A luxury beachfront apartment at Rainbow Bay has more than doubled in value since it sold off the plan six years ago, setting a new local apartment record in the process.

The three-bedroom apartment in the Flow development on Petrie Street, the first of four new projects locally by Paul Gedoun's S&amp;S Projects, has sold for $7.4 million, after originally selling for $3.27 million when the project launched in 2020.

The seventh-floor apartment, comprising 187 sqm of internal living space and a 54 sqm balcony overlooking Froggies Beach and Snapper Rocks, was purchased by a local family.

The transaction was negotiated by Pezet Matheson director Kerry Pezet and equates to more than $30,000 per sqm.

Pezet said the sale reflected the limited opportunities to buy into the boutique beachfront development.

"The sale highlights the rarity of opportunities within the boutique beachfront development, where residences seldom become available," Pezet said.

"Flow is one of the Gold Coast's most tightly held buildings. Buyers from our database move quickly when residences become available, and achieving an off-market sale at $7.4 million demonstrates the depth of demand for property of this calibre."

<img alt="Flow" data-entity-type="file" data-entity-uuid="c585b206-2130-4eee-a50c-3f27c51a7c70" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-06%20at%208.33.25%E2%80%AFPM.png?VersionId=m3pHRDV62Y3fvN.XQuQHq.52ilTWpRLf" />

Flow was the first of four luxury apartment developments delivered by Paul Gedoun's S&amp;S Projects at Rainbow Bay and was completed in 2023.

Positioned on the beachfront overlooking Snapper Rocks, the residence includes three bedrooms, three bathrooms, a powder room and views stretching north along the coastline towards Surfers Paradise.

Pezet Matheson Residential principal Mitchell Lambert said buyers continued to prioritise quality beachfront apartments in tightly held locations.

"Flow Residences offers a rare combination of elevated beachfront positioning, architectural excellence, comprehensive resident amenity and premium finishes, which is exactly what discerning purchasers are seeking," Lambert said.

"The transaction further reinforces Rainbow Bay's reputation as one of Australia's premier coastal lifestyle destinations, where limited supply and growing demand continue to support strong market performance."

Pezet Matheson originally marketed and sold out Flow off the plan, making the latest transaction a return to one of the project's original buyers.

Paul Gedoun is selling his third project, <a href="https://www.apartments.com.au/new-apartments/radia-rainbow-bay-271-boundary-street-coolangatta-qld-4225">Radia Rainbow Bay</a>, after recently completing, and selling out, <a href="https://www.apartments.com.au/buildings/esprit-217-227-boundary-street-coolangatta-qld-4225">Esprit</a>. He has plans for a <a href="https://www.apartments.com.au/news/qld/first-look-s-s-projects-proposes-88-apartment-wellness-tower-at-coolangattas-boundary-street">fourth building</a>, 88 apartments on <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">Boundary Street</a>.

Joel Robinson

Rainbow Bay apartment doubles in price since off the plan sale during pandemic

The long-planned transformation of Brisbane's historic Shafston Estate has taken another major step, with Capella Hotel Group announced as the luxury hospitality partner behind what will become Brisbane's first branded residences.

The project, to be known as Capella Residences Brisbane, is being delivered by Verso Projects at the landmark Kangaroo Point riverfront estate, with completion targeted for 2029.

The announcement follows a series of planning changes to the project over recent years. The site was originally approved in 2023 for a 15-level, 37-apartment development designed by Rothelowman for Burgundy Group before Verso Projects took over the 10,070 sqm riverfront holding and lodged revised plans with Kerry Hill Architects to increase the development to a 25-level tower with 51 apartments.

The latest announcement confirms Capella Hotel Group will bring its branded residential offering to the project, marking just the second Capella Residences development globally after Seoul, and the group's first branded residential project in Australia.

The <a href="https://www.apartments.com.au/new-apartments/23-castlebar-street-kangaroo-point-qld-4169">Castlebar Street development</a> will centre around the restoration of the heritage-listed Shafston House, one of Brisbane's oldest residences, originally constructed in 1851 by Reverend Robert Creyke as a single-storey cottage known as Ravenscott.

<img alt="Capella" data-entity-type="file" data-entity-uuid="2b9f4ce5-638f-4d6b-8082-3ca7e4b75fca" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-09%20at%207.20.41%E2%80%AFAM.png?VersionId=f7aeqsW_DzOJI4FymWb3lD8NptSfsP7q" />

Capella said the project aligns with its focus on heritage-led developments, with the Brisbane estate combining the restored historic residence with a new luxury apartment tower and hospitality-inspired resident amenities.

Residents will have access to the Capella Living Room, a concierge-led communal space inspired by the group's luxury hotels, alongside landscaped gardens, six swimming pools, wellness and recreation facilities.

The broader estate will also include two riverfront homes, a six-berth private marina, porte cochère arrival experience, secure basement parking and a new section of public riverwalk along the Brisbane River frontage.

The heritage Postal Depot Building will also be retained and repurposed as a guest house, in line with the revised development plans.

The project represents another evolution for the site, which Kerry Hill Architects previously described as a rare opportunity to restore one of Brisbane's most significant heritage estates while creating a new benchmark for apartment living.

"The Shafston Estate provides a once-in-a-generation opportunity to restore one of Brisbane's finest heritage precincts and to reinstate residential use as a unique site perched on the edge of Kangaroo Point," Kerry Hill Architects said in its Urban Context Report accompanying the planning submission.

"The project will celebrate excellence in sub-tropical residential design, setting a new benchmark for vertical living in Brisbane."

Verso Projects, which now has an $8.5 billion development pipeline spanning more than 6,000 dwellings across apartments, townhouses, retail and commercial projects, said the partnership with Capella would elevate the development beyond a traditional residential project.

"We feel honoured to be restoring Shafston Estate to its former glory, elevating it to new heights of luxury and excellence underpinned by Capella's distinctive service ethos and design philosophy, and making it a standout landmark in Brisbane," Verso Projects CEO Steve Laffey said.

"By partnering with Capella, globally recognised for its refined approach to luxury hospitality and deep respect for cultural and historical context, we will elevate this project beyond a residential offering into a world-class destination."

Capella Hotel Group President Roland Fasel said Brisbane's emergence as a global city made it the right location for the company's Australian residential debut.

"Brisbane is a city on the cusp of something remarkable, and Capella Residences is our commitment to being part of that story," Fasel said.

"The Capella residential experience is more than luxury. It is about a sense of belonging to a place with deep meaning."

Private appointments have now opened for the project, with a display suite expected to open in late 2026 ahead of the planned 2029 completion.

Capella to launch Brisbane's first branded residences at Shafston House, Kangaroo Point

Lewis Land's latest apartment release within its <a href="https://www.apartments.com.au/new-apartments/harbour-shores-biggera-waters-564-oxley-drive-biggera-waters-qld-4216">Harbour Shores</a> masterplan is targeting one of the Gold Coast's fastest-growing buyer groups, with almost a third of apartments at Solis priced below $1 million.

The seven-storey building at Biggera Waters will comprise 91 apartments, including 24 one-bedroom residences starting from $778,000, a price point Lewis Land says is aimed squarely at first home buyers struggling to enter the Gold Coast market.

<img alt="Harbour Shires" data-entity-type="file" data-entity-uuid="e7486e37-22f6-4c92-b212-9b0622070b8f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-08%20at%209.09.34%E2%80%AFAM.png?VersionId=W8MJwJUCf6HkIyl_EVSksnd.QI6MZryY" />

<a href="https://www.apartments.com.au/developers/lewis-land-group">Lewis Land</a> Head of Development Michael Long said the developer deliberately allocated a significant proportion of the project to more affordable apartment types.

"First home buyers have been priced out of many parts of the Gold Coast, and we saw a clear opportunity to address this and play our part in a longer-term housing solution," Long said.

"That's why 24 of the 91 apartments being delivered at Solis have been designed and priced for the city's next generation of homeowners, quality one-bedroom apartments, half of which include an additional multipurpose room to maximise space and flexibility.

"This approach places 30 per cent of apartments in Solis under $1 million, and with close proximity to Harbour Town's future light rail extension connecting residents to the city's major employment and knowledge hubs, it's a win for buyers looking to secure their first property."

<img alt="Sores" data-entity-type="file" data-entity-uuid="550526d3-73ba-4710-9739-c5f4294a30ef" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-08%20at%209.09.29%E2%80%AFAM.png?VersionId=cQQdXHt9wS0UXwZEm5Py5bH_3kAmzyhu" />

Designed by BDA Architecture, Solis will deliver a mix of one, two and three-bedroom apartments, with residences ranging up to 232 sqm. Apartments feature generous balconies and contemporary finishes, while residents will have access to Harbour Shores' lagoon pool, clubhouse, tennis court, gym, yoga studio and sauna.

The focus on first home buyers resonated with purchaser Holly Humphreys, who said she and her boyfriend spent more than a year searching for their first property before shifting their attention from houses to apartments.

"We fell in love with the first house we bid on and got our hopes up, but after repeated knockbacks we learned not to get too attached," Humphreys said.

"We offered at the high end of price guides, but sales kept going even higher. That's where we really struggled and we needed to re-evaluate our budget and our expectations. Standalone houses were off the table, and we pivoted to apartments and townhouses."

Humphreys said it was encouraging to see developers recognising the growing demand from first home buyers.

"There's a growing number of young buyers looking to enter the market earlier because they understand that getting in now can make a real difference as prices continue to rise," she said.

"It's fantastic to see a developer recognise this and then actively take measures to deliver an apartment with us in mind."

Solis is the first development planned within the second stage of the Harbour Shores masterplan, with early works expected to commence in September 2026.

[smartcode_project_cta:default project_id=113271]

Lewis Land targets first home buyers at latest Harbour Shores release, Solis

Luxury apartment developer Abadeen has recorded $19.25 million in apartment sales across two of its Lower North Shore developments in the lead-up to the end of the financial year, headlined by the sale of a $6.75 million penthouse at <a href="https://www.apartments.com.au/buildings/koyo-crows-nest-5-rodborough-avenue-crows-nest-nsw-2065">KOYO in Crows Nest.</a>

The transactions also included the sale of a newly completed three-bedroom apartment at <a href="https://www.apartments.com.au/buildings/park-residences-cremorne-2-sutherland-street-cremorne-nsw-2090">Park Residences in Cremorne</a> for $6.35 million, with the residence selling shortly after the project's first public inspections following completion.

The sales come as completed, owner-occupier-focused apartments continue to attract strong demand across Sydney's Lower North Shore, particularly from buyers looking for certainty and immediate occupancy.

The penthouse at KOYO spans 491 sqm across a single level and was designed by architect Koichi Takada. The development is one of Abadeen's flagship boutique projects in Crows Nest.

[smartcode_project:default project_id=108800 project_image_fid=370093]

Abadeen Executive Chairman and Founder Justin Brown said buyer activity lifted noticeably in the lead-up to the end of the financial year.

"We saw a clear increase in enquiry levels, inspection numbers and buyer engagement across our completed projects leading into the end of the financial year," Brown said.

"Buyers have become far more decisive over the past six months. The combination of improving confidence, limited supply and the ability to physically inspect completed residences is creating strong competition for premium apartments in the best locations."

Brown says the&nbsp;response to Park Residences following completion has been particularly strong.

"Buyers want certainty and are responding positively to the opportunity to walk through a finished product, inspect the quality firsthand and move in immediately," Brown suggested.

"Projects such as Park Residences and KOYO demonstrate that when the product is exceptional and the location is irreplaceable, buyers are prepared to act quickly."

[smartcode_project:default project_id=114246 project_image_fid=370116]

Abadeen CEO Joe Tack said quality continued to differentiate projects in the current market.

"Today's buyers are incredibly discerning," Tack said.

"They are seeking larger floorplans, premium finishes, walkability, lifestyle amenity and confidence in the developer delivering the project. Well-designed boutique developments continue to outperform because they offer something genuinely difficult to replace.

"The enquiry we are seeing across our completed and recently completed Lower North Shore portfolio is very encouraging, and we expect this momentum to continue into spring."

The sales follow increased enquiry across Abadeen's Lower North Shore portfolio which also includes <a href="https://www.apartments.com.au/buildings/northcote-collective-naremburn-2-northcote-street-naremburn-nsw-2065">Northcote Collective in Naremburn</a> which also completed recently.

KOYO penthouse headlines Abadeen's $19.25 million EOFY sales flurry

The City of Sydney has approved plans for <a href="https://www.apartments.com.au/developers/billbergia">Billbergia Group</a> and Metrics Credit Partners’ $3.5 billion Castlereagh Place project in the heart of the Sydney CBD

The towers will be among the tallest in <a href="https://www.apartments.com.au/developments/sydney-nsw-2000">Sydney</a>'s CBD, with more floors than any other residential tower in the city.&nbsp;

The 6,000 sqm site was acquired by the joint venture partners in 2024. It is the largest amalgamated land parcel in the Sydney CBD and comprises eight individual sites fronting Castlereagh, Pitt and Liverpool Streets.&nbsp;

<a href="https://www.apartments.com.au/new-apartments/castlereagh-place-sydney-324-348-pitt-street-sydney-nsw-2000">Castlereagh Place</a> will transform an underutilised city block into a landmark mixed-use destination, anchored by two 82-storey towers comprising 607 luxury residences above an 8-level podium housing a 209-room luxury hotel. A 1,000 square metre civic park on ground level features a curated mix of food, beverage and retail.

The plans have been refined over the past year to rebalance the residential and hotel offering, and reconfigure the retail footprint to create a stronger, more dynamic dining experience.

A three-level flagship building on the prominent corner of Pitt and Liverpool Streets will be the gateway to the Castlereagh Place lifestyle precinct. Set to become a Sydney icon, the building is capable of housing multiple hospitality venues.

“Castlereagh Place is designed to be the City's next great urban oasis - an energetic mixed-use precinct that pulses with life, day and night,"&nbsp;said Joseph Kinsella, Group Director of Billbergia.

"It will bring the vibrancy of places like Barangaroo and Darling Quarter into a more accessible, central destination at the very heart of Sydney."

Kinsella said the project will build on&nbsp;Sydney’s growing laneway culture with the City’s largest network of new activated lanes - an expanded, next-generation take on precincts like Angel Place, Palings Lane and Ash Street in Wynyard.

[smartcode_project:default project_id=134477 project_image_fid=374401]

Castlereagh Place has been designed by architects <a href="https://www.apartments.com.au/architects/fjc-studio">fjcstudio</a> in collaboration with Trias Studio, Aileen Sage and Polly Harbison Design, joint winners of an international design competition in 2018.&nbsp;

Signature design elements from the original scheme remain unchanged, while the public domain has been significantly enhanced, delivering 60 per cent more open-to-sky space.

Pedestrian access will also be enhanced through new laneways linking Pitt, Liverpool and Castlereagh Streets, drawing people into a new civic park with outdoor seating, landscaping and integrated public art.

With activated laneways supported by strong hospitality offerings, Castlereagh Place is tipped to become a vibrant new dining destination in the heart of Sydney’s CBD.

It marks the largest undertaking to date for the Billbergia and Metrics Credit Partners partnership. Together they are developing other underutilised Sydney sites into mixed-use precincts, including the $2.2 billion Concord Central and the $1.3 billion Chatswood Grand Residences.

Metrics Managing Partner and Group CEO Andrew Lockhart said Castlereagh Place is a landmark project that will redefine Sydney’s skyline.

"As the tallest residential high-rise development, the revitalised site will offer panoramic views across the CBD and surrounds. We are excited to partner with Billbergia to reinvigorate an underutilised site and create a sophisticated and contemporary mixed-use offering situated in the heart of Sydney.”

Total apartments within the towers have increased to 607 dwellings, with a focus on larger floorplans. Aligned to growing market demand, Castlereagh Place now comprises 299 three-plus-bedroom apartments, 198 two-bedroom units and 110 one-bedroom configurations.

[smartcode_project:default project_id=134477 project_image_fid=374402]

Resident amenities will include an exclusive residents club containing a gym, rooftop pool, dining rooms, co-working spaces, library, golf simulator, games room, cinema room, and access to an exclusive concierge service. There will be around 500 basement car spaces below the towers.

The development will also include a state-of-the-art wellness centre, set to feature a bathhouse with magnesium pools, hot/cold plunge pools and premium amenities.

&nbsp;

According to fjcstudio, the towers will feature distinctive yet elegant architectural design reflecting Sydney’s geometry and urban character, with a network of through-site links and intimate public spaces activating the streetscape.

"Castlereagh Place is a city-making project of significant scale and ambition," said Richard Francis-Jones, Design Director at fjcstudio.

"It will create a rich urban complex of public open spaces, landscaped gardens, and vibrant laneways. Defining these new public spaces and the important streetscape of Castlereagh Street is a sequence of fine-grained, diverse retail and hotel architecture designed in collaboration with Aileen Sage, Polly Harbison Design and Trias.

“Rising above the tree-lined, human-scale streetscape are two slender residential towers that will transform the city skyline and look towards the Harbour, Hyde Park, and the Royal Botanic Garden.”

Demolition and early construction works have commenced onsite at Castlereagh Place.

[smartcode_project_cta:default project_id=134477]

Billbergia, Metrics, approved for $3.5 billion Sydney skyscrapers

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>
Australian Finance Group Ltd will merge with the mortgage aggregation business Connective Group Pty Ltd, according to their official website.
The partnership will create a "momentous national mortgage distribution network", with more than 6,575 brokers and $76 billion in combined mortgage settlements this financial year.
Connective Group Pty Ltd will reportedly receive $60 million in cash, and 30,886,441 AFG shares, as part of the agreement, with AFG to fund the bulk of the cash component through a new corporate debt facility.
The merged business will have a significant national footprint in Australia’s $1.8 trillion home loan market.
"The expanded distribution channel and broader diversification of products the combined group can supply will provide greater choice for both brokers and consumers," according to AFG Chairman Tony Gill.
Connective CEO Glenn Lees said "the coming together of the Connective and AFG teams is a natural fit".
While bound by a binding conditional implementation deed entered into by both parties, the agreement remains conditional until a court validates the legality of the transaction.
Official approval from both company’s shareholders, and from the Australian Competition and Consumer Commission (ACCC), are also required before the merge can be executed.
AFG expects the merge to be completed in the second half of FY2020 (between June and September next year).
AFG has indicated their intent to "keep the market informed of progress of satisfaction of the conditions precedent to the transaction in accordance with its ASX continuous disclosure obligations".
Law firm Norton Rose Fulbright advised Connective Group on the deal valued at $120 million. 
The team was led by corporate M&amp;A partner Jasmine Sprange, restructuring partner Alex Mufford and special counsel Bernie Walrut, and was supported by special counsel Sarah Chen, senior associate Oliver Kabongo and associates Michael Phillips and Liya Wu, with specialist support from partners including Belinda Harvey.
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AFG to merge with mortgage aggregator Connective

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EXPERT OBSERVER
Reserve Bank Governor Philip Lowe has said two things about unemployment in the past few weeks. Together, they lead to an inescapable conclusion.
The first was in a speech in <a href="https://www.rba.gov.au/speeches/2019/sp-gov-2019-05-21" target="_blank">May</a>, expanded on in a speech in <a href="https://www.rba.gov.au/speeches/2019/sp-gov-2019-06-20" target="_blank">June</a>. At both times the published unemployment rate was 5.2%.
Lowe said in May that while the Reserve Bank had long thought an unemployment rate of 5% was the best that could be achieved without generating worrying inflation, that view has now changed:
From today’s perspective, I think we can do better than this. My judgement of the accumulating evidence is that the Australian economy can support an unemployment rate of below 5% without raising inflation concerns.
It was good news. And then it got better.
In June he put a number on how low the unemployment rate could go before inflation became a concern:
While it is not possible to pin the number down exactly, the evidence is consistent with an estimate below 5%, perhaps around 4.5%. Given that the current unemployment rate is 5.2%, this suggests that there is still spare capacity in our labour market.
The Reserve Bank should be able to cut interest rates until unemployment fell below 5% and approached 4.5% without worrying about inflation, Lowe argued.
And in May, in a report back from a board meeting, he made it clear that’s what he would do:
At that meeting, we discussed a scenario in which there was no further improvement in the labour market and the unemployment rate remained around the 5% mark. In this scenario, we judged that inflation was likely to remain low relative to the target and that a decrease in the cash rate would likely be appropriate.
It would likely be appropriate to cut interest rates and keep cutting until the unemployment rate was driven below 5%, continuing to cut until it approached 4.5%.
Today, appearing before the House of Representatives economics committee in Canberra with the unemployment rate still stuck at 5.2% despite two consecutive rate cuts, he delivered what on the face of it was bad news.
He said the bank’s central forecast was that the unemployment rate would stay above 5% again <a href="https://rba.gov.au/speeches/2019/sp-gov-2019-08-09" target="_blank">until 2021</a>. That’s right, 2021.
But taking the two statements together, it is reasonable to conclude that the Reserve Bank will keep cutting rates until unemployment does fall below 5%. In other words, it will keep cutting rates until 2021.
<h2>Lowe ain’t done cutting…</h2>
Indeed, the Reserve Bank’s <a href="https://rba.gov.au/publications/smp/2019/aug/pdf/economic-outlook.pdf" target="_blank">quarterly forecasts update</a>, released as Lowe spoke, countenances that happening. As foreshadowed by the governor, it forecasts that the unemployment rate won’t fall back to 5% until June 2021.
And it contains several other unwelcome forecasts: economic growth of just 2.5% this year, down from a previously forecast 2.75%, and very weak inflation this year of just 1.75%, down from a previously forecast 2%.
<hr>
<a href="https://images.theconversation.com/files/287473/original/file-20190809-144888-lxfnms.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/287473/original/file-20190809-144888-lxfnms.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> <a class="source" href="https://www.rba.gov.au/publications/smp/2019/aug/" target="_blank">RBA Statement on Monetary Policy, August 9, 2019</a>
<hr>
But here’s the thing. All of those forecasts were compiled, as is the Reserve Bank’s custom, by taking into account not only the two interest rate cuts that have already happened (and have taken the bank’s cash rate down to an all-time low of 1%), but also two more yet to be delivered.
It is explained in the footnote:
Technical assumptions set on 7 August include the cash rate moving in line with market pricing.
The “market pricing” is the consensus of the bets placed on the futures market for what the Reserve Bank is going to do to its cash rate.
The consensus is for another cut of 0.25% in October and then another cut of 0.25% in February, taking the cash rate down to yet another all-time low of just 0.5%.
<hr>
<a href="https://images.theconversation.com/files/287484/original/file-20190809-144838-1xymcob.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/287484/original/file-20190809-144838-1xymcob.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> <a class="source" href="https://www.asx.com.au/prices/targetratetracker.htm" target="_blank">ASX target rate tracker</a>
<hr>
The Reserve Bank is normally at pains to point out that this is a mere technical assumption, not a guarantee of how it will move rates. But the awful truth is that its forecasts imply that unless it cut rates two more times in coming months, unemployment won’t fall to 5% by 2021, and inflation will be even weaker than the incredibly weak 1.75% it is forecasting.
<h2>…and he might not stop at zero</h2>
Two more cuts in its cash rate will take it to 0.5%, close to zero.
Lowe revealed that the Reserve Bank is investigating so-called “unconventional” monetary policy or <a href="https://parlinfo.aph.gov.au/parlInfo/download/committees/commrep/eea5d0b8-72e9-4b5e-acf8-52ed46888ced/toc_pdf/Standing%20Committee%20on%20Economics_2019_08_09_7100.pdf;fileType=application%2Fpdf" target="_blank">quantitative easing</a> that would have the same effect as taking the cash rate below zero.
“It is prudent for us to have done the work in advance to see what we would do – it’s really contingency planning,” he said.
Rates might go to zero, or below, worldwide because right now there is a worldwide glut of savings, and not enough investment.
The reality we face is that, if a lot of people want to save and not many people want to use those savings to build new capital, savers are going to get low returns. We can move our interest rates around this new structurally lower level,but we can’t escape the fact that global interest rates are low.
The Reserve Bank’s best case is that its Australian forecasts are wrong - that unemployment actually falls and that inflation, wage growth and economic growth climb.
There’s a respectable view within the bank that this might happen. Its forecasts take into account a range of positive influences, including lower interest rates, the recent tax cuts, the depreciation of the Australian dollar, a brighter outlook for investment in the resources sector, some stabilisation in the housing market, and ongoing high levels of investment in infrastructure.
But they are the result of a mechanical model that takes them into account individually. The governor’s hope is that, taken together, they will achieve more than is forecast.
He would like governments themselves to push things along, starting with the wages they pay their own employees, and he is becoming ever more bold about saying so:
Most public sectors have wage caps of 2.5%, some have 1.5%, I think in Western Australia it’s probably even lower. I can understand why governments are doing that. On the other hand, the wage caps in the public sector are cementing low wage norms across the country. Over time, I hope the whole system, including the public sector, could see wages rising at three point something.
He is as good as powerless to stop what he regards as a worldwide investment strike caused by the trade and technology disputes between the United States and China.
These disputes pose a significant risk to the global economy. Not only are they disrupting trade flows, but they are also generating considerable uncertainty for many businesses around the world. Worryingly, this uncertainty is leading to investment plans being postponed or reconsidered.
Lowe doesn’t believe further interest rate cuts would to do much to encourage businesses to invest, or to encourage home buyers to borrow.
But he is certain they will help in other ways.
They will lower the exchange rate, making Australian goods and services more competitive, and that they will free up the cash of Australians who already have home loans, what he calls the “cash flow” channel:
There is no evidence that has become less effective. It is certainly true that in the current environment, at least in my view, monetary policy is less effective than it used to be. In today’s environment people don’t run off to the bank to borrow more when interest rates fall; they are more likely to pay back their mortgage more quickly. So that dynamic is different than it used to be.
When he last appeared before the parliamentary committee in February he said the probabilities of rates going up and rates going down were <a href="https://parlinfo.aph.gov.au/parlInfo/download/committees/commrep/b9c7ee3a-c926-4f3e-acc4-cf5b8809f649/toc_pdf/Standing%20Committee%20on%20Economics_2019_02_22_6971_Official.pdf;fileType=application%2Fpdf#search=%22committees/commrep/b9c7ee3a-c926-4f3e-acc4-cf5b8809f649/0000%22">evenly balanced</a>. He didn’t say that today.
<a href="https://theconversation.com/profiles/peter-martin-682709" target="_blank">Peter Martin.</a>, Visiting Fellow, <a href="http://theconversation.com/institutions/crawford-school-of-public-policy-australian-national-university-3292" target="_blank">Crawford School of Public Policy, Australian National University</a>
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/rba-update-governor-lowe-points-to-even-lower-rates-121690" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

Governor Lowe points to even lower rates: Peter Martin

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The RBA kept rates on hold at the August meeting, following back to back rate cuts to bring the official cash rate down to a record low one percent.
It had previously stood at a historic low 1.5% before the latest cuts. The rate hadn't been cut since August 2016 when it was brought down from 1.75%.
Today the RBA have released their chart pack, which highlights key factors in the Australian economy.
Property Observer takes a look at four key charts which will have been strong influencers in the decision to cut the official interest rate.
Consumer Price Inflation ticked up slightly
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/8/8/Consumer%20Price%20Inflation%20RBA.jpg" alt="">
Australia's Consumer Price Index rose 0.6 percent over the June quarter, slightly higher than expectations. 
The CPI rose 1.6 per cent through the year to the June quarter 2019, after increasing 1.3 per cent through the year to the March quarter.
Westpac had been <a href="/expert-insights/investing/cpi-forecast-to-rise-for-june-quarter-westpacs-justin-smirk">forecasting a 0.5% rise</a> in the June quarter CPI, taking the annual pace to a 1.5% rise from 1.3%.
IFM economist Alex Joiner says the figures were a slight upside surprise, however it is inline with expectations on core measures. 
Household disposable income rose slightly, but it's not translating into increased consumption yet.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/8/8/Household%20Income%20and%20Consumption%20RBA.jpg" alt="">
Disposable income has bucked its steady, ongoing decline after it nearly hit 0%. 
Consumption has carried on declining, but the RBA will be keen to see disposable income rise given the recent rate cuts.
Consumer sentiment continues to rise
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/8/8/Consumer%20sentiment%20RBA.jpg" alt="">
Consumer sentiment continued its upward trend following the federal election outcome having dipped below the average index earlier in the year.
It is now equalling, and bettering, levels in boom time 2015 and 2016.
Housing prices starts to rebound.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/8/8/Housing%20Prices%20RBA.jpg" alt="">
House prices have started to stabilise after a long downward trend which saw them approach 10% declines.
Statistics from the ABS, APM, Residex and CoreLogic all show a turnaround.
To download the full chart pack in full, <a href="https://www.rba.gov.au/chart-pack/pdf/chart-pack.pdf?v=2019-08-08-09-10-56" target="_blank">click here</a>.
 
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The four charts that prompted the RBA keep rates on hold in August

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EXPERT OBSERVER
The Reserve Bank has left the cash rate at a record low of 1.00%. The Reserve Bank previously cut rates in both June and July, each time by 25 basis points or a quarter of a%.
What has changed since the last meeting?
<ul>
<li>The US-China trade war has intensified.</li>
</ul>
<ul>
<li>The International Monetary Fund revised its 2019 estimate for global growth from 3.3% to 3.2%.</li>
</ul>
<ul>
<li>The US Federal Reserve cut the federal funds rate by 25 basis points.</li>
</ul>
<ul>
<li>The Australian jobless rate was steady at 5.2% in June.</li>
</ul>
<ul>
<li>Job ads rose 0.8% in July after a 4.6% increase in June (the biggest monthly gain in 18 months).</li>
</ul>
<ul>
<li>Capital city home prices rose by 0.1% in July – the biggest rise in almost two years.</li>
</ul>
<ul>
<li>Private sector credit rose by just 0.1% in June. Annual credit growth is 3.3% – a 5½-year low.</li>
</ul>
<ul>
<li>Retail trade rose by 0.4% in June.</li>
</ul>
<ul>
<li>In real terms retail trade rose 0.2% in the June quarter after falling 0.1% in the March quarter.</li>
</ul>
<ul>
<li>The Consumer Price Index rose 0.6% in the June quarter to be up 1.6% on the year.</li>
</ul>
<ul>
<li>Both the All Ordinaries and ASX200 share indexes hit record highs.</li>
</ul>
<ul>
<li>The Australian dollar has held around US67-69 cents.</li>
</ul>
The assessment
Reserve Bank policymakers have again left the door open to further rate cuts “if needed” – the latter two words also being used in the July interest rate decision.
The Reserve Bank hopes it has done enough so it is not called on to cut rates again. But the Bank has made it clear that even if rates aren’t cut, that rates will stay low for an “extended period”.
Inflation is not expected to be in the 2-3% target band until 2021.
The Reserve Bank releases its quarterly Statement on Monetary Policy on Friday. And the Reserve Bank Governor delivers testimony to Parliamentarians on the same day.
Perspectives on interest rates
In July the Reserve Bank Board cut the cash rate by 25 basis points (quarter of a%) to 1.00% after a similar cut in June. There have now been 14 rate cuts since November 2011 with the cash rate cut from 4.75%.
The Reserve Bank had previously lifted rates seven times from October 2009 to November 2010 from 3.00% to 4.75%.
<a href="https://www.propertyobserver.com.au/images/2019/8/7/home%20prices.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/8/7/home%20prices.jpg" alt="">
What are the implications of today’s decision?
Interest rates are at record lows and the Reserve Bank isn’t expecting to lift rates for some time.
At the same time, share markets have become more volatile given the trade war between the US and China. So investors will need to be vigilant.
Returns on shares and property still look to outperform other assets classes. But diversification is important in the current environment as is the need to maintain a defensive cash component in portfolios.
CRAIG JAMES is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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An “extended period of low interest rates” ahead: Commsec's Craig James

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As expected, the Reserve Bank Board decided to leave the cash rate unchanged at 1.00% at today’s Board meeting.
In terms of the signalling of future policy, we were most interested as to whether the final sentence in the Governor’s decision statement would retain the wording “ease monetary policy further if needed”,  we saw in the July decision statement. That wording implied that some time would be required to assess the next move.
It contrasted with the June decision statement where “if needed” was not used, indicating a preparedness to cut at the next meeting.
In August, “if needed” was again used, and accordingly, we remain comfortable with our forecast that the next rate cut will come at the October meeting rather than the September meeting.
The decision statement which precedes the release of the RBA’s revised forecasts on the following Friday can also provide an early indication of those revisions. In this statement, we are given the revisions for growth, underlying inflation and the unemployment rate out to the new forecast horizon of end 2021 (previous horizon ended in June 2021).
For growth, the RBA has revised down its forecast for 2019 from 2 ¾ per cent to 2 ½ per cent – in line with our preview which printed on August 2. That is not surprising given that growth in the first half of 2019 is likely to print around 1 per cent, making the previous forecast of 2 ¾ per cent highly unlikely.
However it has retained its forecast for 2020 of 2 ¾ – around trend growth. Westpac still sees those forecasts as too high – favouring 2 ¼ per cent in 2019 and 2 ½ per cent respectively.
For underlying inflation, the previous forecasts were 1 ¾ per cent in 2019, 2 per cent in 2020 and 2 per cent in the year to June 2021.
When the June quarter trimmed mean printed 0.4%, following a 0.3% in the March quarter, we revised up our estimate of the where the RBA would forecast 2019 from 1 ½ per cent to 1 ¾ per cent.
We argued at the time that such a forecast would be an unrealistic stretch but assumed that the RBA would want to maintain a forecast of 2 per cent in 2020.
Accordingly, we welcome the cautious approach to the new 2020 forecast for underlying inflation, which is now described as “a little under 2 per cent for 2020”. That is likely to imply a forecast of 1 ¾ per cent, indicating recognition that the RBA will miss the 2-3 per cent target band for another year.
Somewhat offsetting that discouraging forecast is the forecast for the whole of 2021 of “a little above 2 per cent”. So we have gone from a forecast of 2 per cent in 2020 and 2 per cent in the year to June 2021, to 1 ¾ per cent in 2020 and 2 ¼ per cent in 2021.
While the 1 ¾ per cent looks realistic, the jump of ½ of a percentage point to 2 ¼ per cent looks like a stretch.
Previously the unemployment rate was forecast to hold at 5 per cent to December 2020 before falling to 4 ¾ per cent by June 2021.
Recall that the starting point for these forecasts is 5.24% for June 2019, posing a challenge to reach 5 per cent when the forecast growth rate is below trend in 2019 and only at-trend in 2020.
The new forecasts have the unemployment rate drifting down to 5 per cent “over the next couple of years”. That therefore represents an increase in the unemployment outlook, given that the previous forecasts factored in 4 ¾ per cent by June 2021.
Such a forecast is well above the Governor’s informal “target” of 4.5%.
Consequently, the decision statement signals that the RBA will be forecasting less progress on the inflation and unemployment targets than had been expected in the May Statement on Monetary Policy (SMP)( which assumed two rate cuts by year’s end). And of course, we must bear in mind that these new forecasts are based around market pricing which now includes two 25bp rate cuts having been delivered and the prospect of nearly two further cuts to come.
In addition, the May forecasts assumed an AUD of USD 0.70 , compared to current pricing of USD 0.68.
So the RBA finds itself in a position where even if market pricing for further cuts proves to be accurate, it still expects that it will have to wait another year until underlying inflation returns to the 2-3 per cent target band and the unemployment rate drops back to its level of a few months ago.
Little wonder that the Governor notes “it is reasonable to expect that an extended period of low interest rates will be required in Australia to make progress on reducing unemployment and achieve more assured progress towards the inflation target”. This guidance for low rates for an extended period comes as a new  policy tool.
The commentary around the housing market is somewhat more positive with the Sydney and Melbourne markets being described as “some signs of a turnaround” compared to the July description of “tentative signs that prices are now stabilising”.
Some themes around the labour market are consistent with July with employment growth being described as strong, but little inroads being made into reducing spare capacity.
One significant change is a less confident note around wages. In July, the commentary was “a further gradual lift in wages growth is still expected”, whereas in today’s statement, “a further gradual lift in wages growth would be a welcome development”.
Given the developments in the global economy, particularly over the last few days, we are surprised that the RBA is still only talking about the risks being only “tilted to the downside”. We will expect that a more detailed analysis of these risks will be available in the August SMP, which will print on August 9.
Conclusion
We are very comfortable with our view that the RBA has more work to do. Its revised forecasts paint an increasing challenge around both inflation and unemployment. There is also  recognition that growth will be below trend in 2019 and is unlikely to exceed trend in the forecast period.
It still remains possible, that the RBA will choose September as the next date for a rate cut, but given that they must  see limited future flexibility, we expect that they will be a little patient by moving  next in October, and laying  the foundation for another move in February next year, when additional unconventional policies might be used to sharpen the effectiveness of the rate cut.
<a href="https://www.rba.gov.au/media-releases/2019/mr-19-20" target="_blank">Read full RBA Statement</a>
BILL EVANS is Chief Economist for Westpac
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RBA points to further cuts: Bill Evans 

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EXPERT OBSERVER
The RBA remained on hold at a record low cash rate of 1% at its August board meeting as widely expected. This followed 0.25% rate cuts in June and July.
The Bank’s post meeting statement was dovish:
<ul type="disc">
<li>referring to the downside risks to global growth from the trade war;</li>
<li>revising down yet again its GDP growth forecast to around 2.5% for this year (from 2.75%);</li>
<li>noting that wages growth remains subdued with little upwards pressure; and</li>
<li>indicating that inflation will take longer than earlier expected to reach 2%.</li>
</ul>
The final paragraph repeated Governor Lowe’s recently used forward guidance to expect an “extended period of low interest rates” and noted that the Board stands ready to ease monetary policy again if needed, indicating that the Bank retains an easing bias.
For now the RBA is in wait and see mode – basically waiting to see what sort of boost to growth the rate cuts of June and July and the Federal Government’s tax cuts for low and middle income earners provide.  Baring a shock to the economy this is likely to remain the case for a few months.
However, while the rate cuts seen so far and the Federal Government’s tax cuts will help, we see unemployment drifting up to around 5.5% by year end in contrast to the RBA’s expectation for a fall to around 5% over the next couple of years. The stimulus to date won’t be enough to get wages growth up and inflation back to target and so we expect the RBA to resume cutting rate later this year with 0.25% cuts in each of November and February.
Help from more fiscal stimulus and structural reforms is needed but this will take time to come through and impact the economy so the pressure remains on the RBA in the short term. And the escalating US/China trade war adds to this pressure to the extent that it threatens demand for Australian exports and business confidence locally.
DR SHANE OLIVER is the Head of Investment Strategy and Chief Economist at AMP Capital.
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soliver-smf6LQXgW9

RBA on hold but expect cash rate of 0.5% by February 2020

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EXPERT OBSERVATION
The Reserve Bank of Australia (RBA) has made the decision to leave the nation’s official cash rate unchanged at 1.00%.
The Reserve Bank’s decision to hold the cash rate steady this month was prudent. A third cut so soon after two consecutive cuts in June and July would not have given policy makers enough time to see if the cuts had any marked effect on the economy.
The latest economic data has provided the Reserve Bank with no incentive to reduce the cash rate three times in as many months, encouraging the Bank to continue its historically cautious approach towards monetary policy.
In encouraging news for the housing market, the latest CoreLogic Hedonic Home Value Index revealed that national dwelling values stabilised in July as five of the eight capital cities recorded a rise, supported by a 0.2% increase in values in both Sydney and Melbourne.
It seems that two consecutive cuts to the cash rate, and tax relief from the Government were not enough to improve consumer outlook. The Westpac Melbourne Institute of Consumer Sentiment revealed that consumer sentiment deteriorated in July, as concerns over the economy continue to weigh heavily on sentiment. On a positive note, the index revealed that housing-related sentiment improved in response to lower interest rates.
The latest monthly business survey from the National Australia Bank revealed that business confidence fell over June and while business conditions rose, they remain well below average. The survey also revealed that outlook for business conditions over the next few months is weak, which may put further downward pressure on the labour market going forward.
In the minutes of its July Board meeting, RBA board members suggested they continue to track developments in the labour market. Members agreed that the Australian economy could sustain a lower rate of unemployment, while achieving inflation consistent with the target.
Given that the unemployment rate remained steady at 5.2% in the ABS’ most recent Labour Force Survey, the RBA may not have felt another cut was necessary at this time. That being said, the inflation rate came in under the RBA’s expectations once more, with June quarter figures revealing a CPI quarterly percentage change of 0.6% and a year ended percentage change of 1.6%, well below the RBA’s target range of 2-3%. While financial markets are expecting another 25 basis point cut this year, the important thing for borrowers and future borrowers alike to keep in mind is that interest rates are currently sitting at historic lows. I would encourage anyone thinking of buying a home or investment property to speak to their local Mortgage Choice mortgage broker to learn what their borrowing power is and what home loan options are available to them. Mortgage Choice brokers can assess your financial situation, and help you get home buying ready. With access to a panel of over 25 lenders, with varied lending policies and preferences, we can help borrowers get the most suitable deal for their circumstances, whatever the cash rate.
SUSAN MITCHELL is the Mortgage Choice CEO
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RBA hits pause in August: Mortgage Choice's Susan Mitchell

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At its meeting today, the Board decided to leave the cash rate unchanged at 1.00 per cent.
The outlook for the global economy remains reasonable. However, the increased uncertainty generated by the trade and technology disputes is affecting investment and means that the risks to the global economy remain tilted to the downside. In most advanced economies, unemployment rates are low and wages growth has picked up, although inflation remains low. The slowdown in global trade has contributed to slower growth in Asia. In China, the authorities have taken steps to support the economy, while continuing to address risks in the financial system.
Global financial conditions remain accommodative. The persistent downside risks to the global economy combined with subdued inflation have led a number of central banks to reduce interest rates this year and further monetary easing is widely expected. Long-term government bond yields have declined further and are at record lows in many countries, including Australia. Borrowing rates for both businesses and households are also at historically low levels. The Australian dollar is at its lowest level of recent times.
Economic growth in Australia over the first half of this year has been lower than earlier expected, with household consumption weighed down by a protracted period of low income growth and declining housing prices. Looking forward, growth in Australia is expected to strengthen gradually from here. The central scenario is for the Australian economy to grow by around 2½ per cent over 2019 and 2¾ per cent over 2020. The outlook is being supported by the low level of interest rates, recent tax cuts, ongoing spending on infrastructure, signs of stabilisation in some housing markets and a brighter outlook for the resources sector. The main domestic uncertainty continues to be the outlook for consumption, although a pick-up in growth in household disposable income and a stabilisation of the housing market are expected to support spending.
Employment has grown strongly over recent years and labour force participation is at a record high. There has, however, been little inroad into the spare capacity in the labour market recently, with the unemployment rate having risen slightly to 5.2 per cent. The unemployment rate is expected to decline over the next couple of years to around 5 per cent. Wages growth remains subdued and there is little upward pressure at present, with strong labour demand being met by more supply. Caps on wages growth are also affecting public-sector pay outcomes across the country. A further gradual lift in wages growth would be a welcome development. Taken together, recent labour market outcomes suggest that the Australian economy can sustain lower rates of unemployment and underemployment.
The recent inflation data were broadly as expected and confirmed that inflation pressures remain subdued across much of the economy. Over the year to the June quarter, inflation was 1.6 per cent in both headline and underlying terms. The central scenario remains for inflation to increase gradually, but it is likely to take longer than earlier expected for inflation to return to 2 per cent. In both headline and underlying terms, inflation is expected to be a little under 2 per cent over 2020 and a little above 2 per cent over 2021.
Conditions in most housing markets remain soft, although there are some signs of a turnaround, especially in Sydney and Melbourne. Growth in housing credit remains low. Demand for credit by investors continues to be subdued and credit conditions, especially for small and medium-sized businesses, remain tight. Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality.
It is reasonable to expect that an extended period of low interest rates will be required in Australia to make progress in reducing unemployment and achieve more assured progress towards the inflation target. The Board will continue to monitor developments in the labour market closely and ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time.
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jrobinson-rf4aSBido9

Most housing markets remain soft: RBA Governor Philip Lowe's August 2019 meeting statement

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The RBA has held the cash rate at a record low one percent at its August meeting.
The decision follows slightly <a href="/expert-insights/investing/cpi-rises-0-6-percent-in-june-quarter">higher inflation than predicted</a> for Q2 2019.
RBA Governor Philip Lowe said most housing markets remain soft, although there are some signs of a turnaround, especially in Sydney and Melbourne.
CoreLogic's head of research Tim Lawless says the decision to hold the cash rate was expected.
"The pause in the cutting cycle will give the RBA time to assess the effects of earlier rate cuts on the economy and consumer spending, however there is a strong likelihood of at least one more cut later this year," Lawless says.
"The housing market has been a key beneficiary of lower mortgage rates, with a trend towards stability over the first half of the year converting to a subtle rise in capital city housing values in July. 
"With mortgage rates set to remain low for an extended period of time, as flagged by RBA Governor Lowe in a speech last month, and potentially move even lower later this year, we are expecting to see the housing market move into a gradual recovery, however with credit policies remaining tight and economic uncertainty still elevated, we aren’t expecting a material acceleration in housing activity or housing values."
Finder's latest RBA Survey found that economists and experts predicted small gains across every capital city market.
Graham Cooke, insights manager at Finder, said it's too soon to tell if this is an emerging recovery in the housing market or merely a 'dead-cat bounce'.
“In finance, the saying is that even a dead cat will bounce if it falls from great heights," Cooke says.
“Most economists surveyed foresee small levels of growth across the board, but a few tipped prices to tumble, especially in Sydney and Melbourne where one expert predicted a 7% drop.
“Whether you see this as a falling feline or the beginning of a true rebound, it’s clear that the full effects of the RBA’s recent cuts have yet to play out.
<img src="https://gallery.mailchimp.com/cc5e9bce699fa1d71a67cf499/images/881b878c-2e84-4824-9ea6-abb2854b4aa9.png" width="610" height="443">
“However, after one of the strongest weekend clearance rates in Sydney in recent months (71%), there is definitely a detectable pulse,” Cooke said.
Canberra is expected to be the best performer with 2.27% gains. Sydney and Melbourne are looking at 1.48% and $1.57% gains respectively.
Cooke said those considering getting on the property ladder need to get their ducks in a row.
“Prospective first time buyers should look at arranging pre<a href="https://finder.us9.list-manage.com/track/click?u=cc5e9bce699fa1d71a67cf499&amp;id=72671b9013&amp;e=f2176dbcf8" target="_blank">-</a>approval for finance soon if they want to take advantage of low rates before prices increase.”
<div><img src="https://gallery.mailchimp.com/cc5e9bce699fa1d71a67cf499/images/2027eefe-611e-46ff-974f-dd622ad3779f.png" width="613" height="445"></div>
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RBA holds rates after two consecutive cuts

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GUEST OBSERVATION
Since home loan rates have hit new historic lows in July after two 0.25 percentage point rate cuts from the Reserve Bank in the last two months, now is a great time to be a borrower.
Never before have we seen home loan rates this low. 
The property market is showing early signs of recovery, regulators have eased home loan serviceability guidelines and lenders are cutting rates.
The fees involved in refinancing have come down a lot in the last few years and lenders are actively competing for business.
In short, and depending on your personal situation, conditions seem quite attractive for borrowers and home buyers right now.
There are now so many lenders offering variable headline home loan rates under four per cent, it really is the perfect time to borrow.
And there is an increasing number of lenders going under three per cent, which is quite amazing.
The lowest advertised home loan rates currently listed by InfoChoice are:
Variable rate: 2.89 per cent p.a. (comparison rate 2.89 per cent p.a.) from Reduce Home Loan’s <a id="LPlnk67204" href="https://www.infochoice.com.au/product/home-loans/reduce-home-loans/low-rider-variable-56868" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">Low Rider Variable</a> loan.
Fixed rate: 2.79 per cent p.a. (comparison rate 4.17 per cent p.a.) from Greater Bank’s <a id="LPlnk850745" href="https://www.infochoice.com.au/product/home-loans/greater-bank-limited/great-rate-fixed-home-loan-13426" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">12 month Fixed</a> Home Loan.
The highest savings rates currently listed by InfoChoice are:
At-call savings accounts: 2.55 per cent p.a. max bonus rate (base rate 1.15 per cent) from <a id="LPlnk827466" href="https://www.infochoice.com.au/product/banking/savings-account/rams/rams-saver-24819" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">RAMS Saver</a> (make $200 deposit &amp; no withdrawals in a month)
12 month Term Deposits: 2.5 per cent p.a. from <a id="LPlnk215455" href="https://www.infochoice.com.au/product/banking/term-deposits/qudos-bank/term-deposits-20011" target="_blank" data-auth="NotApplicable">Qudos Bank</a>.
VADIM TAUBE is the Chief Executive Officer of <a href="https://www.infochoice.com.au" target="_blank">InfoChoice</a>
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