FebBihXIZ4cEzbiuENdxm-2Bx3-2FYEEgYMhZlKWNj5Zzy1YZ56RuASD_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20v2akwr6-2BqLyRrlEgkJ4J-2BCCyY0x189xEHZA4Ylf8c7ChBqNIkhmftZzoFuZKFn43pw3oJVg2o1gumrpdA-2B7MB-2FBtmL2rFCI-2FXORATQHySCLVOMg7Vywv-2BqnnQUAtDz6XkvpwxdHFXh70VwKazzhJsICilEYOvP4ju0sIfi5g6TL" target="_blank">www.canstar.com.au</a>. Starting rate is the RBA existing average owner-occupier variable rate of 6.36%. Assumes banks pass the cash rate cut on in full the month after the meeting.
			</td>
		</tr>
	</tbody>
</table>

Canstar Data Insights Director, Sally Tindall, says if core inflation continues to track in the right direction, or unemployment starts to accelerate significantly, we could well see a cash rate cut as early as February of next year.

“All four big banks now believe the RBA will be ready to cut the cash rate in just over four months’ time, if not before, in the case of CBA.

“However, the outlook for both inflation and unemployment is still highly uncertain. A couple of wobbly sets of inflation data could see the RBA holding for longer, particularly if unemployment remains relatively steady."

&nbsp;

Commonwealth Bank, the nation's largest lender, still thinks the first cut will come in December.

NAB bring forward first RBA cut to February 2025

<html><body>
GUEST OBSERVER
The US Federal Reserve at its March meeting left interest rates on hold as widely anticipated, but it was more dovish than expected.
While it sees continued moderate growth in the US it also acknowledged ongoing global and financial market risks and lowered its so-called "dot plot" of meeting participants' interest rate expectations to show just two 25 basis point rate hikes this year down from four and lowered the long term interest rate expectation to just 3.25 percent from 3.5 percent.
Fed Chair Janet Yellen in her press conference also signalled a greater willingness to tolerate upside surprise on inflation as opposed to it continuing to run below 2 percent as the Fed has more policy room to deal with an upside surprise in inflation than a downside surprise.
The lowering of the dot plot has again taken the Fed closer to market expectations for interest rates - much as occurred last year when it started by signalling four hikes and only ended up doing one.
The Fed’s dot plot
<a href="/images/2016/03/17/image001.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/17/image001.png" alt="">
Source: Evercore ISI
 
The Fed appears to have no inclination to hike at its April meeting, but a June hike does look like a reasonable base case, particularly given the recent upwards momentum in US inflation, but with only around a 55 percent probability. And its dependent on global threats and financial market turbulence continuing to settle down.
A risk in recent times has been that a too aggressive Fed will threaten the global outlook by further pushing up the US dollar which in turn would threaten US growth, put more downwards pressure on oil prices and hence energy producers and add to the risk of a funding crisis in the emerging world (as some emerging country borrowers struggle to service US dollar denominated debt).
By continuing to indicate that it is conscious of global risks and that US rate hikes will be data dependent and gradual, the Fed is clearly indicating that it is not going to do anything to consciously threaten the global and US outlook.  
So the Fed's latest decision is supportive for shares and growth assets and should lead to an ongoing stabilisation in the value of the US dollar.
A risk for Australia though is that the Fed's continuing dovishness maintains recent upwards pressure on the value of the $A, which rose 1.5 percent on the Fed’s announcement. This could go further in the short term but with the Fed still heading towards rate hikes (albeit ever more gradual) and the RBA still biased towards cutting rates we still see the $A ultimately resuming its downtrend.
 
<a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author" target="_blank">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home" target="_blank">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
</body></html>

jchancellor-FAypfDUnLy

Fed on hold and dovish: AMP Capital's Shane Oliver

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

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

<html><body>
<h1>Minutes of the Monetary Policy Meeting of the Reserve Bank Board</h1>
Sydney – 1 March 2016
<h2>Members Present</h2>
Glenn Stevens (Governor and Chair), Philip Lowe (Deputy Governor), John Edwards, Kathryn Fagg, John Fraser (Secretary to the Treasury), Allan Moss AO, Heather Ridout AO, Catherine Tanna
Members granted leave of absence to John Akehurst in terms of section 18A of the Reserve Bank Act 1959.
<h2>Others Present</h2>
Guy Debelle (Assistant Governor, Financial Markets), Christopher Kent (Assistant Governor, Economic), Alexandra Heath (Head, Economic Analysis Department), Ivan Roberts (Senior Economist, Economic Analysis Department)
Anthony Dickman (Secretary)
<h2>Domestic Economic Conditions</h2>
Members began their discussion of the domestic economy by noting that the December quarter national accounts would be released the day after the meeting. Based on the data available and in line with earlier expectations, growth appeared to have been slightly below average in the December quarter and over 2015 as a whole. There had been further indications of a rebalancing of activity towards the non-mining sectors of the economy. More recent data had suggested that the economy had continued to grow at a moderate pace in early 2016.
As expected, mining investment had fallen further in the December quarter as more large projects reached completion. The latest ABS capital expenditure (capex) survey of firms' investment intentions had pointed to further large falls in mining investment in 2015/16 and again in 2016/17, in line with the forecasts presented in the February Statement on Monetary Policy. Members noted that non-mining investment appeared to have been little changed over 2015. Although the capex survey had pointed to declines in 2015/16 and 2016/17, roughly half of non-mining investment was not covered by the capex survey and in the past there had been differences between signals provided by the capex survey and what was measured in the national accounts data. At the same time, members noted that survey measures of business conditions and capacity utilisation had remained at above-average levels and business credit growth had increased a little further over recent months.
Members observed that there had been only modest growth in resource export volumes in the December quarter. They noted that more production capacity – particularly for liquefied natural gas, but also iron ore – was expected to come on line over 2016. Chinese iron ore imports had increased over the past year, although by less than earlier years, and Australia's share of that had remained at a high level. The volume of coal exports had fallen, partly because Chinese demand for coal had eased. Meanwhile, iron ore prices had increased over the past month, while coal prices had fallen slightly. Notwithstanding the recent increases in iron ore prices, bulk commodity prices were still about 20 per cent below levels of a year earlier. Oil prices had been volatile over recent months, rising somewhat since the previous meeting but still lower than late last year, which largely reflected the ongoing strength of supply.
Members noted that household demand had continued to be supported by low interest rates and above-average employment growth. Consumption growth was expected to have been close to its average over 2015 and in early 2016. Survey measures of households' perceptions of their own finances had remained at above-average levels into early 2016. Information from the Bank's retail liaison suggested that there had been an improvement in trading conditions around the Christmas–New Year period.
While growth in dwelling investment had been strong over 2015, there were indications that it would gradually moderate over the course of this year. The level of building approvals had declined over 2015, but remained high. Conditions in the established housing market had eased since late 2015. Housing price growth in Sydney and Melbourne was lower than in September last year. Meanwhile, housing credit growth overall had remained around 7½ per cent, after having risen through to the middle of 2015. Members noted that growth in lending to investors in housing had slowed significantly over that period and, more recently, housing loan approvals overall had declined a little.
The unemployment rate rose to 6 per cent in January, from around 5¾ per cent in November and December, and employment had declined slightly. Nevertheless, conditions in the labour market had clearly improved since early 2015. Employment growth had been above average, the unemployment rate had declined by a little more than ¼ percentage point and the participation rate had been on an upward trend. Members noted that there was some uncertainty around the future trajectory of the participation rate. This was partly because the degree to which people had been encouraged to enter the labour force over the course of the past year had been unexpected, and partly because it was difficult to assess the net effect on the participation rate of population ageing (which tends to reduce participation rates). The fact that each generation has tended to have a higher participation rate than the one preceding it also contributed to uncertainty around the trajectory of the participation rate. Meanwhile, leading indicators of employment had increased recently, consistent with employment growth in the months ahead.
Data from the wage price index had confirmed that wage growth was low across all industries over 2015. Although wage growth had continued to slow in a number of mining-exposed industries, it appeared to have stabilised in some industries where employment growth had been relatively strong over the course of the past year. Members observed that ongoing low wage growth was consistent with there being some spare capacity in the labour market, though they also noted that this was not unique to Australia, which suggested that a common global factor, such as the increasingly globalised nature of the labour force, could have been playing a role.
<h2>International Economic Conditions</h2>
Growth in Australia's major trading partners had eased in the December quarter, although it had been little changed over the past year at slightly below its decade average. Labour market conditions had improved in a number of economies, which was consistent with ongoing consumption growth, particularly in the United States and the euro area. Aggregate growth had also been supported by low oil prices. Although measures of core inflation had edged higher over the second half of 2015 in Japan and the euro area, they had shown some signs of declining in the early part of 2016. There had been a more noticeable increase in core inflation in the United States over this period. However, inflation remained below most central banks' targets and monetary policies had remained very expansionary.
Growth in the US economy had been close to trend over 2015, despite slowing late in the year. Employment had continued to grow more rapidly than the working-age population, and the unemployment rate was around its long-run average level. While nominal wage growth had remained relatively modest, growth in unit labour costs was above its long-run average. Measures of core inflation had picked up, but remained below the inflation objective of the Federal Reserve Board. The euro area economy had continued to expand at an above-trend rate over 2015, driven by domestic demand, although industrial activity had remained weak. There had been a further gradual decline in the unemployment rate, but there was considerable spare capacity and wage growth had drifted lower. Inflation had remained low relative to the European Central Bank's target.
GDP had contracted in Japan in the December quarter, driven by a decline in consumption. Despite recent weakness in economic activity, labour market conditions had remained tight and nominal wage growth had been positive. Core inflation had picked up to close to 1 per cent by the end of 2015, but had eased a little in early 2016. Headline inflation had been low, reflecting the effect of lower oil prices. In the rest of east Asia, GDP growth had been a bit below average, particularly for the economies with larger exposures to the slowing in China through their direct trade links. Recent exchange rate depreciations, low oil prices and monetary and fiscal stimulus measures had been providing some support for activity in the east Asian region.
Recent Chinese data had pointed to continued weakness in the industrial and real estate sectors, although members noted that the variable timing of the Chinese New Year holidays made it difficult to interpret data in the early part of the calendar year. Overall, housing prices had increased a little over the past year, but prices had still declined in the smaller cities. Total sales had declined since mid 2015 and the stock of unsold housing remained substantial. In February, the authorities took further steps to support the demand for housing, particularly in markets where housing prices had been weakest. The downward trend in both exports and imports had continued in January, while the trade surplus remained at a high level.
Members spent part of the meeting discussing some issues relevant to China's longer-run economic performance and the risks to growth. They observed that demographic changes and strong productivity growth had been key drivers of economic growth in China for some time, but these forces were now reversing and were likely to weigh on future growth as a result. In particular, China's growth had been supported by an increase in the size of the working-age population and the migration of many agricultural workers to urban areas, where they had been more productive. The working-age population had started to fall but the urban workforce was still growing because of continued urbanisation. China's urbanisation rate was still relatively low by international standards, which suggested that this process had further to run, with the pace of reform to the urban registration system (hukou) likely to have some effect on how rapidly the growth of the urban workforce would moderate. Structural reform was also important for the future trajectory of productivity growth, which had slowed over the past decade.
China's economic development had been characterised by very strong investment growth, which had been funded to a significant extent by high saving rates in the household sector. An element of the policy response to the global financial crisis had been to increase the credit available to the non-financial corporate and government sectors, which had led to sizeable increases in the debt held by these sectors. Slowing aggregate growth and excess capacity in some industries had raised the risk that some firms would find it more difficult to make repayments on their debt, which could, at some point, be associated with more widespread financial problems. Notwithstanding this, members noted that household debt-to-income ratios and the share of debt denominated in foreign currency were both low. The low level of foreign currency debt, in particular, differentiated China from other emerging economies that had previously experienced financial crises. While the overhang of residential housing inventory and excess capacity in the industrial sector would affect demand for Australia's resource exports and their prices, the scope for Chinese household incomes to rise over time created long-run potential for Australia to increase exports of rural produce and services, including tourism, to China.
<h2>Financial Markets</h2>
Members commenced their discussion of financial markets with a review of movements in a range of markets following the Bank of Japan's unexpected lowering of the interest rate for some deposits held at the central bank in order to provide further stimulus. This decision led to significant movements in fixed income and foreign exchange markets in particular, and had also highlighted concerns over bank profits in an environment of low or negative interest rates. Members noted that implementation of the policy decision had been designed to minimise the adverse effect on the Japanese banking system; although the negative rate is effectively the marginal rate on excess funds and therefore had pushed other short-term rates lower, most central bank deposits continued to be remunerated with a positive rate.
Expectations of further increases in the US federal funds rate had been pushed out over the past month, with markets now pricing in only a 70 per cent chance of a further rate rise in 2016 and some market participants expecting a reduction in the federal funds rate this year. In contrast, expectations for additional monetary easing by the European Central Bank this year had increased over the past month, including at the next policy meeting later in the month.
Recent policy developments had contributed to further falls in sovereign bond yields. Members noted that the Japanese government bond yield curve was very flat, with the 10-year bond yield below zero. Almost two-thirds of Japanese government bonds and one-third of short-term bonds issued by euro area governments were currently trading at yields below zero. Australian government bond yields had moved broadly in line with US sovereign bonds.
The sharp declines in global share prices in early February, led by financial sector shares, had, more recently, been partly retraced by price rises. Australian equity prices declined by 2 per cent over February, with movements in prices closely linked to changes in commodity prices. Members noted the generally solid profit reports of Australian listed companies and discussed recent developments in relation to dividend policies.
Share prices of banks in the advanced economies, including Australia, had fallen significantly since early January. The declines had been largest in Europe and Japan. Globally, there had been concerns about the effect of the prevailing low or negative interest rates on interest margins and yields on banks' high-quality liquid asset holdings and, ultimately, on bank profits and business models. These concerns had been compounded in the euro area by specific issues in particular countries as well as uncertainty about the operation of the new European bank resolution regime.
In foreign exchange markets, volatility increased over the previous month alongside the changing current and prospective stance of monetary policy in the major economies. The US dollar had depreciated slightly on a trade-weighted basis, while the euro was little changed. Since the policy announcement by the Bank of Japan, the yen had appreciated by 5 per cent on a trade-weighted basis. The Chinese authorities had emphasised their intention to preserve stability in the trade-weighted value of the renminbi, which had moved in only a narrow range over the past year. The People's Bank of China had continued to sell foreign currency reserves in January in response to net private capital outflow. The Australian dollar was little changed on a trade-weighted basis and against the US dollar since the previous meeting.
Bond issuance by Australian banks had been solid in the first quarter to date, despite volatility in global financial markets in the period. Wholesale funding costs for Australian banks had continued to edge higher, but for long-term funding the cost of issuing new paper was still below the average cost of the existing stock on issue. The rise in short-term wholesale bank funding costs had been passed through to some business lending rates.
Pricing in domestic financial markets indicated that there was no expectation of a change in the cash rate at the present meeting.
<h2>Considerations for Monetary Policy</h2>
In considering the stance of monetary policy, members noted that the recent data on the international and domestic economies had been largely consistent with the outlook presented at the previous meeting. Growth in Australia's major trading partners had remained a little below average in year-ended terms and commodity prices were still significantly lower than they had been a year earlier. Meanwhile, global financial markets had been volatile in the aftermath of the Bank of Japan's decision to implement negative interest rates and generally there appeared to be more uncertainty about the direction and potency of monetary policy in the major jurisdictions. However, given the usual lags in the data, it was still too early to assess whether the bout of financial market volatility since the turn of the year foreshadowed or would lead to a weakening in global economic conditions. Globally, monetary policy remained very accommodative.
The available data suggested that the domestic economy had continued to grow at a slightly below-trend pace. There had also been further signs of a rebalancing of activity towards non-mining sectors of the economy, aided by the low level of interest rates and the depreciation of the exchange rate over the past couple of years, which had responded to the evolving economic outlook. There was a small decline in employment in January and a modest rise in the unemployment rate, following a run of much better-than-expected outcomes in the December quarter. Leading indicators of employment had increased further and were consistent with employment growth in the months ahead. Wage growth had remained at quite low levels.
Conditions in the established housing market had eased somewhat since September 2015, in part reflecting the effect of supervisory measures implemented in that year. In addition, after rising for some time, the growth in aggregate housing credit had stabilised over the past six months or so, with a significant easing in growth in lending to investors.
Members judged that there were reasonable prospects for continued growth in the economy and that it was appropriate to leave the cash rate unchanged at an accommodative setting. Over the period ahead, new information should allow the Board to assess whether the improvement in labour market conditions was continuing and whether the recent financial turbulence presaged weaker global and domestic demand. Members noted that continued low inflation would provide scope to ease monetary policy further, should that be appropriate to lend support to demand.
<h2>The Decision</h2>
The Board decided to leave the cash rate unchanged at 2.0 percent.
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Dwelling price growth easing: Minutes of March 2016 Monetary Policy Meeting of the Reserve Bank Board

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GUEST OBSERVER
Bond yields are an important tool for making inferences about monetary policy. A yield curve is made by plotting the interest rates of bonds against their maturity dates. A normal yield curve occurs when long-term rates are higher than short- term rates. 
This is important for an economy’s liquidity, as banks can make a profit by borrowing at the (lower) short-term rates and lending at (higher) long-term rates.
Figure 1 shows the current yield curve on Australian Treasury bonds with maturities between 90 days and 10 years. Parts of the yield curve are inverted, meaning short-term rates (90 days) are higher than some long-term rates (2, 3 and 5 years). This creates a disincentive for banks to lend and if the entire curve is inverted, it can lead to a “credit crunch”. This happened in the US during the global financial crisis, when money suddenly dried up because banks could no longer profit from lending out money.
<a href="/images/2016/03/10/Screen%20Shot%202016-03-10%20at%204.25.52%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/10/Screen%20Shot%202016-03-10%20at%204.25.52%20PM.png" alt="">
To avoid a credit crunch, either long-term rates need to rise, or short-term rates need to fall. The first option is tied to investor expectations, as the yield on 10 year bonds is usually an indicator of peoples’ outlook for the future of the economy. This is hard to change. The relatively easier option is lowering the short-term cash rate, otherwise known as Quantitative Easing.
Figure 2 compares movements in the yield curve (Figure 1) and the RBA’s cash rate target. The blue line shows the difference between 10-year Treasury bonds and 90-day Treasury notes for any given month. If the line is above zero, the yield curve slopes upward, while if it is below zero, the yield curve is fully inverted. The red line shows movements in the cash rate: if it is on zero, the cash rate stayed the same that month, while if it goes up or down, there was a change in the cash rate. Notice that for the whole timeline (Jan 2000 – Jan 2016) interest rate cuts always followed an inversion of the yield curve.
<a href="/images/2016/03/10/Screen%20Shot%202016-03-10%20at%204.34.08%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/10/Screen%20Shot%202016-03-10%20at%204.34.08%20PM.png" alt="">
When the bond yield curve inverts, intervention is often necessary to keep the economy stable and allow banks to keep lending out money. However, cutting interest rates is a blunt tool as it has ripple effects on the economy including increased demand for housing loans, a devaluation in the Aussie dollar, which in turn changes trade balances and so on. With an already highly inflated housing market and worries about a bubble, the RBA is often reluctant to cut the cash rate if it is not absolutely required.
Will interest rates change in then ear future? With a positive yield curve it may seem unlikely there will be another cut. However, the difference between yields on 10-year bonds and short-term debt is at only 0.4 percent and has been falling since the last interest rate cuts in 2015.
Notice that when the bond yield curve is falling, the trend continues until interest rates are cut. It is often dangerous to use historical patterns to predict the future, and other economic factors always need to be considered.
For more information, <a href="https://secretagent.com.au" target="_blank">click here</a>.
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The yield curve and the RBA cash rate: Secret Agent Bulletin

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The decision to give homebuyers of properties with swimming pools 90 days to rectify non-compliant swimming pool barriers has been lauded by the Real Estate Institute of New South Wales.  Minister for Local Government Paul Toole announced on March 11, 2016 the new regulations applying to the sale of properties with swimming pools to take effect from April 29. 
“From 29 April 2016, vendors will need to attach to the contract of sale a Certificate of Compliance, or a Certificate of Non-Compliance outlining what needs to be fixed,” REINSW president John Cunningham said. “This is a sensible approach given the ongoing issues and delays over the last three years in regard to these important regulations." “It is great to see that amendments have been made to allow these regulations the ability to be successfully implemented and help make our backyards safer,” Cunningham said. As part of the regulations, every new tenancy application to the Residential Tenancy Tribunal must also have a compliance certificate if the property has a swimming pool. 
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PROPERTY 101 New regulations on backyard pools receives REINSW support

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GUEST OBSERVER
Agriculture in vogue: New commercial loans to the Agriculture sector hit 6-year highs in the year to January.
Lending: Total new loans (personal, business, housing &amp; lease) fell by 2.9 percent in January after falling by 5.2 percent in December. Total lending is down by 7.4 percent on a year ago – the biggest annual decline in 3ó years.
Trends: In trend terms lending was down 0.9 percent in January – the fourth consecutive fall. Lending was up just 2.1 percent on a year ago – the weakest growth in almost three years.
The lending figures have implications for finance providers, retailers, and companies dependent on consumer and business spending.
What does it all mean?
Aussie consumers and businesses remain cautious about taking on more debt. Interest rates may be at or near generational lows, but that is no guarantee of higher rates of borrowing. In fact, after running up over the past two years, new lending commitments seem to have hit a ceiling. Effectively borrowers are saying that’s enough for now. 
Leasing is in favour though as are loans taken out by consumers to buy new cars.
The interesting point for the Reserve Bank though is whether another cut in the cash rate would serve any purpose. Borrowers are cautious about taking on more debt. And lower interest rates compress bank margins, affecting profits and potentially investment, employment and shareholder returns.
Click to enlarge
<img src="/images/2016/03/14/Screen%20Shot%202016-03-14%20at%209.58.38%20AM.png" alt="">
Mining has fallen from favour, to be replaced by agriculture sector. Loans to rural businesses over the past year were the highest in six years. The lift in lending coincides with renewed interest in the sector from overseas investors and expectations of stronger Asian demand for Aussie food and beverage products.
What do the figures show?
Total new loans (personal, business, housing &amp; lease) fell by 2.9 percent in January after a 5.2 percent fall in December. Lending had hit a 7ó year high in September. Total lending is down 7.4 percent on a year ago.
Housing finance: The seasonally adjusted measure of construction and new purchases fell by 4.3 per cent in January while alterations &amp; additions rose by 1.5 percent. Home loans are up 15.9 per cent on a year.
Commercial finance: The seasonally adjusted series for the value of total commercial finance commitments fell by 2.5 per cent in January after falling by 8.8 percent in December. Revolving credit commitments fell by 2.2 per cent (-23.1 per cent in December). Fixed lending commitments fell by 2.5 per cent – the fourth straight decline. 
Business loans are down 16.3 per cent over the year.
Over the year to January, total business lending was $531.6 billion, up 7.4 per cent over the year. Lending rose most in Victoria (up 13.1 per cent) followed by Queensland (up 10.9 per cent), South Australia (up 9.4 per cent), NSW (up 7.8 cent) and Western Australia (down 13.2 per cent). No consistent data was available for other states and territories.
Personal finance : The seasonally adjusted series for the value of total personal finance commitments fell by 1.4 per cent in January after rising by 2.1 per cent in December. 
Revolving credit commitments fell by 1.6 percent and fixed lending commitments fell by 1.2 per cent.
Personal loans are down 8.1 per cent over the year.
Within personal fixed finance commitments,  loans for new cars were up by 1.0 per cent on a year earlier while loans for used cars were down by 2.4 per cent. Loans for residential blocks of land were down by 10.0 per cent on a year ago – the 14th  decline in 15 months.
Lease finance : Lending rose by 3.7 per cent in January and was up 18.8 per cent over the year.
<a href="/images/2016/03/14/Screen%20Shot%202016-03-14%20at%209.59.36%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/14/Screen%20Shot%202016-03-14%20at%209.59.36%20AM.png" alt="">
What is the importance of the economic data?
Lending Finance  is released monthly by the Bureau of Statistics and contains figures on new housing, personal, commercial and lease finance commitments. The importance of the data lies in what it reveals about the appropriateness of interest rate settings, confidence and spending levels in the economy.
What are the implications for interest rates and investors?
The slowdown in new lending runs counter to other indicators such as record dwelling starts, record tourism and strong employment growth. Still, it does accord with record car sales. Overall it appears that consumers and businesses remain happy to use their own funds to make purchases.
 <a href="/images/2016/03/14/Screen%20Shot%202016-03-14%20at%2010.00.30%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/14/Screen%20Shot%202016-03-14%20at%2010.00.30%20AM.png" alt="">
The Reserve Bank will maintain its ‘easing bias’ although it may publicly express doubts about the ability of lower rates to boost activity.
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>. 
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Loans to rural sector at six year highs: Craig James

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Credit union CUA announced a nine percent rise in its group net profit after tax (NPAT) in its first-half ended December 31, driven by strong loan growth and net interest income.
The CUA Group – which includes its banking operations (the ADI) and CUA subsidiaries and insurance businesses – also recorded asset growth of more than $500 million over the six months to 31 December 2015, taking consolidated assets to a record $12.5 billion, it said. 
Loans grew 4.2 percent to $10.83 billion, with $1.5 billion in new loans. 
NPAT was $28.05 million, while net interest income was up 5.7 percent or $6.17 million for the period to $113.75 million, boosted by strong lending in FY15, new products and interest rate changes, it said. CUA said it was on track to improve its net interest margin during the second half. 
CUA’s banking business (or ADI) posted a first-half NPAT of $30.85 million, up 12.5 percent on the previous first-half result of $27.43 million.
“This is another solid financial result for CUA which reflects our focus this year on sustainable growth, investing in our future capability and building capital to enable us to lend to more customers,” CUA chief executive officer Rob Goudswaard said. 
Since launching CUA’s updated mobile banking app in October, online banking has attracted 9,500 new mobile users and the number of new registrations each month is up by 46 percent. CUA recently launched a new website.
Goudswaard said he was pleased with the continued high quality and low risk of CUA’s lending growth. Home loans with a Loan to Valuation Ratio (LVR) above 90 per cent account for less than 8 percent of CUA’s total home loan portfolio. Impairment charges were down 9.6 percent on the same period last year and CUA’s loan arrears are around half the rate being reported at industry level. 
“We also launched two new home loan products in July 2015, giving borrowers a greater choice of rates and features, depending on the size of their deposit and whether the customer is buying the property to live in or as an investment. In addition, we implemented different rates for investors across variable and fixed home loans, in response to the regulators’ focus on managing growth in investor lending.
Last year, Goudswaard had said new loan growth would not be as strong in 2016 as it needed to peg back growth in its investor loans, which is at 16 percent, were above the banking regulator's 10 percent growth cap. 
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prateek24-ezbwHMbNAk

CUA first-half profit up nine percent on net interest margin, loan growth 

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Home loan consumers should be cautious of “phantom rates”, the head of major mortgage group 1300HomeLoan, John Kolenda has warned.
He has questioned the sustainability of some rate offers as lenders have been unfairly baiting consumers with “aggressively priced” mortgage products which turn out not to be true. 
“Some lenders are aggressively pricing products to lure customers and boost their market share and then when they are signed up they increase their mortgage rates independently of any interest rate decisions by the Reserve Bank of Australia (RBA),” Kolenda said. Kolenda says lenders are blaming cost of funding issues and changes to regulations for non-delivery.  “We also had the out of cycle raises on home loan rates in response to rising funding costs and the additional costs coming in for the additional compliance and regulatory increase on reserves that the banks will have to have in place by end of June this year. “But the bank wholesale funding costs did not rise enough to warrant the types of rate increases they imposed. “I think there was an element of a profit grab done under the umbrella of higher regulatory and funding costs at the time when those decisions were made.” Kolenda pointed to the bond market where NAB recently estimated rates over the bank bill swap rate (BBSW) had increased by at least 30 basis points. “This again raises serious concerns as to how lenders will react when it comes to their existing customers, especially when lenders are offering rates as low as 3.69 per cent for new business,” he said. “We question the sustainability of that rate offer with the back drop of current market conditions.”
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John Kolenda warns on phantom mortgage home loan rates

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GUEST OBSERVER
Market sentiment has turned more positive, in part because participants realise that the US economy remains solid and as China concerns abate. 
Strong US jobs growth in February boosted risk sentiment and reduced recession fears. 
The RBA remained on hold as expected. Q4 GDP data showed that the economy recorded a strong finish to 2015. 
We still expect further RBA rate cuts, but the data are challenging this view and risks are skewed toward policy easing occurring later than we forecast. 
China nominated a 6.5-7% GDP growth target for 2016. 
INTEREST RATE STRATEGY 
Yields finished higher after a white knuckle ride for the Australian front end last week. 
Risk-on sentiment globally helped push yields higher. 
Focus to remain on higher funding costs as a major bank announced a rise in investor housing loan rates. 
CURRENCY STRATEGY 
The USD is struggling as the data pulse remains strong, but Fed rhetoric remains dovish. This, together with the solid GDP outcome in Australia, is keeping the AUD elevated. 
The sustainability of these AUD levels will depend on the market volatility remaining subdued. 
COMMODITY STRATEGY 
Low prices induce supply response in copper. 
Iron ore supported by hope of further policy support in Chinese steel sector. 
Investor demand for gold remains robust. 
<a href="/images/2016/03/7/Screen%20Shot%202016-03-07%20at%2011.50.39%20AM.png" target="_blank"> Click to enlarge</a>
<img src="/images/2016/03/7/Screen%20Shot%202016-03-07%20at%2011.50.39%20AM.png" alt="" width="794" height="547">
RBA ON HOLD… 
As widely expected, the RBA kept the cash rate on hold at 2 percent last week. The Bank continued to take a positive view of the Australian economy, noting that “the expansion in the non-mining parts of the economy strengthened during 2015”. 
We interpreted two small changes to the Governor’s statement as slightly on the dovish side. First, the Bank noted that low inflation “would” provide scope to ease further rather than its prior reference to “may”. Secondly, the AUD was characterised as “has been adjusting” versus “has continued its adjustment”. Clearly, the Bank would still prefer a lower AUD which has subsequently pushed higher to USD0.74. The Bank would likely become more vocal on the currency again if the activity data started to soften. 
…WHICH WAS JUSTIFIED BY Q4 GDP 
The slightly more dovish tone from the Bank, however, came before the strong Q4 GDP print. Not only did Q4 GDP surprise on the upside at 0.6% q/q, upward revisions meant that growth over the year was well above expectations at 3 percent. The Bank had been flagging the potential for GDP revisions and this rate of growth helps to square the apparent disconnect with the strong labour market data last year.
<a href="/images/2016/03/7/Screen%20Shot%202016-03-07%20at%2011.57.35%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/7/Screen%20Shot%202016-03-07%20at%2011.57.35%20AM.png" alt="">
The Bank would have been heartened by the pick-up in household spending. A key feature of the Bank’s forecasts is a strengthening in household spending to slightly above the long-run average of 3 percent. Household consumption grew 2.9 percent y/y in Q4. 
Housing construction also remained strong (+2.2 percent q/q; 10 percent y/y) in Q4. A significant backlog of work is supporting activity at record levels, especially in the key Sydney and Melbourne markets but lower approvals numbers suggest this growth impetus will wane.
<a href="/images/2016/03/7/Screen%20Shot%202016-03-07%20at%2011.59.05%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/7/Screen%20Shot%202016-03-07%20at%2011.59.05%20AM.png" alt="">
Meanwhile, business investment fell as expected. Engineering construction drove the quarterly fall as resources projects, particularly LNG, continued to approach completion. But the news on the investment front was not all one-way traffic, with both machinery &amp; equipment spending and non-residential building rising solidly in Q4, the latter despite falling building approvals and a shrinking backlog of work. 
Overall, there were plenty of positives in the national accounts. Growth continues to broaden beyond the mining sector, and the pick-up in consumer spending will be particularly encouraging for the RBA. As such, the economy is on a much firmer footing than previously envisaged. 
WE STILL EXPECT FURTHER RATE CUTS 
Despite the improvement in the economy over the second half of 2015, we continue to expect further RBA rate cuts this year. Our call for the first rate cut to occur in May, however, is being challenged by the incoming data. 
We maintain that the contribution to growth from property market activity – not just housing construction – will ease over 2016. Dwelling construction directly added .ppt to Australia’s GDP growth in 2015 but this is unlikely to be sustained. While the level of building activity will remain high, the fall in residential building approvals over the past year suggests that the impetus to growth will wane (Figure 3).
<a href="/images/2016/03/7/Screen%20Shot%202016-03-07%20at%2012.07.56%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/7/Screen%20Shot%202016-03-07%20at%2012.07.56%20PM.png" alt="">
 
There are also risks around household spending. While household consumption strengthened over 2015, this was against a weak income backdrop and was heavily assisted by a sharply lower saving ratio (Figure 4).
<a href="/images/2016/03/7/Screen%20Shot%202016-03-07%20at%2012.09.02%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/7/Screen%20Shot%202016-03-07%20at%2012.09.02%20PM.png" alt="">
Presumably, the falling saving ratio can be partly attributable to a ‘wealth effect’ amid strong dwelling price growth. But this is expected to wane this year amid slower house price growth (and as equities have weakened). Some of the savings decline, however, will reflect consumption smoothing, with evidence of this particularly in the mining states of WA and Queensland that ran up savings during the commodity price boom. 
More timely data on retail sales (released last week) show that spending has been soft in recent months, with no growth in December and a modest 0.3 percent m/m rise in January. 
With unemployment expected to remain around 5¾– 6 percent, spare labour market capacity will continue to weigh on wages growth. In all, it is difficult to see household consumption accelerating further from here. Consumption growth falling below the RBA’s expectations would certainly increase the likelihood of further rate cuts.
Surveyed business conditions have moderated in the early months of 2016, indicating some slowing in non-mining activity. Ahead of the important NAB survey tomorrow, however, Ai Group’s surveys for February continued to show some consolidation in aggregate at above-average levels (Figure 5). Business confidence may be further weighed down by the negative global sentiment in February.
<a href="/images/2016/03/7/Screen%20Shot%202016-03-07%20at%2012.24.05%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/7/Screen%20Shot%202016-03-07%20at%2012.24.05%20PM.png" alt="">
Overall, the incoming data on the Australian economy has remained OK and, for now, allays any concerns about the renewed strength in the currency. China’s target of 6.5–7 percent GDP growth for 2016, coupled with slightly higher budget deficit, lending and money supply growth targets, will also help to further calm anxiety about that economy. 
The rate cut we have pencilled in for May is less than two months away so clearly the risks are skewed towards further RBA policy easing kicking off later than we expect. Markets are only pricing one full rate cut for this year. 
Despite weak wages growth, we can’t rule out being surprised on the upside by household spending. There is room for household saving to fall further to support stronger-than-expected consumption. Housing markets have commenced 2016 in a relatively positive fashion, with auction clearance rates rebounding in Sydney and Melbourne, while price growth has stabilised at solid rates. If these early indicators translate into a second wind for building approvals, the risks would be to the upside for housing construction. Moreover, the RBA would likely be uncomfortable reducing the cash rate further in the face of ongoing strength in house price growth. 
Working in the opposite direction, however, are that the global growth backdrop remains fragile, our interest rates continue to look ‘high’ in a world where negative rates are more commonplace, and creeping upward pressure on actual lending rates in Australia is likely to remain from higher funding costs and tighter capital requirements. 
Stay tuned.
Daniel.Gradwell is economist in ANZ's Australian Research unit and can be contacted <a href="https://www.anz.com/personal/" target="_blank">here</a>.
 
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Rate cuts still likely, but ANZ says doom and gloom takes a back seat

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Fixed-rate mortgages accounted for more than one in every five home loans in February, despite a small drop in demand, Mortgage Choice advised.
Fixed-rate home loans accounted for 22.28% of all loans written throughout February – just 1.34 percent down from the 23.62 percent from the previous month, according to the mortgage broker’s latest national home loan approval data. Mortgage Choice based its research on new borrowers who sourced a loan through it in February.
Chief executive John Flavell said while fixed rates saw a small drop in demand throughout February, they continue to prove a popular home loan product choice for many Australians.
“We are still seeing quite a bit of volatility in the interest rate market, causing many borrowers to opt for the security of a fixed rate home loan,” he said, while adding that going forward, he wouldn’t be surprised to see demand for fixed rate products taper off.
“Given the Reserve Bank of Australia has indicated that they won’t hesitate to cut rates again if the need arises, borrowers may be encouraged to take out variable rate home loans and take full advantage of the current low interest environment,” he said.
Across the country, demand for fixed rate products was highest in New South Wales, accounting for 28.42 percent of all home loans written in February.
Queensland and South Australia were not far behind, with fixed-rate demand at  23.64 percent and 17.29 percent respectively.
Meanwhile, Victoria and Western Australia saw lower demand for fixed rates, with only 16.92 percent and 13.23 percent of all loans written in each state respectively.
Overall, variable rate home loans remained the most popular with borrowers, with 77.72 percent opting for a variable rate mortgage in February.
“The property market may still be showing signs of volatility, but the reality is that interest rates continue to sit at all-time lows. So, regardless of whether a borrower takes on a variable or fixed rate mortgage they can rest assured that they’re securing a great deal,” Flavell said.
Property Observer looked up the best fixed rate products on <a href="https://mozo.com.au/home-loans/fixed-rate" target="_blank">www.mozo.com.au</a> and found interest rates ranging from 3.79% to 4.44% on a period of one to three years.
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