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

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>
<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
A memo on the subject of housing taxation from the Reserve Bank of Australia (RBA) is stirring up debate on proposed changes to negative gearing and capital gains tax in the election campaign.
The memo, dated December 9 2014, does counter the government’s claim that changes to negative gearing will have an adverse effect on housing prices, although this was never its intended purpose.
The memo was in response to the report from the Financial System Inquiry two weeks earlier. The inquiry noted that reducing capital gains tax concessions would “lead to a more efficient allocation of funding in the economy,” that “the tax treatment of investor housing…tends to encourage leveraged and speculative investment,” and that “housing is a potential source of systemic risk for the financial system and the economy”.
The RBA is usually reluctant to comment on areas of government policy outside its remit and hasn’t expressed any views on whether changes are needed to the long-standing tax treatment of housing investment. However, in response to a Productivity Commission inquiry 12 years ago, the RBA pointed out that:
“…taxation arrangements in Australia are more favourable to investors in residential property than are the arrangements in other countries.”
It also went on to note that a higher share of Australian taxpayers are attracted to property investment to lighten their tax burden and reducing investor demand would allow for more demand from first home buyers, without adding to the overall pressure on demand and prices. The RBA submission suggested this could also lead to a more stable housing market.
At that time, housing investors accounted for just over 45 percent of all lending by Australian financial institutions. In 1999 this was less than 32 percent, when the Howard government amended the tax treatment of capital gains in a way that made it more generous to investors (in property and other assets).
After falling back to around 36 percent in the aftermath of the global financial crisis, the share of property loans taken out by investors rebounded to more than 50% in the first half of 2015. The Australian Prudential Regulatory Authority (APRA) has since required banks to tighten their lending standards for property investment loans, now the share of new housing loans going to investors has fallen back to about 45 percent.
The key point to note here is that the changes enforced by APRA to banks’ lending criteria have also had the effect of dampening investor demand, as Labor’s current policy also intends, without any obvious adverse effects on property prices.
The government’s strict enforcement of foreign investment regulations, designed to prevent foreigners from purchasing established properties (other than in limited circumstances), and the cutting of grants to first-time buyers of established properties while boosting grants to first-time buyers of new dwellings at a state level, have both failed to dampen investor demand for property.
In other words, governments are trying with these policies to reduce demand for the purchase of established dwellings (90% of borrowing by Australian property investors is for the purchase of established dwellings) while encouraging the demand, and therefore building of, new properties. This is exactly what the Opposition’s proposed changes to negative gearing and the capital gains tax discount seek to do.
Labor is trying to make it less attractive for investors to buy an established property after 1 July 2017. As a result, the prices of established dwellings should go up at a slower rate than it would otherwise – and from the standpoint of would-be home-buyers, this is a good thing.
However, the Opposition proposes to “grandfather” existing negatively-geared investors from these changes. This means anyone who has a negatively geared property investment as of 30 June 2017 will still be able to offset the excess of their interest costs over their net rental income against their other taxable income. So there is no reason to expect that investors will seek to sell their investments en masse and that prices of existing properties will fall any more than they have done as a result of the other government measures.
And this is precisely what the memo from the RBA notes:
“only if changes were not grandfathered” would there be a risk of “large scale sale of negatively geared properties.”
The RBA note also raises the possibility that changes to negative gearing could prompt a “potential increase in rents” – a point which the Coalition has been as quick to seize upon. Presumably this concern reflects an assumption that if changes were to be made to existing negative gearing arrangements, those changes would apply to new properties as well as established ones (since the Financial System Inquiry whose recommendations prompted this staff memo didn’t make any distinction between the two).
The Opposition’s policy is to keep existing negative gearing arrangements for investors in new dwellings. There is a risk that it could end up inflating builders’ profit margins, rather than boosting the supply of new housing.
However, to the extent that it does the latter, there is less reason to expect rents to rise. This is because under the Opposition’s policy more would-be home-buyers could fulfil their aspirations. It would reduce the competition they face from investors who negatively gear and this would decrease the demand for rental housing.
The Reserve Bank hasn’t explicitly supported Labor’s negative gearing policy. But it does appear to have rebutted one of the government’s principal arguments against it.
Saul Eslake is vice-chancellor’s Fellow, University of Tasmania and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/saul-eslake-665" target="_blank">here</a>.
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What the RBA memo really says about negative gearing: Saul Eslake

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The former RBA governor Bernie Fraser has warned that more monetary policy stimulus won't be able to boost growth or reinvigorate inflation following last week's surprise interest rate cut.
Fraser said he was not "in the slightest" bit concerned about letting inflation undershoot the range for a lengthy period of time, according to the Australian Financial Review.
This contradicts the central bank's quick action against signs of deflation in the March quarter.
Considered the architect of the Reserve Bank's 2 to 3 percent inflation target, Fraser said the economic focus should be moved to government-led stimulus rather than more interest rate cuts.
"I don't see myself as fiddling with monetary policy to deal with the deflation problem," he told The Australian Financial Review. 
"I don't see monetary policy as solving the problem with zero, or practically zero, interest rates or quantitative easing. It can't get things moving."
The potential for more official rate cuts and low inflation has prompted some economists to suggest that the Reserve Bank is nearing the limits of its powers. They are at risk of sliding into the same zero-rate constraints that have left European and Japanese central banks unable to revive their economies.
Despite suggesting he had a "certain fondness" for the Reserve Bank's inflation target, he told the Australian Financial Review he "wouldn't want people to be tempted to start adjusting that."
Fraser spoke out following the Reserve Banks issue of the weakest inflation outlook since the target range was introduced by himself in the early 1990s.
Officials are predicting that price increases would remain below two percent through to 2018, despite at least one more rate cut.
Speculation suggests the Reserve Bank will seek to reverse slowing inflation by cutting the cash rate again in October.
Currency traders predict the extra cut will push the dollar as low as US67¢ from US73.77¢
Fraser said the burden of spurring economic demand should urgently fall on fiscal policy and infrastructure spending by government.
"The Reserve Bank should be talking to the government and saying there is not much more we can do on monetary policy, that this is a classic situation for being more active on fiscal policy.
"Australia shouldn't worry too much about debt and deficit at this stage," he said.
"We need some growth."
He also criticised the board for creating confusion around the reasons for last week's sudden rate cut.
"I was a bit surprised by the rate cut on budget day because of the ambiguity that such a move is likely to create in the public mind," he said.
"Is it really lower inflation that's provoking the Reserve Bank or concern about the weakness of the economy?
"I wouldn't myself have been concerned about a short period of under 2 per cent inflation – not in the slightest."
He said the lack of confidence in the Reserve Bank is the bigger concern based on the strength of the economy.
"[It] suggests to me that they too have a few concerns about the outlook for activity."
Fraser expects inflation will increase thanks to an increase in demand caused by the lower exchange rate with the currency falling by more than a quarter over recent years
"We've only had one quarter of negative inflation.
"To me that's nothing to be unduly concerned about and the exchange rate is coming down, so that might stimulate some demand, but more directly it will add to inflation."
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Bernie Fraser warns against more monetary policy stimulus

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A Reserve Bank memo written before the release of the Federal Opposition’s negative gearing policy raised concerns about the impact of changing negative gearing on renters.
The 2014 memo was released as part of an FOI request to a property industry lobby group.
In a section entitled “Potential negatives from changes that make negative gearing less attractive?”, the question is raised by the bank “Potential increase in rents?”.
The memo was cited as flagging that changing negative gearing would impact rents”, said Ken Morrison of the Property Council of Australia.
“This memo confirms that policy makers have real concerns about how renters would fare under policies that make negative gearing less effective."
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Rents could rise under negative gearing changes: property lobby group

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Ratecity.com.au has provided five of the lowest advertised ongoing variable rates as at May 9.
<a href="/images/2016/05/10/Screen%20Shot%202016-05-10%20at%209.13.30%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/10/Screen%20Shot%202016-05-10%20at%209.13.30%20AM.png" alt="">
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The five lowest variable home loans: Ratecity.com.au 

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Mark Steinert, chief executive of Australia's largest residential property developer, Stockland, believes Labor's housing policy has "the potential to destabilise the entire economy" – to the extent of "risking a recession".
"At the end of the day, house prices are unlikely to adjust so much that it would really change that affordability equation anyway," Steinert told the Australian Financial Review.
"And if they do, believe me it won't be a recession. It will be a depression."
Steinert told columnist Jennifer Hewitt property is such a major force driving Australian growth and activity, that even a small change in the market and in sentiment flows through the entire economy. 
"Housing represents $6.5 trillion of the Australian people's wealth," he tells The Australian Financial Review. 
"It is so big and so many people are involved that even when that order of magnitude of change is obviously small compared to the stock market…its affects people.
"It becomes the new dinner party conversation.
"People feel poorer. 
"They buy less in the shops and people employ less and people are less willing to borrow money to start a business and suddenly that goes on.
"That is how markets work.
"The only way you deal with affordability in my view is first and foremost about supply…in a structural way.
"You cannot deal with affordability in a manageable way by de-stabilising the largest asset in the country."
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Labor negative gearing policy could cause recession or depression

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The RBA board member John Edwards, a former chief economist for HSBC and adviser to former prime minister Paul Keating, has not been given a second five year term.
He will be replaced early by Professor Ian Harper, who recently headed the government's competition policy review.
It is unusual that board members are given a second term.
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Ian Harper to replace John Edwards on RBA board

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GUEST OBSERVER
The Reserve Bank has released its latest quarterly Statement on Monetary Policy (SoMP) for May.
While its growth and unemployment forecasts were left unchanged compared to February, the Banks’ inflation forecasts are more dovish than we had expected.
There is always considerable interest in the Bank’s SoMP forecasts as they offer the clearest guidance to its policy inclinations. That is even more the case this month given the May rate cut and the somewhat limited guidance in the Governor’s statement accompanying the move.
Note that an important consideration is how the Bank’s forecasts are framed by its assumptions on the exchange rate and interest rates. For May, these are for an AUD of USD 0.75 and 62.5 in TWI terms, and for ‘market pricing’ that has the cash rate falling 15bps by August and to 1.50% by February next year. That compares with forecasts in the February SoMP that assumed an AUD at  USD 0.72 and 62.0 in TWI terms, and ‘market pricing’ that had a full rate cut (from 2% to 1.75%) by September. Noting that the RBA favours the TWI for its forecasting, the assumptions around the AUD will not have significantly affected the forecasts. However, the May forecasts are based on a cash rate that is 0.25% lower across the entire forecast period.
Growth forecasts
Recall that in the last SoMP, on February 4, the RBA had growth forecast to run at 3.0% in the year to December 2016; 3.0% for the year to December 2017; and 3.5% for the year to June 2018 (all figures are mid-points of 1ppt forecast ranges).
The May SoMP forecasts for growth are unchanged. This implies that if the Bank had not cut rates by 0.25% earlier this week then the growth rate for 2017 would have been revised down.
Inflation forecasts
In February the Bank forecast underlying inflation at 2.0 percent to June 2016; 2.5 percent to December 2016; and 2.5 percent to December 2017 (again all mid-points of 1ppt forecast ranges).
The Bank is now forecasting underlying inflation to come in at 1.5 perch t to June 2016 (implying a June quarter print of 0.5 percent qtr).
Beyond that it is forecasting inflation of 1-2 percent for the year to December 2016 and 1.5-2.5 percent for the year to December 2017 and the year to June 2018, i.e. a mid-point forecast of 1.5 percent for December 2016 lifting to 2 percent thereafter.
These forecasts are at the lower end of our expectations and can therefore be interpreted as clearly more dovish than we had expected.
They are saying that even after taking into account the latest rate cut and market pricing which anticipates a further cut by early 2017, underlying inflation is most likely to remain 0.5% below the bottom of the RBA’s 2-3 percent target band in 2016 and at the very bottom of the band in 2017, staying there even out to the end of the forecast period (June 2018).
Key to understanding the outlook for policy is the discussion on inflation
The downward revisions to the RBA’s inflation forecasts reflect a structural change in its view on domestic inflation and wages growth.
The reassessment is specifically attributed to: “the broad-based” nature of the weakness in non-tradables inflation and the fact that wage outcomes were lower than expected over 2015”. 
On wages, the Bank notes that wages growth has been “much lower than the historical relationship with measures of spare capacity, such as the unemployment rate”. They suggest several factors may account for the divergence including: declining inflation expectations; the falling terms of trade; and a more flexible labour market. They also note that the phenomenon of “surprisingly low wage growth for given labour market conditions which has been apparent across a number of advanced economies” and particularly, the breakdown of the relationship between the unemployment rate and wages growth. They also, sensibly, observe the impact on wages of the movement of workers from highly paid mining related jobs to other employment. 
Accordingly the Bank has revised down its outlook for wage growth: “will remain around current low levels for longer than previously forecast and pick up only very gradually over the forecast period”. More generally, unit labour costs are expected to be much slower to pick up than in previous cycles (historically, they have tended to pick up once the unemployment rate starts to decline).
Other factors seen as contributing to weak domestic cost pressures include: heightened retail competition (also affecting tradables, softer conditions in rental and housing construction markets and declines in the costs of business inputs such as fuel and utilities.
Also notable in the discussion of uncertainties around the forecast is the comment that “it is possible that inflation expectations will be persistently lower for longer than currently anticipated”. While that is placed alongside a range of other upside and downside risks, the risks around expectations are clearly skewed to the downside.
While clearly more downbeat on the outlook for non tradables inflation, the Bank has broadly retained its view that the gradual pass-through from the fall in the AUD since 2013 can be expected to add “a bit less than half a percentage point to underlying inflation over each year of the forecast period.”
This observation is ‘hedged’ a little with both the size and timing of the effect described as “inevitably imprecise”. The Bank also sees the impact being limited by heightened retail competition.
However, the discussion still implies that the bulk of the downward adjustment in the forecasts (from 2.5% to 1.5% in 2016 and from 2.5% to 2.0% in 2017) is due to the impact from lower non-tradable inflation.
Other points of interest
While the main message is clearly around the outlook for inflation and wages growth there were some other notable comments in the May SoMP.
On the global backdrop, the RBA has lowered its forecast for growth in Australia’s major trading partners “a little” with this now seen tracking 0.5% below its 10yr average. In particular, growth momentum was assessed as slower in Asia although within the region, expectations for China were unchanged since February, the soft March quarter outcome offset by a near term boost from policy measures. China remains a standout risk for Australia with the RBA voicing concerns that these recent stimulus measures appear to run counter to the Chinese authorities’ medium term goals of deleveraging and reducing dependence on investment and heavy industry and could see problems emerge if progress towards these medium term goals is delayed.
There is also an important sidenote on commodity prices. These have rallied strongly since the February SoMP. However, the Bank makes an explicit assumption that “prices for bulk commodities will not be sustained at current levels” with iron ore and coal prices after 2016 unchanged from the February SoMP. Oil prices are assumed to sustain at US$/47bbl but these have a mixed impact on Australia due to our high imports – the net effect is to leave the Bank’s terms of trade forecast largely unchanged compared to February. This is an important assumption as the rise over the last three months, if it had been assumed to continue, would likely have led to some (albeit minor) upward revisions to its growth and inflation forecasts.
Finally, there were some notable ‘absences’ in the SoMP overview. The closing paragraphs in the overview often take a similar form to those in the Governor’s decision statement and the ‘Considerations for policy’ section. Hence it can sometimes provide a bit more guidance around the Bank’s policy views, e.g. wording that sets out a clearer view on where the Bank would like the AUD to go or gives a framework implying a clear ‘policy bias’ going forward. Neither were offered in the May SoMP although the significance of the Banks’ forecast revisions is clearly the dominant policy ‘message’ this time around.
Conclusion
The changes to the forecasts for underlying inflation in this SoMP are, for a central bank like the RBA, nothing short of spectacular. This is particularly so given the new forecasts are based on a profile for interest rates that is 0.25% lower.
The revisions entirely support our expectation of a further rate cut in August. With inflation now driving the policy decision and rates so low, we would be surprised if the Bank chose to move any earlier.
For now, we think they will stick with a plan to re-assess the inflation outlook after the next inflation report (due July 27) and deliver a further rate cut at the Bank’s August meeting.
Updates on wage inflation (May 18), unit labour costs (with the Q1 national accounts release on June 1, a week prior to the RBA’s June meeting), and a wide range of inflation expectations measures will also be of keen interest.
On face value we have to ask ourselves whether the forecasts in the Statement, being based on the expected rate cut, are acceptable for an inflation targeting central bank.
Will the Board be comfortable with a forecast that inflation only rises to the bottom of the target range by the ‘policy year’? (i.e. 2017, the 12-18mth horizon over which current monetary policy settings and assumed near term adjustments are expected to have fully worked through to the wider economy).
We cannot entirely dismiss the prospect that reaching the bottom of the zone is unacceptable to the Board and, in due course, it will assess that even further action is required.
It will certainly be a challenging introduction for the new Governor when he takes over in September. 
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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RBA cuts inflation forecasts strongly: Westpac's Bill Evans

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UBank have announced it will reduce variable rate loans by 0.25% bringing the standard variable headline rate for new Owner Occupier P&amp;I loans down to 3.74 percent p.a. including a discount of 0.43 percent p.a as part of a value offer.
The new standard variable rate will be effective Monday 16 May 2016. 
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UBank to pass on 0.25 percent p.a. rate reduction to variable rate customers

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<h1 class="page-title">RBA Statement on Monetary Policy May 2016
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Economic conditions in Australia’s major trading partners generally appear to have eased a little of late. 
Growth in China moderated further in the March quarter. Subdued investment growth in the manufacturing sector was partly offset by rising public infrastructure investment and a return to growth in real estate investment. The latter was consistent with a strengthening in the property market in recent months in response to a range of earlier measures to stimulate demand. The moderation of Chinese growth has affected Asian economies and emerging economies in other regions that have strong trade links with China. 
Economic activity remained weak in Japan, while growth eased in the United States but continued at an above-trend rate in the euro area. Meanwhile, there have been further improvements in labour market conditions across all three economies. Despite that, inflation in the major advanced economies remains below central banks’ targets and inflation expectations have declined. This has been an important concern for central banks and contributed to the European Central Bank’s decision to ease monetary policy further in March. Monetary policy settings remain very accommodative in Japan and the United States (where markets expect no further increase in the policy rate before late 2016).
Changes in expectations about the course of the monetary policies of the major central banks have been reflected in exchange rates and financial market prices more generally. Sentiment in global financial markets has improved since late February. 
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The outlook for growth in Australia’s major trading partners in 2016 has been revised a little lower since the February Statement on Monetary Policy to incorporate generally weaker-than-expected growth in the March quarter and a reassessment of growth momentum, particularly in Asia. 
Despite the moderation in Chinese growth in the March quarter, the outlook there is much as it was earlier forecast, based on the expectation of further support being provided by more stimulatory policy settings. The Chinese authorities appear, at present, to be giving greater priority to short-term growth objectives than to the longer-term goals of deleveraging and achieving growth that is less reliant on investment and heavy industry. 
The outlook for the Chinese economy continues to be a key source of uncertainty for the forecasts. One risk is that the pursuit of the authorities’ near-term growth targets is likely to increase already elevated levels of debt and could potentially delay addressing the problem of excess capacity in the manufacturing and resources sectors.
While commodity prices are significantly lower than the peaks of a few years ago, the expectation of more policy stimulus in China has been accompanied by a sizeable increase in commodity prices over recent months. Iron ore and coking coal prices are around 60 per cent and 30 per cent above their low points in late 2015, respectively. This amounts to a rise in Australia’s terms of trade in the near term. However, it is assumed that the prices of bulk commodities are not sustained at current levels.
 Chinese steel demand is still expected to decline over the next couple of years and a substantial amount of new, low-cost iron ore supply is likely to enter the market over that period. Meanwhile, liquefied natural gas (LNG) prices are expected to be higher than previously forecast, which will tend to increase the terms of trade. The net result of these various movements is that the terms of trade are expected to be around recent levels by the end of the forecast period.
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Growth in the Australian economy over 2015 was a bit stronger than earlier anticipated, and a little above estimates of potential growth. 
Growth was moderate in the December quarter, however, and appears to have continued at about this pace into 2016, much as was forecast at the time of the February Statement. Consistent with this, employment growth has slowed from the strong pace of last year and leading indicators of employment have been somewhat mixed of late. Nevertheless, labour market conditions remain much better than a year ago. The unemployment rate has been around 53⁄4 per cent in recent months, having been as high as 61⁄4 per cent last year. 
There has been no material change to the forecast for GDP growth or the unemployment rate. GDP growth is expected to strengthen gradually to an above-trend rate, reflecting the effects o low interest rates and the depreciation of the exchange rate since early 2013. Both have been helping activity to rebalance towards the non- resource sectors of the economy. As before, the unemployment rate is forecast to remain around current levels for the next year or so and then gradually decline as growth in economic activity strengthens. The outlook for the unemployment rate is consistent with spare capacity remaining in the labour market throughout the forecast period.
Growth in household consumption picked up in the second half of last year and is expected to be sustained at around that rate in the period ahead. The pace of growth in retail sales volumes was maintained in early 2016. And while surveys suggest that households’ perceptions of their own finances 
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have eased, they were around long-run average levels in April. Growth in consumption is forecast to be maintained at a pace that is a bit above average, despite only modest growth in wages. This implies a further gradual decline in the household saving ratio over the forecast period. 
The amount of residential construction work still in the pipeline is substantial and has continued to increase. This points to further strong growth in dwelling investment, albeit at a gradually declining rate consistent with the decline in building approvals since last year. In established housing markets, conditions have stabilised over the past six months or so. Housing prices have grown moderately over 2016 to date, following a small decline at the end of 2015. 
Housing credit growth has eased a little over recent months to be around 7 per cent in six-month-ended annualised terms in early 2016. This follows increases in mortgage rates and the strengthening of banks’ non-price lending terms in response to supervisory actions. 
Surveyed conditions in the business sector remain above average and business credit growth has picked up over the past year or so. Nevertheless, indicators of investment intentions suggest that non-mining business investment is likely to remain subdued for a time, although it is expected to gradually pick up later in the forecast period as overall demand strengthens. Mining investment 
is expected to continue to fall as projects are progressively completed, although the magnitude of the falls should diminish over the next couple of years, consistent with the forecasts presented in the February Statement. Project completions will support further growth in resource exports. Net service exports are expected to continue to make a noticeable contribution to growth. 
Inflation was lower than expected in the March quarter. The various measures suggest that underlying inflation declined to a little less than 1⁄4 per cent in the quarter (compared with about 1⁄2 per cent in the December quarter), to be about 11⁄2 per cent over the year. Headline inflation was lower still, partly reflecting some temporary factors. Nonetheless, the CPI data indicate that there has been broad-based weakness in domestic cost pressures. 
This is evident in the further decline in non-tradables inflation in the March quarter. In part, this reflects lower-than-expected growth in labour costs, with unit labour costs being little changed for four or more years now. In addition, there has been heightened retail competition, a moderation in conditions in housing rental and construction markets, and declines in the cost of some business inputs, such as fuel and utilities. A number of these factors are also likely to have mitigated some of the upward pressure on the prices of tradable items arising from increasing import prices following the depreciation of the exchange rate since early 2013.
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The forecast for underlying inflation has been revised lower, reflecting the lower-than-expected outcome for inflation in the March quarter and an expectation that domestic cost pressures, including labour costs, will pick up more gradually than anticipated at the time of the February Statement. 
The outlook for domestic cost pressures is a key source of uncertainty. Despite above-trend growth in economic activity and improvements in labour market conditions over the past year, it is possible that domestic cost pressures may weaken further, and so inflation may not pick up as expected. However, it may be that the strengthening in the labour market embodied in the forecasts is associated with growth of labour costs picking up sooner or by more than is currently forecast. 
The substantial exchange rate depreciation over recent years is expected to continue to place some upward pressure on inflation for a time. While the exchange rate is assumed to remain around current levels over the forecast period, it may respond to a number of influences, including any unanticipated changes to the outlook for growth in China, commodity prices or the monetary policy decisions of the major central banks. It therefore represents a significant source of uncertainty for the forecasts of inflation, as well as for the outlook for growth in activity. 
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For some time, the Reserve Bank Board had noted that the inflation outlook provided scope for a further easing in monetary policy. After taking account of developments over recent months, the Board’s assessment at its May meeting was that the outlook for economic activity and the unemployment rate was little changed, but that the inflation outlook was lower than earlier anticipated. At the same time, the Board took careful account of developments in the housing market, noting the effects of supervisory measures to strengthen lending standards, the recent easing in housing credit growth and the abatement of strong price pressures. 
Taking all of these considerations into account, the Board judged that the prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by further easing of monetary policy. Accordingly, the cash rate was reduced by 25 basis points. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time. 
To read the full Statement on Monetary Policy, <a href="https://www.rba.gov.au/publications/smp/2016/may/" target="_blank">click here</a>.
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The latest RBA Statement on Monetary Policy

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Dr Philip Lowe, the RBA deputy governor since early 2012, takes over the nation's most important economic job in September when governor Glenn Stevens retires.
Both Mr Stevens and his predecessor have endorsed the appointment.
The former governor Ian Macfarlane told The Australian Financial Review "he is absolutely the right person for the job.
"He is an outstanding economist and a very sensible and pragmatic policy maker," Mr Macfarlane said.
After considering a candidate list drawn up by Treasury, the Treasurer Scott Morrison settled on Lowe in a decision that has wide spread support.
"Dr Lowe is well regarded in the central banking community, financial markets, and the Australian business community, and will reinforce existing confidence in the institution," Mr Morrison said.
The University of NSW undergraduate economics medallist joined the Reserve Bank more than three decades ago and has a PhD from the Massachusetts Institute of Technology.
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