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]

Joel Robinson

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

International developer&nbsp;<a href="https://www.apartments.com.au/developers/spg-land">SPG Land</a> is preparing to re-launch its long-awaited $1.5 billion <a href="https://www.apartments.com.au/new-apartments/paradiso-place-surfers-paradise-103-ferny-avenue-surfers-paradise-qld-4217">Paradiso Place</a> development at Budds Beach, bringing a new price point to the Surfers Paradise apartment market.

The developer will release one-bedroom apartments from $825,000 and two-bedroom apartments from $1.24 million in the three-tower development.

According to Urbis, the starting price for the two-bedroom apartments is more than $400,000 below the weighted average sale price for comparable two-bedroom apartments in Surfers Paradise during 2025, which was pinned at $1.7 million.

&nbsp;

Urbis reported quarterly average sale prices for new two-bedroom, two-bathroom apartments ranged from around $1.2 million to $1.7 million throughout 2025, peaking in the December quarter.

[smartcode_project:default project_id=106566 project_image_fid=185853]

Paradiso Place is now moving into its formal sales campaign, with a limited early-release opportunity available ahead of the public launch.

The development will comprise 845 apartments across three towers rising 40, 41 and 44 storeys from a 1.15-hectare site spanning an entire city block. The towers will sit above a new retail precinct.

"Paradiso Place represents a rare opportunity in today's market, offering premium apartments at a price point that is significantly more competitive than anything else currently available," SPG Land Sales Director Brad McMahon said.

"When you look at comparable new developments across Surfers Paradise, Main Beach and the Southern Beaches precinct, buyers are typically paying hundreds of thousands more for a similar product.

"The scale of this project and the developer-builder construction model allows us to unlock efficiencies that smaller developments simply cannot achieve. We are passing those benefits directly to buyers, while still delivering a five-star residential experience with an unmatched lifestyle."

[smartcode_project:default project_id=106566 project_image_fid=374280]

Each of the three towers designed by Rothelowman will have its own podium, connected by an elevated skybridge network to create a beachside village for residents. The resident amenity has been designed to rival a five-star hotel, with private dining rooms, resident lounges and entertainment spaces.

McMahon said the pricing strategy was a deliberate response to the current market.

"What Paradiso Place offers is a unique balance, genuine value within a premium market. Buyers are not compromising on quality, design or amenity, they are gaining access to it at a more competitive price point at a time when prices across the Gold Coast continue to reach new highs."

[smartcode_project:default project_id=106566 project_image_fid=362498]

Located around 100 metres from the beach and within walking distance of the Surfers Paradise North light rail station, Paradiso Place occupies one of the Gold Coast's most tightly held beachfront precincts.

Construction is continuing to progress, with eight of the project's 112 foundation piles now complete. Excavation has also commenced on the first diaphragm wall panel, with the first concrete poured on 15 June, marking a key milestone in the project's early works program.

[smartcode_project_cta:default project_id=106566]

SPG Land launches $1.5 billion Paradiso Place at attractive price point

Luxury developer-builder <a href="https://www.apartments.com.au/developers/lowe-living">Lowe Living</a> has achieved a new Victorian benchmark for an off-the-plan apartment, with the sale of two penthouses at its ultra-exclusive Maison Savoy development in Brighton.

The two penthouses achieved a combined sale rate of $49,926 per sqm. Both transactions eclipsed the previous identified Victorian off-the-plan price-per-square-metre benchmark, set by the 449 sqm apartment at Como Toorak, which sold at $46,659 per sqm.

[smartcode_project:default project_id=140818 project_image_fid=366473]

<a href="https://www.apartments.com.au/new-apartments/maison-savoy-brighton-150-esplanade-brighton-vic-3186">Maison Savoy</a>, Lowe Living's redevelopment of the former Brighton Savoy Hotel on absolute beachfront land at 150 The Esplanade, Brighton, has gained significant momentum since launching just eight weeks ago. Around 30 per cent of the project's 19 residences have already been secured, generating approximately $45 million in sales.

"Securing two of the three penthouse sales at this stage, within eight weeks of launching to market speaks to the confidence our clients place in Lowe Living," Lowe Living co-founder Emma Lowe said.

"They know we'll be with them through every stage of the journey, and that assurance is something we've worked hard to earn and never take for granted."

[smartcode_project:default project_id=140818 project_image_fid=366474]

Lowe said Maison Savoy was conceived as a genuine alternative to a prestige Brighton home, combining house-scale proportions with the convenience, security and lock-up-and-leave appeal of apartment living.

Lowe Living co-founder Tim Lowe said the early sales success demonstrated the resilience of Melbourne's prestige market and highlighted the growing demand for house-sized apartments among ultra-high-net-worth buyers.

"The Melbourne market has definitely been tested in recent years, with interest rates and global economic factors all creating a period of uncertainty across the real estate sector. The sales success at Maison Savoy however demonstrates that confidence remains exceptionally strong at the top end of the market.

"The prestige market is being driven by long-term lifestyle decisions rather than short-term market sentiment, which continues to create a level of certainty that befits an absolute beachfront property in a blue-chip location like Brighton.

"Brighton's fundamentals remain among the strongest in Melbourne, with limited new supply, enduring demand from an overwhelmingly local owner-occupier market, and a rare combination of beachfront amenity and proximity to the CBD."

[smartcode_project:default project_id=140818 project_image_fid=374378]

According to Cotality, Brighton remains one of Melbourne's most tightly held prestige suburbs, with an average ownership tenure of 15.3 years for houses and 12.3 years for units, while more than 73 per cent of homes are owner-occupied.

Tim Lowe said selling two of the project's three penthouses so early in the campaign was an uncommon result.

"This sales result is a reflection of quality and understanding the local market. It's incredibly rare to transact the penthouses so early in a sales campaign in any project so to have sold two of the three penthouses at Maison Savoy so soon after launch, all in-house without any external sales agency appointed, is reflective of our careful consideration of our buyers' needs and lifestyle.

"This is knowledge that is accumulated not just from data and demographic analysis, but via a deeply embedded understanding of how this type of buyer wants to live and feel in their home. We pride ourselves on getting to know our clients personally, and over the last 10 years we have been able to refine our product offering by talking one-on-one with our clients about their design and floorplan preferences.

"Being a fully integrated developer-builder with an in-house design and sales team allows us to lead every part of the process and ensure the highest quality of product and service at every touchpoint. It's a really important part of our DNA and the recent sales success at Maison Savoy indicates that our clients and purchasers are resonating with this point of difference.

"It reinforces that demand remains strong for thoughtfully designed residences that offer rarity, lifestyle and long-term value in tightly held locations, which ultimately validates Maison Savoy's positioning as creating a new benchmark for house-scale, wellness-led apartment living on Brighton's beachfront."

&nbsp;

[smartcode_project:default project_id=140818 project_image_fid=366480]

The residences at Maison Savoy start from 295 sqm, with most enjoying uninterrupted views across Port Phillip Bay. The project sits moments from the Brighton Bathing Boxes, Royal Brighton Yacht Club, Middle Brighton Baths and Church Street's retail and dining precinct.

A key feature of the development is its private residents-only bathhouse, curated by the founder of Aurora Spa &amp; Bathhouse and modelled on traditional European bathing rituals and the award-winning Sorrento bathhouse.

The wellness offering includes a hydrotherapy pool, salt room, sauna, steam room, cold plunge pool, foot activation zone and a Vichy rainfall bed, one of only a handful in Australia. Residents will also have access to a Technogym studio, lounge spaces and a dedicated concierge service offering everything from morning coffee delivery and restaurant bookings to dry cleaning and home coordination.

"Wellness-led design has become a defining factor for luxury buyers," Emma Lowe said.

"Purchasers increasingly value homes that enhance wellbeing through thoughtful design, private amenity, privacy and liveability."

The penthouse purchasers are now undertaking a bespoke customisation process curated personally by architect Pete Kennon and the Lowe Living team, one of the developer's signature service offerings.

Construction on the $160 million transformation of the former Brighton Savoy Hotel site commenced last month, with completion expected in early 2028. The project has secured funding from NAB alongside development partner Monark.

Just one penthouse remains available, along with a limited number of two and three-bedroom residences starting from $3.75 million.

Lowe Living currently has eight projects on the market across Melbourne and recently celebrated its 10th anniversary, having grown a $1 billion development pipeline alongside a $350 million construction pipeline.

&nbsp;

[smartcode_project_cta:default project_id=140818]

Lowe Living set new Melbourne off the plan apartment record

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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Westpac have followed ANZ and NAB and cut their two and three year fixed mortgage rates for new owner-occupiers.

They now have the lowest two year fixed rate on the market at 1.79 per cent, having chopped 20 basis points from their record-low 1.99 per cent offering.

Westpac's three year rate has seen an 11 basis point cut, now at 1.88 per cent.

The rates are only for owner-occupiers paying principal and interest with an LVR ratio of 70 per cent or less.

The two year investor fixed rates have also been cut by 0.2 per cent.

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RateCity.com.au database shows that 57 lenders now have home loan rates under two per cent, including three of the big four banks.

“Westpac has thrown down the gauntlet to its competitors today proving there’s still heat in the fixed rate market.” RateCity.com.au research director Sally Tindall said.

“While we’re nearing the bottom of the rate cycle, provided the cash rates remains above zero, it’s likely there’ll be more cuts in the weeks to come as banks compete for the record levels of new lending coming through the door.

“Lenders are currently in a strong position to offer low fixed rates, which also have the benefit of locking a customer in for the fixed term.

“Westpac is now offering the lowest 2 year fixed rate, and was already offering the lowest 4-year fixed rate in the market – an unusual position for a big four bank.

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Tindall says home loans at the nation's largest lender, Commonwealth Bank, are starting to look outdated, with just one fixed rate under 2 per cent.

“Westpac group is reserving its sharpest rates for people who own at least 30 per cent of their home.

“Property price rises aren’t just helpful for people planning to sell. If you’ve had your home loan for a few years you might find you have more equity than you think and qualify for one of these low-rate loans."
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RateCity.com.au database shows that 57 lenders now have home loan rates under two per cent, including three of the big four banks.

Westpac offer lowest two-year fixed rate mortgage after cutting home loans

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EXPERT INSIGHT

After years of repeatedly <a href="https://theconversation.com/vital-signs-yet-another-year-of-steady-rates-whats-the-point-of-the-rba-inflation-target-110574">missing its inflation target</a> through too timid monetary policy, in the past week the Reserve Bank has decided to get tough.

Not only did it hold its closely watched <a href="https://rba.gov.au/statistics/cash-rate/">cash rate</a> target steady at 0.10% at Tuesday’s board meeting, it ramped up its efforts to defend its separate 0.10% target for the three-year government bond rate in the face of a mini-revolt by bond traders.

A few weeks back, some of the traders in Australia and elsewhere got it into their heads that big borrowing by governments would force up bond rates - a relationship that was once thought to be clear cut but hasn’t held for some time.

The traders sold government bonds issued by Australia and other nations, which in the case of the bond market, <a href="https://www.investopedia.com/articles/bonds/07/price_yield.asp">forces up the bond interest rate</a>.

Then other traders piled on, partly because economic outlooks are improving and they thought governments might soon be issuing fewer bonds, and partly because they thought other traders might agree with the traders.

That’s right: “thought other traders might agree with the traders”.

<h2>Beauty contests can make markets mad</h2>

In financial markets you don’t make money by correctly guessing what will happen, you make it by correctly guessing what other traders think will happen.

One of the founders of modern economics, John Maynard Keynes, described it as a beauty contest in which judges are rewarded not for picking the most beautiful face, but for picking the face <a href="https://www.zeninvestor.org/keynesian-beauty-contest/">other judges</a> will think is the most beautiful.

It’s like the rules in <a href="https://www.liveabout.com/family-feud-brief-overview-1396911">Family Feud</a>.

The yield on Australian Commonwealth 10-year bonds climbed from 0.98% at the start of the year to 1.11% a month later, to an extraordinary 1.87% a month after that - a near-doubling in a matter of weeks.

Even the yield on three-year bonds, which the Reserve Bank has pledged to keep at <a href="https://theconversation.com/5-ways-the-reserve-bank-is-going-to-bat-for-australia-like-never-before-149311">0.10%</a> crept up to 0.13%.

Last Friday, the Reserve Bank fought back.

It bought extra bonds a day after completing its usual purchases on Thursday.

This Tuesday, in its statement after its monthly board meeting, it added nine words to its usual acknowledgement that “<a href="https://www.rba.gov.au/media-releases/2021/mr-21-01">wage and price pressures remain subdued</a>”.

Those words were: “<a href="https://www.rba.gov.au/media-releases/2021/mr-21-03">and are expected to remain so for some years</a>”.

And then it released a <a href="https://www.rba.gov.au/mkt-operations/announcements/rba-purchases-of-government-securities-2021-03">separate statement</a> reiterating that when its A$100 billion program of buying $5 billion of government bonds each week expires in May it will launch another $100 billion program, taking the scheduled bond buying through to November.

Since the program began last November, the bank has bought $74 billion of bonds. Its message was that if traders thought it was within $26 billion of running out of ammunition, it had another $100 billion. It doubled <a href="https://www.youtube.com/watch?v=X-M8e1YYiQg">the size of its knife</a>.

The bank can’t afford to lose

Keeping control of rates is a fight the Reserve Bank has to win. When it announces a change in an interest rate, usually the <a href="https://rba.gov.au/statistics/cash-rate/">cash rate</a>, it uses words along the lines of “<a href="https://www.rba.gov.au/media-releases/2020/mr-20-06">the board decided to lower the cash rate</a>,” implying that it can.

The more accurate words it <a href="https://www.rba.gov.au/media-releases/2001/mr-01-17">used to use</a> were “the bank will be operating in the money market this morning to reduce the cash rate,” an admission that it could only try to move the cash rate, by trading in financial instruments.

So effective have its pronouncements become that in recent years it hasn’t needed to do much trading to move the cash rate - it has just announced the move knowing that traders will fall into line because it could buy or sell financial instruments if it wanted to.

If it loses a battle with traders over rates, what it says will have much less force.

It has the resources it needs to win

The bank will win whatever battle it chooses to fight because it has unlimited resources. Unlike traders, it can <a href="https://www.rba.gov.au/education/resources/explainers/unconventional-monetary-policy">create</a> as many Australian dollars as it needs in order to buy as many bonds as it needs.

So far it has chosen to defend its ground on the cash rate and the three-year bond rate. It wants both at 0.1%.

It said on Tuesday it would “not increase the cash rate until actual inflation is sustainably within the 2 to 3% target range”.

It added that for that to occur, wage growth will have to be “materially higher”, which would require significant gains in employment and a return to a tight labour market.

And then the killer sentence, <a href="https://www.rba.gov.au/media-releases/2021/mr-21-03">the last</a>, aimed directly at the traders: “The Board does not expect these conditions to be met until 2024 at the earliest.”

Although it released the statement one day before Wednesday’s <a href="https://theconversation.com/gdp-is-v-shaped-but-not-yet-good-these-three-graphs-tell-the-story-156372">national accounts</a> that showed the economic recovery continuing, it would have been aware of what they were likely to show.

It remains resolute.<img alt="The Conversation" height="1" src="https://counter.theconversation.com/content/156410/count.gif?distributor=republish-lightbox-basic" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important" t1tcsswdv="" width="1">

<a href="https://theconversation.com/profiles/richard-holden-118107">Richard Holden</a>, Professor of Economics, <a href="https://theconversation.com/institutions/unsw-1414">UNSW</a>

This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/vital-signs-in-the-battle-over-interest-rates-itd-be-unwise-to-bet-against-the-rba-156410">original article</a>.
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In the battle over interest rates, it'd be unwise to bet against the RBA: Richard Holden

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Amid ongoing uncertainty in the global markets due to COVID-19 it remains low rates as usual for the RBA, who kept the official cash rate at 0.10 percent for another month.

Their recently released chart pack, which details figures from the world economy to Australia's financial figures, yielded interesting information about the Australian property situation

Private residential building approvals has continued to soar, up once again in February as seen below.

<img alt="" height="339" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/rba_chart_1.jpg" width="407">

This trend continues to be driven by growth in the detached housing sector which can be attributed to the HomeBuilder grant among other government initiatives

<img alt="" height="357" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/rba_chart_2.jpg" width="396">

There continues to be a gap between household consumption and disposable income.

A household's disposable income hadn't been higher than its consumption since 2014.

This is in sharp contrast to the current Covid-19 effected situation.

Housing price growth can be seen to have come out of a dip with APM recording the smallest falls as seen below. 

<img alt="" height="313" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/rba_chart_3.jpg" width="401">

Residex and CoreLogic data showed that for the year to February home price growth near zeroed out.

Housing loan commitments continue to soar to new record highs, levels well beyond the 2015 and 2017 highs.

<img alt="" height="353" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/rba_chart_4.jpg" width="393">

This trend is similarly driven by government initiatives with owner-occupiers rocking this trend up to $20 billion in commitments.

Investor's have also been investing further although clearly not to a similar level as many lack incentive in this current low supply, high demand market.
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Data showed that for the year to February home price growth near zeroed out, however a growth spike seems to be on the horizon

jordan_55689

House prices hold steady and ready for turnaround: RBA 

<html><body>The number of Australians who experienced some form of financial hardship rose slightly in Q4 to 32%, according to the latest NAB Insights.

Younger Australians reported noticeably higher levels of hardship, it noted.

While credit card debt is the most common form of debt held by Australians, it was found to cause the least anxiety. 

Around 1 in 3 Australians are in strong agreement that their finances control their lives.

And 1 in 4 struggle to enjoy life because of the way they are managing money, according to the latest NAB Insights. 

The NAB Financial Anxiety Index, fell in Q4 2020 and is well down on the same time last year as Australians are feeling less worried about COVID-19 and less concerned about the economy. 

However, anxiety increased among younger people aged 18-29, driven by concerns over credit card repayments, the ability to raise emergency funds and pay monthly household bills. 

Anxiety was also higher for women across all drivers, compared to men and nationally, NSW residents were the most financially anxious, replacing Victorians.

Despite financial anxiety falling, the number of Australians who experienced some form of financial hardship rose slightly in Q4 to 32% (up from a survey 30% in Q3), although still well down on a year ago, with hardship growing to 34% for women (31% in Q3) and to 30% for men (29% in Q3). 

The NAB Financial Anxiety Index is based on measured level of concern around 14 key metrics: Not being able to: meet the cost of medical bills/healthcare; make mortgage repayments, rent or other housing costs; meet minimum payments on your credit card; pay off personal loans; pay for your children’s education; for food and basic necessities; meet normal monthly household utility bills (e.g. electricity, gas, water, phone); meet other normal monthly household expenses (e.g. car, insurances, public transport, etc.); meet the cost of non-essential expenses (holidays, entertainment, eating out); raise $2,000 if an unexpected need arose within the next month; finance your retirement; provide for my family’s future; for major household items (e.g. furniture and appliances); and for home improvements &amp; maintenance. 

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Around 1 in 4 Australians struggle at managing their money, according to the latest NAB Insights into financial anxiety and the role our household finances play in our wellbeing

jchancellor

NSW replaces Victoria as the most financially anxious state

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The Council of Financial Regulators says its will continue to closely monitor housing prices and consider possible responses should lending standards deteriorate and financial risks increase.

The council is the coordinating body for Australia's main financial regulatory agencies: the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the Australian Treasury and the Reserve Bank of Australia (RBA), with the aim to promote stability of the Australian financial system and support effective and efficient regulation by Australia's financial regulatory agencies.

Its latest quarterly statement issues today arose from its quarterly meeting on Friday, 26 February where discussions focused on the financial sector's role in supporting recovery from the COVID-19 pandemic.

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Council members discussed credit conditions. 

They noted housing credit had "picked up a little and was growing at a moderate pace."

"Commitments for new owner-occupier housing loans have increased strongly in recent months, consistent with most other indicators of housing market activity. 

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"There has been some increased availability of mortgage finance recently, though lending standards are generally being maintained at this stage."

The council noted its places a high emphasis on lending standards remaining sound, "particularly in an environment of rising housing prices and low interest rates.

"It will continue to closely monitor developments and consider possible responses should lending standards deteriorate and financial risks increase."

[smartcode_project:default project_id=3730]

The March RBA minutes repeated, from the February statement that, “investor and business credit growth remain weak.” 

But the March minutes added the warning that “lending standards remain sound and it is important that they remain so.”
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The Council of Financial Regulators noted "an environment of rising housing prices and low interest rates."



Council of Financial Regulators continues to monitor housing prices, but no tightening yet of lending rules

<html><body>The near 500,000 borrowers who took a “repayment holiday” at the height of the COVID-19 pandemic now face difficulties in refinancing to a cheaper home loan rate loan.

Despite lenders claiming COVID-19 repayment holidays wouldn’t damage borrowers’ creditworthiness, borrowers have now been told they need to re-established a clean bill of repayments before refinancing consideration.

The banks have reportedly claimed the pause signalled a potential issue with their borrowers, notwithstanding their resumption of payments.

Borrowers took the pause with the understanding it would not affect their borrowing power.

The majority of loans granted repayment deferrals were housing loans; nearly 500,000 were deferred, which was close to 10% of all home loans amounting to $195 billion in value.

“Lenders’ policies going into this was for it not to be a blemish on someone’s financial record going forward but unfortunately we’re seeing some banks not abiding by how it was originally designed to work,” Connective executive director Mark Haron told the Mortgage Professional Australia industry website.

Haron added lenders who refuse to refinance a customer purely because they have been on a repayment pause "should be called out."

“It’s a breach of what the intention of that program was and I’m sure the government would be interested in that,” he added.

MPA did not name any lending institution.

As at 31 January, according to data submitted to APRA by authorised deposit-taking institutions (ADIs) with over $20 million in loans subject to repayment deferral, a total of $37 billion worth of loans are still on temporary repayment deferrals, which is around 1.4 per cent of total loans outstanding, down from $50 billion (1.9 per cent of total loans outstanding) in December 2020. 

Housing loans make up the majority of total loans granted repayment deferral.

APRA granted temporary capital concessions to ADIs offering loan deferrals to small businesses and home loan customers struggling due to COVID-19. 

In allowing ADIs to temporarily treat loans with deferred repayments due to COVID-19 as if they continued to be performing loans, lenders avoided the imposition of higher capital requirements.

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Mortgage brokers have clients who have found it difficult to refinance because of taking a repayment pause during COVID-19

Borrowers face refinancing difficulties after COVID-19 repayment pause

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RBA ANNOUNCEMENT

At its meeting today, the Board decided to maintain the current policy settings, including the targets of 10 basis points for the cash rate and the yield on the 3-year Australian Government bond, as well as the parameters of the Term Funding Facility and the government bond purchase program.

The outlook for the global economy has improved over recent months due to the ongoing rollout of vaccines. While the path ahead is likely to remain bumpy and uneven, there are better prospects for a sustained recovery than there were a few months ago. Global trade has picked up and commodity prices have increased over recent months. Even so, the recovery remains dependent on the health situation and on significant fiscal and monetary support. Inflation remains low and below central bank targets.

The positive news on vaccines together with the prospect of further significant fiscal stimulus in the United States has seen longer-term bond yields increase considerably over the past month. This increase partly reflects a lift in expected inflation over the medium term to rates that are closer to central banks' targets. Reflecting these global developments, there have been similar movements in Australian bond markets. Changes in bond yields globally have been associated with volatility in some other asset prices, including foreign exchange rates. The Australian dollar remains in the upper end of the range of recent years.

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In Australia, the economic recovery is well under way and has been stronger than was earlier expected. There has been strong growth in employment and a welcome decline in the unemployment rate to 6.4 per cent. Retail spending has been strong and most of the households and businesses that had deferred loan repayments have now recommenced repayments. The recovery is expected to continue, with the central scenario being for GDP to grow by 3½ per cent over both 2021 and 2022. GDP is expected to return to its end-2019 level by the middle of this year.

Wage and price pressures are subdued and are expected to remain so for some years. The economy is still operating with considerable spare capacity and the unemployment rate remains higher than it has been for some years. Further progress in reducing spare capacity is expected, but it will be some time before the labour market is tight enough to generate wage increases that are consistent with achieving the inflation target. In the central scenario, the unemployment rate will still be around 6 per cent at the end of this year and 5½ per cent at the end of 2022. In underlying terms, inflation is expected to be 1¼ per cent over 2021 and 1½ per cent over 2022. CPI inflation is expected to rise temporarily because of the reversal of some COVID-19-related price reductions.

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The current monetary policy settings are continuing to help the economy by keeping financing costs very low, contributing to a lower exchange rate than otherwise, and supporting the supply of credit and household and business balance sheets. Together, monetary and fiscal policy are supporting the recovery in aggregate demand and the pick-up in employment.

Lending rates for most borrowers are at record lows and housing prices across Australia have increased recently. Housing credit growth to owner-occupiers has picked up, but investor and business credit growth remain weak. Lending standards remain sound and it is important that they remain so in an environment of rising housing prices and low interest rates.

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The Bank remains committed to the 3-year yield target and recently purchased bonds to support the target and will continue to do so as necessary. Also, bond purchases under the bond purchase program were brought forward this week to assist with the smooth functioning of the market. The Bank is prepared to make further adjustments to its purchases in response to market conditions. To date, a cumulative $74 billion of government bonds issued by the Australian Government and the states and territories have been purchased under the initial $100 billion program. A further $100 billion will be purchased following the completion of the initial program and the Bank is prepared to do more if that is necessary. Authorised deposit-taking institutions have drawn $91 billion under the Term Funding Facility and have access to a further $94 billion. Since the start of 2020, the RBA's balance sheet has increased by around $175 billion.

The Board remains committed to maintaining highly supportive monetary conditions until its goals are achieved. The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest.
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Housing prices across Australia have increased recently: RBA Governor Philip Lowe's March 2021 meeting statement

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Despite the pressure of soaring property prices, the RBA have decided to keep the official cash rate on hold at the March 2021 meeting.

In his <a href="/expert-insights/finance/housing-prices-across-australia-have-increased-recently-rba-governor-philip-lowes-march-2021-meeting-statement">meeting minutes</a>, RBA Governor Philip Lowe said that lending rates for most borrowers are at record lows and housing prices across Australia have increased recently.

"Housing credit growth to owner-occupiers has picked up, but investor and business credit growth remain weak," Lowe said.

"Lending standards remain sound and it is important that they remain so in an environment of rising housing prices and low interest rates."

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Canstar’s group executive of financial services Steve Mickenbecker said the Reserve Bank looks likely to find itself under property price pressure a lot sooner than it had expected.

“The Reserve Bank doesn’t expect to raise the cash rate for three years or more, but unless property prices can be slowed it will have to start looking for some way to apply the brakes," Mickenbecker said.

"First home buyers and new construction are leading the charge for property buying rather than investors, so the Reserve Bank can’t enlist APRA to target investors with lending caps as it has done previously.”

Mickenbecker said it is the perfect storm for house prices.

"On the supply side, new listings through 2020 were well below the four preceding years and total listings now are also down as stock is absorbed before or as soon as properties hit the market. Owners are loath to put a house on the market even at high current prices, fearing they will miss the boat getting back in.

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<h2>Should lending be looked at?</h2>

Analysis of owner-occupier rates from RateCity.com.au and property prices from CoreLogic show mortgage repayments are $140 less a month for the average new home buyer than in the previous housing peak of October 2017.

This is because the average owner-occupier interest rate has dropped by 1.42 per cent in this time, according to the RateCity.com.au database.

RateCity.com.au research director Sally Tindall said that while the RBA is unlikely to raise rates to keep a lid on the market this year, the regulator could respond by putting caps on risky lending for some borrowers.

Finder.com.au's monthly RBA Cash Rate Survey found that a little over half of respondents agree that the removal of responsible lending regulations could lead to an unstable level of household debt across the country.

Peter Boehm of CLSA Premium said, “When interest rates start to rise, it is possible a mortgage arrears time bomb will be released.”

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On the other side of the argument, 45% of experts argue that the current regulations in place are too onerous and are hurting both borrower and lender.

Rich Harvey of Propertybuyer said those with the ability to borrow sustainably and with good employment history and serviceability should be able to borrow.  

“Stronger borrowers create a stronger economy as they help inject investment into other sectors of economy,” Harvey said.

Nicholas Gruen of Lateral Economics said it's a real hardship for some older Australians who are income poor but asset rich.

“The regulations are pretty silly now, requiring lenders to turn down plenty of viable lending,” Gruen said. 
 
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RBA holds interest rate at record low 0.1 per cent at March 2021 meeting

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EXPERT INSIGHT

Australian capital city average dwelling prices rose 2% in February according to CoreLogic and are up 2.6% on a year ago. This is their fastest monthly gain since 2003 and they have now surpassed their September 2017 record high by 0.7%.

Sydney dwelling prices rose a very strong 2.5%, resulting in five months of gains, and are up 2.8% on a year ago. Melbourne prices also rose 2.1%, resulting in four months of gains, but are down -1.3% on a year ago reflecting a -5.6% fall around mid-2020 through the various lockdowns.

Prices in other cities were all up strongly led by Hobart with prices up 2.5% in February and 8.7% through the year, followed by Canberra up 1.9%, Brisbane and Perth both up 1.5%, Adelaide up 0.8% and Darwin up 0.7%. Prices in Hobart, Canberra, Brisbane and Adelaide are all at record highs.

<img alt="" height="794" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/surging_house_prices_oliver.jpg" width="1200">

Regional dwelling prices rose 2.1% in February and 9.4% on a year ago with their relative strength reflecting lower levels of indebtedness and hence less vulnerability to the financial stresses caused by the pandemic driven economic downturn, less exposure to the slump in immigration and increased buyer interest as people seek to relocate from cities as part of a secular trend towards working from home and a greater focus on lifestyle.

Capital city house prices rose 2.3% in February and 3.6% over the last 12 months whereas unit prices lagged with a 1.1% gain in the month and a -0.1% fall on a year ago, with the relative underperformance likely reflecting an ongoing shift in lifestyle preferences towards houses as a result of more working from home and a lifestyle choice and as weak rental conditions made worse by the slump in immigration constrain the inner city unit markets in Sydney and Melbourne. Over the last 12 months unit rents fell -8.0% in Melbourne and -5.3% in Sydney, although there were further signs of stabilisation in February.

The strength in home prices is consistent with the surge in new housing finance commitments over recent months. This rose another 10.5% in January and is now up 44.3% from a year ago. First home buyer finance surged 10.1%mom - and is up a whopping 73% on a year ago - to a new record high although with owner occupier ex first home buyer finance up an even stronger 11.3%, the first home buyer share of new loans slipped from a record 25% to 24.9%. Investor finance is now also surging and rose 9.4%. The ongoing strength in finance commitments points to more solid house price gains in the months ahead although January’s 2% capital city rise may be hard to beat.

Auction clearances are now very strong and sales are running around pre coronavirus levels, although listings are still relatively low. Clearance rates are at levels consistent with 15% or so annual price gains!

What’s driving the surge in home prices?

The combination of reopening unleashing pent up demand, government incentives, the removal of responsible lending obligations, record low mortgage rates, the desire to "escape from the city" and relatively low property listings are all helping to push prices higher with an element of FOMO (or the “fear of missing out” creeping in too. This is after bank payment holidays and Government income support measures averted a sharp fall in prices that would otherwise have followed from the pandemic recession. The combination has more than offset the impact of weak inner city rental markets and the hit to immigration and has brought forward demand from first home buyers and owner occupiers, with investors now starting to jump in too.

Average capital city dwelling prices have now surpassed their September 2017 high, although this masks a wide divergence with: clear record highs in Brisbane, Adelaide, Hobart and Canberra and in average regional home prices; Sydney and Melbourne still down just over 1% from their 2017 highs; and Perth and Darwin remaining well down on their 2014 highs.  

<img alt="" height="806" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/average_prices_record_high_oliver.jpg" width="1200">

Outlook

Australian home prices are likely to rise another 5% to 10% this year and next being boosted by record low mortgage rates, government home buyer incentives and the recovery in the jobs market but the stop to immigration and weak rental markets will likely constrain price gains in inner city areas and units in Melbourne and Sydney. Outer suburbs, houses, smaller cities and regional areas will see relatively stronger gains in 2021.

The phasing down of government incentives and exhaustion of first home buyers will likely see first home buyer demand as a share of housing finance and overall demand peak in the months ahead but they will likely be replaced by rebounding investor demand. Possible increases in 4 year plus fixed rate mortgage rates flowing from the recent surge in bond yields will act as a bit of a dampener but likely only enough to see price growth settle around a 5-10% annual pace.

Shane Oliver is the Head of Investment Strategy and Chief Economist at AMP Capital 
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The strength in home prices is consistent with the surge in new housing finance commitments over recent months

soliver

Housing finance commitments surged another 10.5% to start 2021: Shane Oliver

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Experts and economists are united in their view that the RBA will hold the cash rate this month, with only one prediction for any movements at all in 2021, according to the latest survey from Finder.com.au.

Tony Makin of Griffith University, believes the rate will increase this year due to the economic effects of the COVID-19 vaccination rollout.

“Global economic activity will pick up as countries are vaccinated. Given the expansion in money supplies, other things equal this will put upward pressure on inflation. Otherwise, macroeconomics textbooks need to be rewritten. 

“At the same time, record-breaking levels of public debt worldwide will continue to exert upward pressure on bond yields," Makin said.

Shane Oliver from AMP Capital said that while the economy has recovered faster than expected, the RBA is still a long way away from meeting its inflation and employment goals. 

“A rate hike is still a long way away. 

“That said, the faster than expected recovery will likely see the first hike occur earlier than the RBA's expectation of ‘no increase before 2024’. It could come late next year or early 2023," Oliver said.

Positive sentiment around both housing affordability (3%) and cost of living (3%) reached the lowest level ever recorded since the Finder survey began in 2018.

Employment continued to be the highest indicator measured with 55% expressing positive sentiment, down from its record-high of 73% last month.

Positive sentiment around employment plummeted to 0% in April when the lockdowns first began, but the nation’s stronger-than-expected economic recovery has resulted in a rosier outlook for the job market. 
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Experts and economists are united in their view that the RBA will hold the cash rate this month, with only one prediction for any movements at all in 2021

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