<a href="https://www.apartments.com.au/developers/sunland-group">Sunland Group</a> has officially lodged plans for its first Gold Coast apartment project since the departure of the Abedian family from the company three years ago, unveiling a new high-rise proposal for a prominent Broadbeach corner site on Old Burleigh Road.

The application was submitted by an entity directed by Tom Jamieson, stepson of longtime Sunland leader Soheil Abedian, and Riaz Rezvanipour, brother-in-law of Sahba Abedian, Soheil’s son.

Sunland acquired the 1,283 sqm site on the corner of Old Burleigh Road and Armrick Avenue for $9.5 million late last year and is now seeking approval for a <a href="https://www.apartments.com.au/new-apartments/99-101-old-burleigh-road-broadbeach-qld-4218">42-storey tower with 81 apartments</a>.

<img alt="First look: Sunland Group returns to Broadbeach with new Old Burleigh Road tower plans" data-entity-type="file" data-entity-uuid="fea2946d-90ee-4cfc-babe-2a8ad5db2cb6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/pers.png?VersionId=BV0fihJw31nDIQ8ozY_h3GbS8mxDyhnm" />

Designed by <a href="https://www.apartments.com.au/architects/contreras-earl-architecture">Contreras Earl Architecture</a>, the proposed tower at 99-101 Old Burleigh Road would deliver a predominantly larger-format apartment mix aimed at the owner-occupier market. Plans include 17 two-bedroom apartments, 55 three-bedroom apartments, and nine four-bedroom residences across 35 residential levels.

The development also incorporates three basement levels, four podium parking levels, two levels of communal recreation facilities, and rooftop plant and equipment. A total of 189 car spaces are proposed, significantly exceeding the 90 spaces required under the planning scheme.

The architecture adopts a sculpted, curvilinear form, with deep wraparound balconies and integrated landscaping intended to soften the tower’s vertical expression. The planning report states the building’s “slender footprint/form provides a complimentary yet varied built form within the local streetscape” and contributes to “a varied, yet ordered skyline.”

Contreras Earl noted in its Architectural Statement that from the early stages, the project addressed a fundamental challenge: how to accommodate the required residential yield while avoiding the conventional model of a tower sitting on a rigid, fully resolved parking podium.

“The most direct response would have been to consolidate parking into a singular, flat podium and extrude a repetitive tower above,” the statement said. “While efficient, this approach would result in a consolidated built form with limited engagement with the surrounding landscape and public realm.”

Instead, the conventional podium model was “deliberately rejected”. The architects described the base of the building as “a landscaped architectural condition where structure, planting and circulation are integrated”.

“Rather than presenting a continuous built mass, the base of the building is articulated through a series of concrete planter elements that organise the podium into a fragmented system,” the statement said. “This approach reduces the perceived bulk of the lower levels while establishing a more permeable interface with the streetscape and adjacent open space.”

<img alt="Sunland" data-entity-type="file" data-entity-uuid="923fad8d-c960-4527-8fbe-975cf1ddf88d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-25%20at%2010.32.03%E2%80%AFAM.png?VersionId=pngwb0hYOIUpq9vDw6F2EsOiVuHF3DiX" />

&nbsp;

The site sits within the High Density Residential Zone and inside the City of Gold Coast’s unrestricted “HX” building height area, where the planning framework anticipates intensified residential development tied to the expanding light rail corridor. The planning report notes the area is undergoing “transition toward more intense development forms” given its proximity to Broadbeach, Surfers Paradise, and high-frequency public transport infrastructure.

Positioned directly opposite Broadbeach Park and within walking distance of Florida Gardens light rail station, the development would sit among a rapidly evolving stretch of Old Burleigh Road that has become one of the Gold Coast’s most active apartment development corridors.

The application joins a growing pipeline of luxury residential projects reshaping Broadbeach, including nearby developments by 5Point Projects, Polycell, and Graya.

The planning report argues the project contributes toward the Gold Coast’s long-term housing targets under the South East Queensland Regional Plan, which forecasts the need for more than 100,000 additional high-rise dwellings across the city by 2046.

<section data-scroll-anchor="false" data-testid="conversation-turn-4" data-turn="assistant" data-turn-id="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-1" data-turn-id-container="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-1" dir="auto">
The Abedian family departed Sunland Group in late 2023, ending a four-decade association with the company, and subsequently established the private development firm Abedian &amp; Co. The group is currently delivering <a href="https://www.apartments.com.au/new-apartments/greenmount-residences-cnr-hill-street-and-marine-parade-coolangatta-qld-4225">Greenmount Residences</a> at Rainbow Bay and recently launched <a href="https://www.apartments.com.au/new-apartments/18-mary-avenue-14-18-mary-avenue-broadbeach-qld-4218">18 Mary Avenue</a> in Broadbeach.
</section>

Joel Robinson

First look: Sunland Group returns to Broadbeach new apartment market with new Old Burleigh Road tower plans

The Minns Labor Government has established the new Bays West Delivery Authority to lead the development&nbsp;of the Bays West Precinct and Blackwattle Bay Precinct.&nbsp;

The Authority is charged with creating Sydney’s newest precinct, a thriving, connected, sustainable hub with White Bay Power Station as its cultural heart. Its vision is to build on the area’s natural, cultural and industrial history to shape a vibrant new neighbourhood.

The precinct will deliver up to 8,500 well-located homes, including a minimum of 10 per cent affordable and essential worker homes. Combine new housing with public open space, opening public access to the waterfront for the first time in more than 100 years, while retaining important deep-water facilities to support Sydney’s working harbour.

Located just minutes from the Sydney CBD and connected to a world-class metro, ferry, walking and cycling links, the Bays West precinct will rebalance housing growth towards well-serviced inner-city locations and help tackle the state’s housing crisis.

The Bays West Delivery Authority,&nbsp;an agency of the Department of Planning, Housing and Infrastructure, will report to the NSW Minister for Lands and Property who already has oversight of major precinct renewal projects including at Blackwattle Bay and Barangaroo.

As part of the broader Bays West transformation, the Minns Government recently announced that a proposal from Lendlease to redevelop part of the Bays West Precinct has progressed to Stage 2 of the NSW Government’s unsolicited proposals process.

<img alt="Sydney" data-entity-type="file" data-entity-uuid="2ed71eb9-d8e8-4fa7-b9d1-de4531dcf2f3" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-25%20at%209.42.31%E2%80%AFAM.png?VersionId=IDryFIbped9SNDg72LEN_EecvhUsOPvp" />

The Minns Labor Government has also confirmed the Bays West precinct will have a new suburb name. This will be the first major suburb built in close proximity to Sydney’s CBD in decades and will encompass the area currently being referred to as Bays West, including Glebe Island and the White Bay Power Station. Served by a new Metro station just five minutes from the CBD, it will become one of the most populous suburbs in the Inner West and one of Sydney’s premier cultural destinations.

An early works program is taking shape, which&nbsp;includes the first stages of an international design competition.&nbsp;

The aim of the Bays West&nbsp;International&nbsp;Design Competition is to&nbsp;ensure design excellence is embedded in the project from the start. The competition will deliver an&nbsp;urban framework that defines the character, ambition and long-term identity of&nbsp;this&nbsp;former industrial precinct as it transitions to a vibrant, inclusive and sustainable residential&nbsp;neighbourhood.

The competition will be led by the Bays West Delivery Authority in partnership with Government Architect NSW.&nbsp;

It will launch with an invitation for a global Expressions of Interest, before moving to an invitation-only stage that will be assessed by a panel that&nbsp;will provide advice to Cabinet who will select a winner.

Premier of NSW, Chris Minns said the establishment of the new Authority is the first step in transforming the Bays West precinct into a vibrant, livable suburb minutes from the Sydney CBD and two stops from Hunter St Station on the Metro West line.

“The Authority will deliver well-located homes close to the heart of the city and integrate the new precinct with Blackwattle Bay and the new Sydney Fish Market.

“This is a generational opportunity to build a new suburb on the city’s edge and open the harbour foreshore to the public for the first time in a century.”&nbsp;

Minister for Lands and Property Steve Kamper said the new Bays West Delivery Authority established by the Minns Government will turbocharge the development of Sydney’s newest suburb.

“The Authority is working at a record pace to deliver an international design competition, planning pathways and a financial model so that this development benefits Sydney with well-designed homes in a central location, close to public transport, jobs, entertainment and essential services.

“If we want Sydney to stay liveable and affordable, we need to be bold about using underutilised government-owned land to deliver homes for the future while making sure essential working harbour functions can be accommodated.”

Bays West Delivery Authority established to "turbocharge" Sydney’s newest suburb

Around 400 additional homes could be built at Southwark Grounds on Port Road, lifting total site capacity from 1300 to around 1700 dwellings.

A recently approved code amendment would allow apartment towers of up to 14 storeys in some areas of Renewal SA’s redevelopment of the former West End Brewery.

Renewal SA Acting Chief Executive Shane Wingard said he welcomed the code amendment, with the increase in heights and homes making a positive impact on the supply of high-quality, well-connected housing close to the city.

“By going higher across some parts of Southwark Grounds, we are adding a substantial number of very well-located homes with little impact on project delivery time or planned open space,” Mr Wingard said.

Since the project officially launched in 2025, Mr Wingard said more than 12,000 enquiries had been received about living at Southwark Grounds.

“The very strong early interest we’ve seen since homes were first released in the precinct reinforces our plans to create more housing opportunities,” he said.

The Southwark Grounds code amendment was launched in December last year, with community engagement undertaken over five weeks from January.

It proposed increasing maximum building heights from eight to 14 storeys on the eastern section of Southwark Grounds, and to 12 storeys across the remainder of the site, with minimum building heights ranging from two to four storeys.

The code amendment was implemented through an Early Commencement policy in late January, allowing developers to quickly explore the viability of increased height and housing yield while other planning processes continue.

One of the first developers delivering apartment sites have already finalised redesigns to increase the number of apartments following the code amendment.

Samaras’ development adjacent to the future Colonel Light Park is now planning to deliver 125 apartments across 11 storeys, significantly greater than original plans of around 50 apartments across four storeys.

The developer is also exploring the potential for additional affordable housing outcomes.

Most of the apartments at Southwark Grounds will be delivered within a master-planned precinct on a large parcel of land on the eastern portion of the site, covering around two-thirds of its 8.4 hectares.

Wingard said detailed precinct planning over the coming months may identify further opportunities to increase yield further that could see total apartment numbers at Southwark Grounds, exceed this number.

Affordable homes at Southwark Grounds will also see a net increase, with Renewal SA maintaining its commitment to a minimum of 20 per cent affordable housing across the development.

&nbsp;

&nbsp;

Civil works have begun across the site, with construction under way on the first new roads surrounding a townhouse precinct in the south‑west corner of Southwark Grounds. This includes Renewal SA’s 17 Founder’s Row homes, which are on track for completion by Christmas.

“We expect to have people living at Southwark Grounds by the end of the year, so delivering roads and public spaces for those residents is among our highest priorities.”

Construction of 40 townhouses off Anderson Street, known as West Village and being delivered by Contour, is forecast to begin in mid‑2026. Kolabb’s Anderson Lane development will follow shortly after, delivering a further 26 townhouses.

Southwark Grounds is a state government‑led urban renewal project now set to deliver around 1,700 homes over the next decade.

Homes will be supported by a supermarket, a range of retail and hospitality offerings anchored by a revitalised Walkerville Brew Tower, a childcare centre, car parking and well‑connected public spaces.

400 new homes planned for Adelaide's former West End Brewery site

Brisbane developer&nbsp;<a href="https://www.apartments.com.au/developers/cavcorp">Cavcorp</a> has lodged plans for a new mixed-use residential development at <a href="https://www.apartments.com.au/new-apartments/55-wyandra-street-teneriffe-qld-4005">55 Wyandra Street</a>, Teneriffe, anchored by an 85-metre public laneway designed to reconnect the suburb’s riverfront with the Gasworks precinct.

The buildings, known as Teneriffe House and Teneriffe Lane, would replace the existing Queensland Cotton head office site with a 15-storey residential tower transitioning to eight storeys toward Helen Street. The project has been designed by Plazibat Architects and lodged as a code assessable development application for 93 apartments across a 3,401 sqm mixed-use site within the Newstead and Teneriffe Waterfront neighbourhood plan.

Central to the scheme is the transformation of an existing service easement into a publicly accessible cross-block connection linking Wyandra and Helen Streets. Cavcorp says the new laneway will act as both a pedestrian shortcut and a landscaped civic space between the Teneriffe Riverwalk, ferry terminal, and Gasworks precinct.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="26e7f058-b065-4de8-b13d-a2b8cb64dfcc" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/bldg.png?VersionId=sELS0ZKYi361oYipUa1BIKfe_.DLZoFV" />

“The revised proposal delivers a legacy public-realm cross-block link, permanently secured for community use, transforming an existing private easement into a safe, high-quality pedestrian connection between the Teneriffe heritage riverwalk and the Gasworks–Long Island precinct,” the planning report states.

The laneway will sit beneath a large subtropical loggia integrated into the podium levels of the development. The design incorporates deep landscaping, water gardens, lobby spaces, business lounges, and ground-floor apartments to create what Cavcorp describes as a climate-responsive “urban verandah.”

The tower itself has been designed as a slender form with recessed floorplates and curved translucent corners inspired by contemporary Japanese architecture. The building height aligns with the Commercial Road precinct controls, which permit towers up to 15 storeys within proximity to Longland Street.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="a8a17d40-43b6-4718-b3fd-67676fcbb485" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/pers%202_1.png?VersionId=i3VwDtp5AmL_8InW7w4qRbDFEpb744Jt" />

The project will comprise a mix of larger-format apartments aimed at owner-occupiers, downsizers, and families. The proposed apartment mix includes 11 loggia apartments across the lower levels, 50 four-bedroom Sky-Terrace apartments from levels three to seven, and 32 Sky-Pool Homes occupying the upper tower levels. The Sky-Pool Homes will feature private thermal plunge pools integrated into oversized balconies.

According to the application, the apartments are intended to reinterpret the scale and character of Teneriffe’s woolstore conversions and Queensland homes within a vertical residential format.

“The sky-pool homes build on Cavcorp’s previous projects and introduce a distinct apartment typology to Teneriffe, informed by both local and international precedent and responding to an identified market demand for enhanced safety, space and amenity,” the planning submission notes.

A major focus of the proposal is its five-level wellness and lifestyle offering, extending from the basement through to the rooftop.

Amenities proposed include a rooftop Swim &amp; Racquet Club with a 25-metre Olympic lap pool and tennis court, coworking spaces and libraries, golf simulators, wine storage, concierge facilities, business lounges, pet wash areas, and rooftop longevity-focused wellness spaces with spas, outdoor fitness zones, and landscaped terraces.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="944b352c-49b9-4247-a4c6-5967b4b69fda" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/amenity.png?VersionId=Ed_qKjAtMwFT.5gfl3jiA9QwdWxSMsaX" />

All parking will be concealed within basement levels accessed from Wyandra and Helen Streets. Cavcorp says the deep-basement engineering approach allows the entire ground plane to prioritise landscaping, pedestrian movement, and active frontage rather than vehicle infrastructure.

The development continues Cavcorp’s concentration in Newstead and Teneriffe, where the Brisbane developer has delivered a number of apartment projects including Lucent, Le Bain, and Luminare, as well as the Long Island Wellness Precinct nearby. Several of those projects have received national design and architecture awards, including recognition under Brisbane’s “Buildings that Breathe” program.

Cavcorp unveils wellness-focused Teneriffe House and Teneriffe Lane apartment buildings

Focus Group Investments has lodged plans for a new apartment development at <a href="https://www.apartments.com.au/new-apartments/64-70-hanover-street-fitzroy-vic-3065">64–70 Hanover Street</a> in Fitzroy, seeking to utilise the Victorian Government’s recently introduced Great Design Fast Track pathway to accelerate approvals for the project.

The proposal is among the latest developments to emerge through the state-led initiative, which was established to fast-track well-designed residential projects in activity centres and transport-connected inner-city locations. The pathway allows qualifying developments that meet elevated design and housing benchmarks to bypass traditional council planning timeframes and instead be assessed directly by the Department of Transport and Planning.

Designed by SJB, the development will comprise a mix of apartments above activated lower levels, with a strong focus on architectural articulation, landscaping, and communal amenity. The design response seeks to balance the industrial character of Richmond’s former warehouse precincts with a more contemporary residential form.

<img alt="First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Richmond apartments" data-entity-type="file" data-entity-uuid="abea51cc-d85b-479e-9aef-a589f3b37ca7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ground.png?VersionId=e1Kf8EyPWwyiVumtqQ4rM5S4GpOR3CCz" />

Proposed are 63 new dwellings, a wide ranging mix of studio, one-, two-, and three-bedroom apartments, and townhouses and duplexes. They will be spread across a part-three, part-eight storey building.

The Planning and Urban Context Report by Tract says the development is of an "exemplary architectural standard" and has been carefully crafted by SJB Architects.

"Dwellings&nbsp;will benefit from excellent access to natural light, cross-ventilation opportunities and extensive communal space," the report noted.

The architectural material highlights the project’s integration of landscaped elements and communal spaces throughout the building. The proposal also incorporates sustainability initiatives aligned with the Victorian Government’s push for higher-performing apartment developments under the fast-track program.

The Great Design Fast Track was unveiled by the Victorian Government in 2024 as part of a broader housing supply strategy aimed at accelerating the delivery of new homes. Projects assessed through the pathway must demonstrate high-quality architecture, sustainability outcomes, and housing diversity while being located close to public transport and existing infrastructure.

<img alt="First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Richmond apartments" data-entity-type="file" data-entity-uuid="afdbe834-8dc4-4a77-a943-ba07bc927348" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/site_11.png?VersionId=0J657j.TaChAZfp93wqJYBTqSsnREJx2" />

Focus Group, founder and led by Paul De Lutiis, is increasingly active across Melbourne’s inner suburbs, targeting well-connected urban renewal locations suited to medium and higher-density residential development. The Fitzroy proposal continues that strategy, leveraging the area’s strong transport links, established retail amenity, and proximity to the CBD.

Fitzroy has been one of the most popular spots for developers and buyers in recent years. The likes of PACE Development Group, SMA Projects, Crema Group and Chapter Group, currently selling projects in the suburb.

First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Fitzroy apartments

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

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Demand for fixed-rate mortgages soared to a four-year high in March as customers took advantage of an extremely competitive market and low fixed rates on offer.
Analysis of ABS housing finance data by CommSec shows that nearly 15% of home loans taken out in March were on fixed-rate terms, the highest proportion since April 2008, when fixed rate mortgages accounted for 19% of all home loan commitments.
CommSec chief economist Craig James says “home loan buyers clearly are shopping around for the best deals, and that may mean more cocktail loans – part variable, part fixed (known as a split loan)”.
Borrowers are also taking advantage of fixed rates that are currently, on average, lower than variable-rate mortgages.
According to research by mortgage comparison website RateCity.com.au, the average three-year fixed rate is 6.24%, compared with the standard variable mortgage rate average of 6.74%.
RateCity.com.au lists IMB Building Society’s three-year fixed rate product, which has an interest rate of 5.89% as the lowest rate in the market, followed by the Greater Building Society at 5.95%.
Lenders to have cut their fixed-rate mortgages recently include ME Bank, which cut its three-year fixed rate on the Super Member Home Loan to 5.99% on May 7.
Towards the end of April Westpac brands Rams, Bank of Melbourne and St George all cut their three-year fixed-rate products to 5.99% (the two banks for a limited time).
The growing appeal of fixed rate mortgages was foreshadowed in March Mortgage Choice figures (released in April), which found that the popularity of fixed-rate loans among its borrowers had jumped to a four-year high. Fixed-rate loans accounted for 26% of approved home loans written by Mortgage Choice mortgage brokers in March, up from 20.6% in February and well above the 12-month average of 17.7%.
At the time, Mortgage Choice spokesperson Belinda Williamson attributed the increase in demand for fixed-rate mortgages to concerns over that the Reserve Bank might increase the cash rate or lenders moving their interest rates independently of the central bank.
“Borrowers’ appetites for fixed-rate loans may have also been spurred on by competitive lender pricing,” Williamson added.
In April 2008 borrowers locked in fixed rate mortgages as the cash rate climbed to 7.25%, the highest rate since December 1994, following six years of incremental rate increases.
However, borrowers that switched to fixed-rate products in April 2008 were severely stung as the RBA entered into a big rate cutting cycle soon after  (starting in September 2008) to counter the effects of the GFC, reducing the cash rate from 7.25% to a record low of 3% by April 2009.
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lschlesinger-FZcF9M3vE6

Fixed-rate mortgage demand reaches four-year high: ABS

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When the GST came along on July 1, 2000 there was the "promise" that lots of other taxes, duties and charges, in particular state taxes would be abolished or at least reduced. But in the intervening years changes have been minimal and only at the margins, for example mortgage duties have been abolished in most states.
A policy change to remove or reduce the payment of stamp duty applied to real estate post-GST was and still is an illusive target. Today there are few indicators that any big changes are coming our way in the near future.
This is not to suggest that change will never come, in fact just the opposite. Various state governments are happy to use stamp duty concessions to stimulate various sectors of the market. They have become very comfortable with the idea of making concessions that are in reality no different from a promotion that a developer might offer.
Common incentives on offer can frequently target first time buyers, or older buyers or aim to stimulate construction activity. Sometimes these target groups are seen as disadvantaged and stamp duty savings can then be promoted in combination with other grants, like the FHB grant to directly stimulate activity.
However, this on-again, off-again approach can create market distortions and when the central idea is for example to stimulate the construction of new homes, it’s hard to argue why this application of stamp duty should not be removed permanently.
And I would have to suggest that such a change would need to be a national initiative. New construction is a major driver of economic activity and it has a huge flow on affect that runs deeply into many sectors of the economy and so the benefits appear obvious.
A national approach is desirable, to avoid different states simply chasing policy so their local market is not disadvantaged. Lets change the rules in this or that state so that an adjacent state does not gain all the advantages, appears to be a common theme. A national policy would also present a uniform market for international buyers looking at Australia, and avoid a major influx into any particular state. Again with the possibility of creating a local distortion.
The under supply of dwellings in almost all major markets is further reason to consider this permanent change to duty and with a predicted national undersupply of 170,000 forecast for 2013 (Source: BIS Shrapnel) removing stamp duty would hopefully kickstart the resources necessary to overcome this shortage.
Older buyers have a role to play
But this is not a simple area of policy, the predicated undersupply of new homes also needs to be compared with the already established housing stock, and there are some very interesting trends here that are for instance being impacted by older homeowners.
A study in 2010 by the Australian Housing and Urban Research Institute found that 84% of homes occupied by people over 55 were living in a home with one or more spare bedrooms. And while some of this spare capacity would be used for family or lifestyle reasons, downsizing was possibly being restrained by the impact of stamp duty.
In NSW there is an existing concession, where the Senior’s Principal Place of Residence duty exemption applies to people between 55 and 65 years of age buying a new house before 1 July 2012 when the concession is set to end.
Stamp duty concessions for older people downsizing would see more homes in established areas released onto the market and this would also have the impact of better utilising of existing infrastructure, as many of these homes would be in established areas.
Here I can see good reason for such a policy as funding new infrastructure is almost always sighted as one of the main reasons that high council levies apply in new residential development areas. But could I also suggest that this type of ‘recycling’ of existing homes and local infrastructure could be a solid argument to collect less stamp duty.
Such stamp duty incentives do produce structural change in the market as we have seen recently in Sydney. The $600,000 cap on the current NSW Home Builders Bonus has for example seen a big lift in the number of one-bedroom apartments coming onto the market, and they have proved popular with investors and first time buyers.
Post June 30 – what will happen in NSW?
When it comes to the undersupply of housing, I have already highlighted that NSW has the biggest shortfall of more than 101,000 dwelling forecast for 2013, and construction activity has lagged for many years. And this is even with some large land release area’s opening in the cities south-west and north-west.
Activity simply refuses to budge and this is despite what should be a big level of pent up demand, and yet regardless of the shortfall demand has failed to greatly boost construction. The pressure from pent up demand is somehow not materialising.
And while there will never be one simple answer, the impact of stamp duty must be counted among the reasons, and this would suggest that the current concessions for First Time Buyers should be extended across the entire market. The FHB market does not exist in isolation and market-wide activity would benefit.
A more general concession at a realistic price level and possibly over a sliding scale could help generate more extensive market activity.
Some may still argue that this could further dampen affordability if the exemptions for stamp duty was not only limited to first time buyers, but we need to keep in mind that there are other FHB grants and also these same buyers would have access to a wider choice of locations helping to create a deeper market.
The case for change
Stamp duty on real estate transactions is a big source of revenue for every state government. This is essential revenue, but does the burden fall fairly and is the ‘tax’ more complex than it needs to be. Clearly every state and territory government is happy enough to use stamp duty as a form of concession with varied and ongoing schemes, and so there are many precedents of sorts for change.
Australians generally pay stamp duty on all property transfers (accepting that there are varied and ongoing concessions) but on our principal residence we pay no capital gains and in 2012-13 according the Federal Treasury that concession will cost the federal budget $35.5 billion, that’s almost 9.5% of all federal government expenses.
Any move to change this policy would be almost impossible, but it is perhaps the absence of a CGT that permits other high property taxes, including stamp duty to be justified.
Stamp duty concessions are almost always tipped in favour of first-time buyers, and associated with new homes, but questions remain as to what impact this has on building activity. This is also as noted a more complex area because the concessions vary between states and they are almost always transitory.
Stamp duty is an unpredictable tax for the states and despite the cash flowing from the GST the revenue would need to be captured from other structural changes in the economy. But clearly stamp duty remains a barrier to everyone in the housing market, young, old and even those looking for greater flexibility with employment are possibly constrained by its impact, being reluctant to move.
There are, however, some more immediate changes possible that could include greater indexation of rates of duty, including the permanent removal of duty for first-time buyers and some appreciation of the fact that the duty applies to the final price of a new home where there would already be many other layers of taxation. When the duty is paid is also an area where policy could be modified, helping to reduce the up-front costs of buying a residential property.
With the NSW state budget set to be announced in two months' time, will change result with the possible application of duty concessions to the wider market?
However, let's hope that we do not take a lead from Queensland, where from August 1 last year stamp duty for owner-occupiers on property purchases increased. But in contrast at the same time to stimulate the building industry, discounts on stamp duty for anyone buying or building a new home were introduced, leaving existing dwellings to bear the brunt of the increases. That’s a mixed message by any conclusion.
Peter Chittenden is managing director for residential of <a target="_blank" href="https://www.colliers.com.au/Colliers%20Corporate/Residential.aspx">Colliers International</a>
 
 
 
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pchittenden-eLqUUC8TWW

It's time for a major change to stamp duty

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Some signs of life returned to the mortgage market in March, with owner-occupier mortgage commitments rising 0.3% on a seasonally adjusted basis over the month, according to the latest ABS estimates. 
The value of investment housing commitments seasonally adjusted fell 1.0% in March 2012 while the total value of dwelling commitments excluding alterations and additions falling  0.5% on a seasonally adjusted basis in March to $20.18 billion.
The strongest gains were made in the resource-rich states, with owner-occupier mortgage commitments up 3.5% ($232 million) in Western Australia and 2% ($176 million) in Queensland. 
The Northern Territory was the standout among the smaller markets with a 23% ($73 million) increase. 
NSW remained flat with just a 0.1% increase in mortgage lending while there were falls recorded in Victoria (down 79, 0.6%), Tasmania (down 37, 4.5%), the ACT (down 22, 2.6%), and South Australia (down 14, 0.4%).
Mortgage broker Loan Market calculated that national results for the March 2012 quarter were 10% up on the corresponding quarter in 2011 with all states and territories on the mainland on the rise. Only Tasmania bucked the trend.
Western Australia and Queensland had March quarter increases of 25% and 16%  respectively, while the Northern Territory was up 18% and NSW 11%. There was a 4% increase in South Australia, 3% in the ACT and 2% in Victoria. Tasmania had an 8% decrease.
Loan Market corporate spokesperson Paul Smith says the latest figures are "highly encouraging". 
“We are obviously seeing more confidence from consumers so far this year, compared to last, which augers well for the months ahead.”
Smith says this month’s lowering of official interest rates from 4.25% to 3.75% would also have an impact on the home finance market in the coming months.
“With two consecutive months of flat activity, we should see the figures for May and June spike in reaction to the RBA’s rate cut,” he says.
”Even though most lenders held back on passing on the full 50 basis points, they still lowered their variable rates by significant margins in a positive move for home loan customers.
The Housing Industry Association (HIA) noted that the number of loans for the construction or purchase of new homes lifted by 3.5% in March,  "a welcome piece of good news given the existing weak conditions facing the new home building sector", according to HIA senior economist, Andrew Harvey.
“The March figures reflect a period prior to the 50 basis point cut in interest rates which occurred in May, and although the cut was only partiallly passed on by Australia’s banks, this factor should act to spur a further modest improvement in new home lending in the coming months,” Harvey says.
New South Wales was a key driver of the national result with the March 2012 seasonally adjusted number of loans for new housing (construction and purchase of new) up by 13.6%.
Elsewhere, Victoria rose by 1.7%, South Australia by 0.5%, Western Australia by 1.9%, Tasmania by 7.3%, the NT by 19.3% and the ACT by 12.1%. Queensland was the only jurisdiction which saw new home lending fall in the month of March (down by 2%).
The number of first-home buyer loans as a share of total owner-occupied home loans dropped to 16.4% in March 2012 from 17.2% in February 2012.
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Mining states lead rebound in demand for owner-occupier mortgages in March: ABS

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Mortgage Choice and Aussie Home Loans will be able to continue to require that their mortgage brokers be members of the Mortgage and Finance Association of Australia (MFAA) without the threat of legal action, following a ruling by the Australian Competition and Consumer Commission (ACCC).
Aussie and Mortgage Choice along with Virgin Money and ING Bank lodged applications in 2007 and 2008 known as “third line forcing notifications” seeking protection from legal action for its exclusive arrangement with the MFAA.
The requirement restricted brokers’ choice of industry body membership and did not recognise membership of rival industry body the Finance Brokers Association of Australia (FBAA).
The notifications protected the four organisations until such time as the ACCC made its ruling.
During the course of the review, ING Bank withdrew its notification and Virgin Money advised that it did not engage in the conduct.
Exclusive dealing arrangements such as third line forcing are prohibited under Australian competition rules, but organisations can apply to the ACCC for protection from legal action for these arrangements to continue.
The applications proved highly controversial within the mortgage broking industry.
In making its ruling, ACCC chairman Rod Sims said the consumer watchdog believed the arrangements “continue to deliver a benefit to the public, notwithstanding the commencement of a national regulatory regime for the credit industry in 2010”.
“The MFAA's membership requirements impose higher educational and certain other professional standards on its members than the regulatory regime,” said the ACCC in its ruling.
"The ACCC considers requiring MFAA membership is likely to assist those lending businesses to ensure that their brokers are of a consistent high standard and to meet their compliance obligations under the National Consumer Credit Protection Act.
“The ACCC acknowledges requiring MFAA membership restricts choice of professional association for these brokers, thereby limiting competition from other similar professional associations.  However, given the small number of mortgage brokers currently affected by the notified conduct compared to the overall size of the industry, the ACCC considers that any public detriment is likely to be minimal.
“Further, the MFAA membership requirement is only imposed by two industry participants.  There are a large number of other businesses that individual brokers can work for if they disagree with the MFAA membership requirement.”
 
 
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ACCC allows Aussie and Mortgage Choice to require MFAA membership

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Following Friday’s decision by ANZ to reduce its variable rate by 0.37 percentage points to 7.05% as part of its monthly independent rate decision, just two lenders – both credit unions – have passed on the full 50-basis-point May 1 rate cut to borrowers.
<a href="https://www.unicredit.com.au/" target="_blank">Unicredit WA</a>, which primarily provides loans to staff of WA’s four public universities (and according to its website “was born out of the chemistry department at the University of Western Australia in 1964”), has lowered its standard variable interest rates half a percentage point to 6.1%, making it one of the lowest in the market with<a href="https://www.queenslanders.org.au/"> Queensland Credit Union</a> not far behind at 6.15%
The other lender to pass on the full rate cut is New South Wales-based <a href="https://www.pcu.com.au/" target="_blank">Police Credit Union</a>, which has dropped its Police Value Variable Home Loan to 6.24%.
Borrowers at one of the larger credit unions, Credit Union of Australia (CUA) will perhaps feel the most aggrieved after it passed on only a 25-basis-point cut to 6.47% – half of the official RBA rate cut. However, CUA still has a standard variable rate significantly lower than the major banks.
Of the bigger lenders, ING Direct is offering the lowest standard variable rate of 6.44%.
Here’s a guide to some of the standard variable mortgage rates currently on offer from banks, credit unions and non-bank lenders, starting with the cheapest:
All rates correct as of 9am, May 14.
6.10%
The standard variable bank rate of Unicredit WA
6.15%
The standard variable bank rate of the Queensland Credit Union
6.24%
The standard variable bank rate of Police Credit Union
6.37%
The standard variable bank rate of State Custodians
6.42%
The standard variable bank rate of ING Direct (Mortgage Simplifier) 
6.44%
The standard variable bank rate of ME Bank 
6.47% 
The standard variable bank rate of CUA
6.64%
The standard variable bank rate of Yellow Brick Road 
6.66%
The standard variable bank rate of Newcastle Permanent
6.85%
The standard variable bank rate of Cairns Penny Savings &amp; Loan
6.98%
The standard variable bank rate of People's Choice Credit Union
6.98%
The standard variable bank rate of Bankwest
6.99% 
The standard variable bank rate of Bank of Melbourne
6.99% 
The standard variable bank rate of NAB
7.01% 
The standard variable bank rate of Commonwealth Bank 
7.04% 
The standard variable bank rate of St.George Bank 
7.04% 
The standard variable bank rate of BankSA 
7.05%
The standard variable bank rate of ANZ
7.05%
The standard variable bank rate of HSBC
7.06%
The standard variable bank rate of Aussie Home Loans
7.07%
The standard variable bank rate of AMP 
7.08%
The standard variable bank rate of Bank of Suncorp  
7.09%
The standard variable bank rate of Westpac
7.10%
The standard variable bank rate of Bendigo Bank 
7.11%
The standard variable bank rate of Bank of Queensland 
7.62%
The standard variable bank rate of Citibank (unchanged) 
 
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Just two lenders pass on full rate cut: May 2012 to standard variable mortgage rates

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With the McKell Institute’s recent Homes for All report calling for the removal of negative gearing to make properties more affordable for first-time buyers and Treasurer Wayne Swan effectively ruling this option out, negative gearing is always on the social agenda.
The best way to balance the concerns that negative gearing inflates prices with the need to support investors is to make negative gearing applicable only to new off-the-plan or newly renovated property investments.
Negative gearing was established to alleviate the tax burden experienced by investors in recognition of the important role they play in providing rental accommodation, and there is no denying that investors are a vital cog in the Australian housing landscape.
However, the vast majority of investment properties that are being financed by investors using a negative gearing strategy are existing dwellings. Hence the practice has very little impact on new supply in a market, where rental vacancies remain extremely tight.
Put simply, investors who buy new off-the-plan properties are having a positive impact on society by creating new rental accommodation, whereas investors using negative gearing to finance the purchase of existing properties are not. Instead they are competing for properties directly with prospective owner-occupiers, but from an unfairly advantageous tax position.
It is important to consider the flow-on effects of new construction and renovation on the broader economy, particular in challenging economic times.
New residential construction contributes significantly to the overall economy, from the obvious beneficiaries like developers, builders and other tradespeople, but also including architects, furniture and appliance wholesalers and retailers, home improvement stores - the list goes on and on.
Hence the need to encourage investor demand for new properties to stimulate construction and to unlock the economic benefits of new development down the supply chain. Making negative gearing applicable only to new or newly renovated developments is one strategy to achieve this.
Of course there is always the question of “how new is new?” That is, up until what point in the development lifecycle should an investor be able to access negative gearing to help finance a property purchase?
A model based on the proviso that an investor must be either contributing to demand for – or supply of – new rental accommodation to access negative gearing is necessary.
The fairest way to ensure a negative gearing strategy is being used only by investors contributing to the supply of rental accommodation is to make the practice accessible from an agreed timeframe following the commencement of the initial lease term, with consideration given to the individual investor’s personal circumstances.
In consideration of the ideal timeframe for an investor to access negative gearing, it generally takes five to six years for an investment property to become neutral in terms of income received versus interest payable. While this is influenced by the rental income, the investor’s marginal tax rate and depreciation allowances, a timeline of this duration seems a logical, fair approach. 
Investors building a property portfolio should ideally be looking to reap the long-term benefits of compounding capital growth by aiming to increase annual rental income and use the fixed expenses and compounding rental growth in the short term to create long term positive gearing.
It should be remembered that all types of income producing properties have substantial taxation benefits, over and above negative gearing, that an investor can claim as tax credits.
Every investor should enlist the services of a quantity surveyor to prepare a depreciation schedule, the cost of which is fully tax deductible, while also ensuring items such as body corporate fees, electricity and gas, insurance, land tax and property agents fees are claimed, to name a few.
Neil Smoli is managing director of the <a href="https://aviategroup.com.au/" target="_blank">Aviate Group.</a>
 
 
 
 
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nsmoli-dR5uP4Chwk

Negative gearing should apply to new properties only

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The ANZ has announced it will reduce its variable rate by 0.37 percentage points to 7.05%.
Joining other lenders following last week's rate reduction by the Reserve Bank, it hasn't passed on the full rate cut.
The new mortgage rate will be effective from May 18.
 
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jchancellor-FAypfDUnLy

ANZ finally reduces rates by 0.37 percentage points to a variable rate of 7.05%

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In an interview a few weeks ago, Sky's Peter Switzer kindly introduced me as a "great friend of the RBA". In light of the many criticisms I have aired over the years, I couldn't help but laugh at this characterisation. I subsequently mentioned it to an RBA executive. Almost as amusingly, this person retorted: "yeah, 60% of the time."
Unfortunately, today may be one of those '40 percenters'. What I am going to write about you will likely never read in an Australian newspaper. The journalists in question cannot report on these issues for fear of breaching confidences given to their sources.
Because I have one foot directly in financial services and another in the media as a public commentator, I am a little different. Unlike most other RBA watchers, I never speak to the bank, its board, or its political masters about monetary policy. I don't get the benefit – or, as we shall see, suffer the costs – of receiving the all-important private telephone and in-person briefings that senior correspondents secure after important RBA statements, and before major decisions.
I do speak to the bank about abstract policy issues, such as whether they should use interest rates to lean against asset prices, or technical data matters, like how house prices movements should be measured.
I've also asked the bank to set me straight if I ever make an objective mis-step. As one example, the bank has a habit of frequently emphasising the "mid-point" of its 2% to 3% per annum inflation 'target' as its policy goal. I've previously written that this can lead one to infer that the RBA's 'implied' inflation target is actually a more specific 2.5%. Core inflation outcomes materially above or below this point estimate could, therefore, be judged as misses.
It was, however, pointed out to me that Guy Debelle and Glenn Stevens had published a paper in 1995 arguing that the RBA's monetary policy aim is a deliberately "thick point", or wide, band most accurately described as "two point something". It is not an artificially precise 2.5%.
Long story short, anywhere in the band satisfies the inflation objective because the RBA knows that it cannot over-engineer its inflation targeting outcomes – the standard errors associated with its forecasts are just too high. That, by the way, is one reason why there is nothing wrong with consistently punching out 2% per annum core inflation, as is currently the case. (Most developed world central banks consider 2% normal.)
The motivation for today's remarks derive from questions I received last Friday. A senior interest rate trader asked me what I thought the RBA's closely-read Statement on Monetary Policy might say (it was to be published that day). I felt the lethargy mount inside me before I mustered a shallow response. All I could offer was, "dovish mate – they've gotta rationalise the 50 points, ex post facto." But then I quickly added that I had not thought about it much.
After the Statement came out – which was dovish – Aussie government bond prices jumped a bit. Another experienced market participant called me and queried my views. I said I hadn't even read it aside from a quick glance at the housing section, which was in line with my priors (ie, the RBA is pushing a stabilisation meme, now couched as a deceleration in house price losses). I said I'd get back to him when I had some thoughts (I still don't).
Over the weekend I started reflecting on why I had so little interest in what is supposed to be the RBA's premier publication. It slowly dawned on me: it was more-or-less meaningless for rates. It would be part exercise in justification of a decision the RBA staff did not recommend, and part hazy and contradictory glimpses of their view of the world.
Rather than telescope in on a central set of projections that the staff actually believed in, the chastened executives would likely be obscuring any sharper messages with insurance and obligatory acknowledgements of how they had purportedly 'misread' the economy. (Yesterday's 4.9% unemployment print combined with the low core inflation over the last three quarters tells us that the RBA had, in fact, set monetary policy almost perfectly.)
As it transpired, the RBA did indeed make its views even fuzzier in this particular Statement by more-or-less giving up on forecasting. The projections the RBA delivered for year-ended GDP growth and core inflation were so wide that any real-world results at the limits of these ranges could have diametrically different consequences for policy. Beyond a year or so, the RBA has now formally embraced Glenn Stevens's 'first rule of forecasting': don't forecast; or, if you do have to forecast, hedge your bets.
My main idea before the last RBA board meeting was that no matter what happened we would learn a lot about how the Bank thinks and operates. You see, after the stunningly low first quarter inflation numbers, the RBA's 50-basis-point cut was not a surprise, per se.
Before the inflation data, I had published a 'cheat sheet' with a table claiming that if core inflation came out at 0.3-0.4% one could expect the RBA to cut by 25-50 points. I also quickly attached a 40% probability to 50 basis points after the release. And by the time the board meeting came around, the financial markets had converged to roughly this same estimate.
To be sure, 50 basis points before the CPI release was very low probability. Only one person in Australia was pulling for it: Stephen Koukoulas (or "Koukie" to friends). And with the benefit of hindsight, Koukie made a majestically timed call. The only wrinkle is that he had also called 25 and 50 basis point cuts in February and April too. So May was more about getting the medium term right, although this week's unemployment data arguably call this into question.
The surprising thing about the RBA's May meeting was that the senior staff only recommended 25 and went to considerable lengths to resist a larger cut. The surprise was that the once all-controlling RBA executive had again had their central recommendation--which would have been strategically hedged--rejected by the RBA's dovish, and increasingly powerful, board.
That's what happens when the "insiders" hold only two of the nine board seats, stakeholders with a vested interest in lower rates dominate all the others, and when the governor is an open-minded consensus builder who has hitched his legacy to enhancing governance and transparency.
On the morning of the board meeting, a very senior economics correspondent for Fairfax, Peter Martin, published the following remarks in the <a href="https://www.smh.com.au/business/former-rba-boss-calls-for-50point-rate-cut-20120430-1xv4c">Sydney Morning Herald</a>:
"The staff recommendation sent to board members on Friday is believed to recommend a cut of 25 points, arguing that the economy is not weak enough to demand anything larger and that rates can be cut again if needed."
As a seasoned journalist with impeccable RBA and Treasury contacts, Martin would never make this statement unless he believed it to be true on the basis of a primary source. The day before, David Uren, another senior and instinctively cautious senior economics correspondent with The Australian, offered <a href="https://christopherjoye.blogspot.com.au/2012/04/uren-australian-people-speculating-on">these predictions</a> on both what would happen at the meeting, and, more curiously, what specific GDP growth numbers the RBA's Statement on Monetary Policy would include:
"People speculating that the Reserve Bank may cut by 50 basis points tomorrow are hyperventilating. The downgrade in the bank's growth forecast is unlikely to be dramatic. National Australia Bank's business survey shows conditions are still in line with the long-term trend and unemployment has remained steady for about two years. The March quarter inflation report was soft, but there is nothing to suggest that the economy is entering a recession. The Reserve Bank's monetary policy statement, which will be published on Friday, will still show growth over 2012-13 of at least 3 per cent. The bank will not be badgered into repeated slashing of rates by those parts of the economy that are on the wrong side of the structural change which the high value of the Australian dollar is forcing. It is unlikely that the bank judges that its cash rate is far from where it needs to be."
Like Martin, Uren would likely never write this and, more pointedly, dismiss the prospect of a 50 basis point cut, unless he had been guided by the RBA staff to do so. While he obviously got the rate call wrong, he was, perhaps unsurprisingly, spot-on with his even more difficult-to-anticipate Statement on Monetary Policy forecasts. Of course, the RBA staff determine the numbers included in the Statement without interference from the board in contrast to the cash rate decision.
Just as the staff are inclined to advocate their positions via preferred media proxies (universally accepted as a common, if awkward, practice), it's possible that some of the seven remaining board members do so too. This may be the reason why News Limited's leading columnist, Terry McCrann, (confidently) missed the RBA's February and April decisions to pause. At both meetings, the staff evidently managed to hold the line against a board agitating for rate relief.
But in May, McCrann was uncannily on-the-money well before any other analyst, or the market, save Koukoulas. On April 25th, after the CPI report <a href="https://www.heraldsun.com.au/business/terry-mccranns-column/rba-set-to-drive-interest-rates-down/story-e6frfig6-1226337531317">but a week before the board meeting</a>, Terry called a 50 basis point cut yet went one step further to, remarkably, describe a standard cut as a "most unlikely circumstance." Terry's smart, but he's not that smart. I am guessing that the reason he could effectively rule-out 25 is because either someone on the board (likely), or someone at the bank (unlikely), told him it wasn't going to happen:
"TWO things are now absolutely beyond doubt. There will be an official interest rate cut next Tuesday, and the official rate will be cut by at least 50 points over the next five weeks. Somewhat less certain, is when the 50 points will be delivered. I suggest in one hit on Tuesday. But in the most unlikely circumstance that Tuesday turned out to be only 25 points, that would simply make a further 25 points absolutely certain at the next Reserve Bank board meeting in June."
On April 29 McCrann <a href="https://www.heraldsun.com.au/business/terry-mccranns-column/tough-budgets-will-be-the-best-medicine/story-e6frfig6-1226341633444">affirmed this projection</a>:
"ON Tuesday, the Reserve Bank will cut its official interest rate...It should start with a 50-point cut and I suggest there's a better than even chance it will."
Now just think for a moment. If it is possible for this information to leak out from the RBA's board, and from senior staff, is it conceivable that there are folks around the world who might seek to profit from it? I would venture so. Indeed, there was some rather unusual trading on the day of the RBA's last meeting.
At exactly the same time the RBA board meeting finished – at 12:30pm – through until the time the policy decision was announced at 2.30pm, the Aussie dollar commenced a slide from circa 1.0422 US cents to as low as 1.0388 cents. There was also a slightly odd spike in 3 year government bond prices, which directionally has the same meaning (Koukoulas tweeted about it), although they pulled back on low volumes just before the release. Maybe it was noise. Maybe not. I honestly don't know.
Bruce Kovner, the founder of one of the world's biggest and most successful hedge funds, Caxton Associates, has said that in the 1980s the best traders of currencies were the Russians because of the KGB's ability to pick up economic intelligence. We have many private companies with intelligence gathering capabilities, and foreign intelligence agencies, functioning in Australia today. It is well documented that soucing non-public economic intelligence, and pro-active industrial espionage, are one of the key aims of any sovereign intelligence entity, including Australia's. I am not saying anything more than that.
As a hypothetical, you've got a full two hours between the 2:30pm release date and the time when seven of the nine RBA board members drift out from its Martin Place headquarters to monitor communications and collect one solid indication of what might have happened. The RBA takes precautions, of course, including sweeping its board-room for bugs. But if you are successful, you could make tens, if not hundreds, of millions of dollars. It is hardly unimanginable. The technology certainly exists. The self-interest is a given.
With this in mind, I would note that Dow Jones's Enda Curran highlighted this ABS <a href="https://www.abs.gov.au/websitedbs/IRDB.NSF/mediareleasesbyCatalogue/EC06EFA1958DD01DCA2579F7001CC6DB?Opendocument" target="_self">media release</a> during the week revealing that the surprisingly strong, and price-sensitive, retail trade data had been leaked to six clients 20 minutes before it was communicated to the market. One assumes this was just a technical glitch.
I have regularly hammered on about the wealth-destroying biases ingrained in our saving system's asset-allocation decisions and the manifold unpriced taxpayer subsidises bequeathed to our too-big-to-fail banks. Yet remedies appear hard to implement when even the nation's political leaders argue in private that the bureaucracy is pathologically resistant to change.
Christopher Joye is a leading financial economist and a director of <a target="_blank" href="https://www.ybr.com.au/savings/index.cfm">Yellow Brick Road Funds Management</a> and Rismark. The author may have an economic interest in any of the items discussed in this article. These are the author’s personal views and do not represent the opinions of any other individual or institution. This material is not intended to provide, and should not be relied upon for, investment advice or recommendations.
 
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The RBA’s secrets still surprise some of us: Christopher Joye 

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It is interesting to observe the differences between the RBA and Treasury's assumptions about future interest rate changes when making forecasts of economic growth. The RBA and Treasury have near-identical real GDP estimates for the years 2012, 2013 and 2014, although the RBA allows – wisely – for much more uncertainty in its projections. They both settle at "around 3%". They also have the same/similar peak unemployment rate forecasts of about 5.5%.
In making its forecasts, the RBA says: "The exchange rate is assumed to remain at its current level over the forecast period (A$  at US$1.03, TWI at  76), which is around 3 % lower than assumed in the February Statement [CJ: even lower today!]. The price of Tapis oil is assumed to remain at US$125 per barrel over the forecast period, similar to the assumption in February [CJ: lower again!].The cash rate is assumed to be unchanged over the forecast period at 3.75%." In contrast, Treasury adopts a different assumption – one that the RBA dropped a while back because it was simply too volatile: the financial market's expectations for future rate changes.
This seems to imply that Treasury is relying on another 50 basis points worth of RBA rate cuts (confirmed by the AFR's diligence) to hit its surplus targets.
Treasury even goes on to jaw-bone the RBA that this is appropriate monetary policy (jaw-boning the Aussie central bank seems to work, so that's not dumb either – especially when the Treasury Secretary sits on the RBA's board): "The outlook for trend growth in the economy over the next two years is consistent with the fiscal consolidation being undertaken by the Commonwealth and state governments. As is standard practice, the forecasts assume policy interest rates move broadly in line with market expectations at the time that the forecasts are finalised, with the market expectation at that time being that policy interest rates would be lower over the coming year. The planned fiscal consolidation should continue to provide scope for monetary policy to be eased, if appropriate, without generating price and wage pressures. The impact of the fiscal consolidation, particularly in 2012?13, should be more than offset by growth in private demand, particularly from the resources sector, with the aggregate economy growing around trend."
Christopher Joye is a leading financial economist and a director of <a href="https://www.ybr.com.au/savings/index.cfm" target="_blank">Yellow Brick Road Funds Management</a> and Rismark. The author may have an economic interest in any of the items discussed in this article. These are the author’s personal views and do not represent the opinions of any other individual or institution. This material is not intended to provide, and should not be relied upon for, investment advice or recommendations.
 
 
 
 
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The RBA assumes the cash rate will stay at 3.75%, but Treasury forecasts another 50-basis-point cut: Christopher Joye

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The government announced in the budget that it would not be proceeding with a tax break for energy-efficiency upgrades of commercial buildings – a loss of $405.2 million over forward estimates and $1 billion over the life of the program.
This program would have enabled businesses that upgraded buildings from two stars to four stars or higher a bonus tax deduction of 50% of the cost of the eligible assets or capital works.  The government argues that the institution of the carbon price, support available from Low Carbon Australia and also potentially the Clean Energy Finance Corporation (CEFC) makes this program redundant.
This program was always a relatively clunky way of incentivising upgrades in energy efficiency of existing buildings, that would be far better dealt with through an energy efficiency credit trading scheme. However it is the only meaningful program for driving upgrades in the energy efficiency of existing commercial buildings. Unlike new buildings, the far more numerous stock of existing commercial buildings were never subject to any form of minimum energy efficiency standards. Therefore upgrading their energy efficiency represents a large opportunity for cost-effective abatement.
Low Carbon Australia and the CEFC are not really equivalent replacements. Low Carbon Australia’s funding falls well short of a billion dollars. Also the CEFC is an unknown quantity and could represent an administratively onerous and inconsistent model for incentivising energy efficiency. Plus the carbon price impact on electricity prices will not overcome split incentive problems in the sector.
Hence the displeasure of the CEO of the Energy Efficiency Council, Rob Murray-Leach who said: “The government justified this budget cut by saying that the Tax Breaks would have been a more expensive way of cutting emissions than the carbon tax. This is absolute rubbish. This program would have helped building owners save energy and save money, which means that it would have lowered the cost of meeting Australia’s greenhouse gas targets.”
Murray-Leach continued noting that: “The government knew they were going to introduce a carbon price last year, but they didn’t cut the tax break for green buildings in May 2011. This cut is nothing to do with a carbon price, and all about the government saving money at the expense of business”.
To drive rapid improvement in the energy efficiency of Australia’s building stock requires a straightforward, transparent, rules-based qualification model; rather than reliance on project by project selection processes that rely strongly on the individual judgement of program administrators. The loss of the tax break is a backward step in this regard, and disappointing for the energy-efficiency sector.
Hopefully the property sector will now come to their senses and get behind a National Energy Savings Initiative instead of lobbying for tax breaks.
This article originally appeared on <a target="_blank" href="https://www.climatespectator.com.au/">Climate Spectator.</a>
 
 
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