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

Joel Robinson

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

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

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

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

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

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

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

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

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

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

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

NAB bring forward first RBA cut to February 2025

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The Bank of Queensland is among five lenders to have increased their mortgage rates.
BoQ, one of the nation's major regional banks, is increasing variable home loan rates for interest-only owner occupiers and investors by up to 15 basis points.
"Funding costs have significantly risen since February and have primarily been drive by an increase in 30 and 90 day BBSW rates, along with competition for term deposits," said Anthony Rose, Bank of Queensland's acting group executive.
"While the bank has absorbed these costs for some time, the changes announced will help to offset the impact of increased funding costs," Rose said.
The interest rate changes are effective July 2.
BOQ today announced variable home loan rate for owner occupiers (principal and interest repayments) will increase by 0.09 per cent, per annum;
<ul>
<li>
Variable home loan rate for owner occupiers (interest only repayments) will increase by 0.15 per cent, per annum;
</li>
<li>
Variable home loan rate for investors (principal and interest and interest only repayments) will increase by 0.15 per cent, per annum; and
</li>
<li>
Owner occupier and investor Lines of Credit will increase by 0.10 per cent, per annum.
</li>
</ul>
Anthony Rose said the decisions "are always difficult" and BOQ balances the needs of our borrowers and depositors when making changes.
Elsewhere rates in some cases are up by 40 basis points.
It comes as the lenders suggest they can no longer absorb the impact of rising funding costs on net interest margins.
<div>
IMB, the nation's third largest building society, has raised standard variable interest rates by 8 basis points for new and existing home loans.
AMP Bank has hiked rates on some investment products by up to 40 basis points. 
</div>
<div>
Greater Bank and Homestar Finance are also raising some rates by 10 basis points.
</div>
 
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j.ballantyne1990-6AQqhLzZaK

Bank of Queensland raise IO investor rates

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EXPERT OBSERVER
Broad themes and tone of the Minutes are consistent with earlier statements by the RBA. 
The RBA still anticipates that the next move in rates is likely to be up, as stated by the Governor on June 13, but this phrase has been omitted from these Minutes.
The broad themes and tone of the Minutes of the June Board meeting were consistent with earlier statements from the RBA.
The final paragraph in the Considerations for Monetary Policy section was along the lines of the corresponding paragraph in the Decision Statement by the Governor following the June meeting. The key sentence is: “Further progress in the period ahead in reducing unemployment and returning inflation to the target was therefore expected, although this progress was likely to be gradual”.
We note that this differs from the Minutes for April and May, which instead included the statements that “members agreed that it was more likely that the next move in the cash rate would be up rather than down … members also agreed that there was not a strong case for a near-term adjustment in monetary policy”.
We interpret this as a prudent tactic, omitting these statements from the Minutes now to avoid them becoming a key focus for markets. The RBA Governor in his speech of June 13 restated the line “it is likely that the next move in interest rates will be up, not down”, confirming that this remains the RBA’s central case view.
On the global economy, the Minutes note greater uncertainties, including: political developments in Italy; developments in some emerging markets; and the ongoing trade tensions. There is an acknowledgment that “growth in the major advanced economies had eased a little in the first quarter of 2018” but the view remains that “the underlying momentum in these economies had still been consistent with above trend growth”. Importantly, wage pressures are seen as increasing and it is noted that central banks are withdrawing some monetary stimulus.
On the domestic economy, the RBA’s central case view and forecasts are unchanged, “members noted that recent data had been consistent with the Bank’s central case forecast for GDP growth to pick up to be above 3% by the end of 2018”.
The June RBA Board meeting was held the day before the release of the March quarter National Accounts. The Minutes suggest that annual GDP growth was expected to pick up to at least 2.75%. As it turned out, the National Accounts surprised to the high side, with annual GDP growth printing at an above trend 3.1% and non-farm GDP growth a well above trend 3.6%.
For the RBA and other forecasters, the outlook for consumer spending remains a key uncertainty, at a time of high debt levels and weak wages growth. On jobs growth, the RBA expects the current slowdown to be temporary, with the Minutes pointing to the positive forward indicators, which would, in the view of the RBA, suggest a gradual decline in the unemployment rate and, in time, a gradual lift in wages growth.
Lastly, comments on housing were along the lines of earlier statements. In short, the sector is cooling and APRA’s supervisory measures and tighter lending standards are view by the RBA as being helpful in containing the build-up of risks on household balance sheets. As previously, there is also an acknowledgement that “there might be some further tightening of lending standards in the period ahead”, while at the same stating “the average mortgage interest rate on outstanding loans had declined over the previous year”.
We remain of the view that the RBA will be on hold throughout 2018 and 2019. We continue to expect annual GDP growth to be a trend 2.7% for December 2018, moderating to a below trend 2.5% in 2019 as wages growth remains sluggish, the downturn in home building activity accelerates and as global commodity prices ease from current levels, denting national income growth. 
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jrobinson-rf4aSBido9

Next cash rate hike forecast missing from RBA minutes: Westpac's Andrew Hanlan

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Imminent restrictions on lending to heavily indebted borrowers will accelerate a squeeze on borrowing, according to UBS analysts.
UBS has repeated its warning of a potential credit crunch in the Australian economy where house prices would likely fall over a prolonged period across a few years.
This is because the price of money [via record low interest rates] becomes less relevant compared with the supply of money [credit availability] or demand for money — that is through employment, income, population," UBS economist George Tharenou said.
This week he noted about 30% of outstanding mortgage debt was held by borrowers with debts more than six times their income, which meant the flow of total lending going to borrowers with debt-to-income levels of more than six times would previously have been greater than 30% of lending.
Westpac advised recently that the share of loans on the bank’s books with a debt-to-income ratio above six times was about 20%.
UBS suggested this could be well above the new limit required by APRA.
“We expect boards, shareholders and management teams to recommend ‘very high’ debt-to-income be a low 5 to 10% of new lending flow,” Tharenou said.
“The impact of even a generous limit of 20% would likely be a negative for lending growth and credit availability.”
It is the latest warning from the UBS analysts of a potential credit crunch in the wake of the early evidence presented to the royal commission into banking and financial services, 
“This means that the introduction of debt-to-income limits will likely make borrowing for the median home in Australia (let alone Sydney or Melbourne) even more challenging,” Tharenou told The Australian.
He said restricting the amount of credit going towards borrowers with lower incomes could drag house prices in Sydney and Melbourne lower, as loan sizes would no longer support high house prices.
“Even taking into account higher household income in Sydney and Melbourne along with a 20% deposit, on our estimates the median household in Sydney will only be able to afford an $800,000 property, still well below the median house price,” Tharenou said.
UBS's George Tharenou said the credit crunch scenario would clearly be unintended by regulators and policy makers.
A tightening of access to credit for heavily indebted borrowers would also crimp the ability for property investors to enter the market. About 20% of investors own two properties, and 10% own three or more. About half of all investment properties are owned by investors with multiple properties.
“Limits could well spell the end of widespread multiple property investing in Australia — at least for those investors who maintain an owner-occupier mortgage and geared investments,” Tharenou said.
 
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jchancellor-FAypfDUnLy

UBS see heavily indebted borrowers squeezed in pending credit crunch

GDP annual growth stronger than expected: RBA June minutes

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EXPERT OBSERVER
While RBA Governor Lowe reiterated the mantra that the next move in interest rates is likely to be up, he also said any increase “still looks to be some time away” and indicated that to raise rates the RBA is looking for reduced labour market slack, faster wages growth and increased confidence inflation is picking up. At present there is no sign of reduced labour market slack and this is likely to continue to weigh on wages growth. 
We remain of the view that with trend growth likely to be remain subdued, bank lending standards tightening, Sydney and Melbourne house price falls having further go that the RBA won’t start raising rates to 2020 at the earliest and in the meantime the next move being a cut can’t be ruled out.
Australian data was back to being a bit on the softish side. Business confidence slipped a bit in May but remains solid, consumer confidence remains stuck around long term average levels, housing finance continued to slow in April with tighter bank lending standards pointing to more weakness to come and jobs data was a bit soft in May.
Employment growth was weaker than expected with full time jobs falling and while unemployment fell slightly this was because of a decline in participation. Meanwhile underemployment rose slightly over the last three months to 8.5% so total labour market underutilisation remains very high at 13.9%.
In Australia, ABS March quarter data is expected to confirm a 1% or so decline in home prices (Tuesday) consistent with already released private sector surveys and population growth data (Thursday) for 2017 is expected to show continued strength of around 1.6% year on year with Victoria the strongest on the back of high immigration levels and interstate migration. The minutes from the RBA’s last board meeting (Tuesday) are likely to confirm that the RBA remains comfortably on hold.
<a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
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soliver-smf6LQXgW9

RBA won't start rising rates until 2020 and a cut can't be ruled out: Shane Oliver

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Banks have put the brakes on lending to people with small deposits, according to new research from RateCity.
Banks have slashed the number of mortgage products with a maximum loan-to-value ratio (LVR) of 95% in the past three years. 
Fewer than a third of home loans in the RateCity database now offer lending up to a maximum of 95% of the value of the property.
That’s down from 76% of all loans on offer in early 2015, in line with lending guidelines by the Australian Prudential Regulation Authority (APRA), who want banks to loan with small deposits to be the exception, rather than the rule.
Sally Tindall, spokesperson at RateCity, said the banks were actively looking for deposits of 20%, if not more.
“For Australians battling to crack into the highly competitive home loan market, low-deposit loans have been a doorway in," Tindall suggested.
"But the rules have changed and now borrowers that might have been given the green light three years ago are starting to be turned away."
RateCity research shows that upgrading from a 5% deposit to a 20% deposit on a $500,000 mortgage will require a buyer to stump up an extra $75,000 in cash.
“These new LVR requirements will set a lot of potential buyers back, because they just don’t have access to that kind of money.
“But the alternative is worse. Stretching yourself thin at record low interest rates can be a recipe for disaster.
“It’s been over seven years since we’ve experienced an RBA rate hike and people have become complacent. These new LVR rules will sharpen the focus who is serious about securing housing finance,” Tindall said.
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jonathanchancellor-7SQnKwU6yx

Banks tighten the screws on small-deposit home loan borrowers

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EXPERT OBSERVATION
Westpac's Andrew Hanlan has cited two key events this week, the Central Bank forum being hosted by the ECB and in Australia the RBA minutes.
<iframe src="https://player.vimeo.com/video/275542798" frameborder="0" width="420" height="350"></iframe>
Real GDP grew by 1.0% in the March quarter, lifting annual growth to 3.1% - an above trend outcome, with trend judged to be 2.7%. Non-farm GDP grew by 3.6% over the year, the strongest annual outcome since 2012. These results bring output growth more into line with that for employment, which increased by 3.5% over the year.
<img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/Justin_Images/JuneRealGDOGrowth.jpg" alt="Ralk" title="GSP">
Economic conditions have been supported by a combination of global and domestic forces, leading to conditions becoming more synchronised across the state economies, namely:
<ol>
<li>The global backdrop is more favourable. World growth accelerated in 2017 to 3.8%, up from 3.2%, the strongest pace since 2011. We expect world growth to hold around this 3.8% pace in 2018, supported by the US. However, conditions in China are likely to moderate.</li>
<li>Commodity prices are up off the lows of late 2015, improving cash flows for miners and boosting government tax revenues. Going forward, we expect commodity prices to moderate as China slows and supply expands.</li>
<li>The mining investment drag is greatly diminished, albeit not quite complete.</li>
<li>Non-mining investment is trending higher, led by construction activity, to meet the needs of a fast growing population. Notably, total business investment turned the corner in 2017, up 6%, following four years of decline.</li>
<li>Public demand, a quarter of the economy, grew by a brisk 5.5% over the year, directly adding 1.3ppts to activity, with additional positive spill-over effects. Investment in an upswing (centred on transport infrastructure) and additional resources are being directed to health.</li>
<li>Exports are a growth driver, adding 0.9ppts to activity over the year, with strength in LNG (expanding capacity) and services (albeit current estimates suggest a recent consolidation).</li>
</ol>
Weaknesses remain, particularly around the consumer and housing. The consumer is vulnerable at a time of weak wages growth, high debt levels and slipping house prices. The housing sector is cooling as lending conditions tighten, with prices easing back from recent highs. Auction clearance rates in Sydney and Melbourne have slipped further to now be at below average levels.
<img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/Justin_Images/JuneGDPContrib.jpg" alt="June " title="GDP contr">
Consumer spending is choppy (up only 0.3% in the March quarter) and ‘slightly below trend’ (up 2.9% over the year). Even the current pace of consumer spending appears unsustainable over the forecast period – we expect a slowing to 2.5% for 2018 and 2019. Spending has been supported by a drop in the savings rate, declining to 2.1% from 4.0% a year ago, with the scope for a further run-down diminished. In addition, the turnaround in housing price growth, from 11.3%yr nationally a year ago to –1.5%yr currently, could see negative spill-overs for consumer demand, although ‘wealth effect’ boosts look to have been very muted through the price upturn (see p14).
Total labour income grew by a robust 5.1% over the past year, but this was largely reliant on a very strong hiring burst that looks to have been temporary. Wages, as measured by average compensation of non-farm employees, grew by only 1.6% over the year, to be flat in real terms. Employment increased by 3.5% in the year to the March quarter 2018, twice population growth, in part a catch-up following a hiring pause around the July 2016 Federal election. Jobs growth has subsequently slowed in 2018, to 1.2% annualised for the initial five months - for the full year we expect an increase of around 1.8%.
<img src="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/image/bulletin/Justin_Images/JuneHHLabourINc.jpg" alt="JuneHh" title="Labour">
As to home building activity, this contracted by 5.0% in 2017, consistent with the decline in dwelling approvals from the historic highs of 2016, largely centred on high rise projects. This downturn has further to run with the contraction accelerating into 2019 after a near-term consolidation early in 2018. Large increases in new supply and a marked slowdown in sales to foreigners are weighing on the outlook for residential building.
In summary, key positives around pubic demand, business construction investment and exports will provide a solid base for overall economic activity However, with weaknesses in consumer spending and housing we expect GDP growth to moderate to 2.7% in the year to December 2018 and then slip to a below trend 2.5% for December 2019.
Andrew Hanlan is senior economist for Westpac and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/andrew-hanlan/3/222/430" target="_blank">here</a>.
 
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Central banks in focus this week: Westpac video update

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This week Reserve Bank of Australia governor Philip Lowe gave <a href="https://www.rba.gov.au/speeches/2018/sp-gov-2018-06-13" target="_blank">one of the more revealing speeches</a> one is likely to hear from a central banker.
It touched on many of the recurring themes in this column – sluggish wage growth, crazy levels of household debt, persistently low inflation, a long period of low interest rates, and a chunk of the country feeling they are not sharing in national prosperity.
But, most strikingly, Lowe hinted that the RBA’s official interest rate – the cash rate – might not rise until wage growth returns to the long-term trend.
Lowe began with the following familiar fact:
Over recent times, wages growth around the 2% mark has become the norm in Australia. Some time back, the norm was more like 3 to 4%.
He then turned to a range of possible explanations for this sluggish wages growth. A leading factor is that there is still slack in the labour market, with unemployment stubbornly stuck around a relatively high 5.5%. Relative to what? That, of course, is the key question.
Lowe suggested that 5% is the traditional estimate used to gauge full employment in Australia. But it could be lower, noting that:
...in a number of other countries, estimates of the unemployment rate associated with full employment are being revised lower as wage increases remain subdued at low rates of unemployment.
Then there’s underemployment. Lowe observed:
… around one-third of workers work part-time, with most of these people wanting to work part-time for personal reasons [but] around one-quarter would like to work more hours than they do; on average, they are seeking an extra two days a week … This suggests an overall labour underutilisation rate of 8¾%.
Turning to technology, Lowe pointed out that recent technological advances have tended to be in information technology, rather than large new machines. Moreover, a relatively small slice of successful firms in a few sectors of the economy tend to adopt this technology.
Those firms do well – as do their workers. But lagging firms that cannot successfully adopt these technologies get put under pressure. According to Lowe’s thinking, those firms respond by keeping a lid on wages to remain competitive.
All of this has implications for the real value of debt and for consumer spending, As Lowe put it:
Many people who borrowed expected their incomes to grow at something like the old rate rather than the current rate.
Well, indeed.
The really candid part came when Lowe concluded with what this meant for monetary policy. It is worth quoting him in full:
Any increase in interest rates, however, still looks to be some time away. The [RBA] board will want to have reasonable confidence that inflation is picking up to be consistent with the medium-term target and that slack in the labour market is lessening. At this stage, a sustained pick-up in inflation to around the midpoint of the target range is likely to require faster wages growth than we are currently experiencing. There are reasonable grounds to expect that this increase in wages growth will occur. But, for the reasons I have spoken about today, this increase is likely to be only gradual. Given this, there is not a strong case for a near-term adjustment in monetary policy.
This is a striking statement. First, central bankers are usually intentionally vague about how they make policy. Not so Lowe in this speech. He essentially said there would be no rise in interest rates until wages growth is above 3%. Wow!
My first reaction, after the shock at his candidness wore off, was “that could be a while”. But if that’s how the RBA is really thinking about this, then predictions of no rate rise this year are not only solid, but you can lock in a 1.5% cash rate for 2019, too.
The factors that could boost wages growth enough to get back to historical levels are slow-moving – centred around changes in labour-market policy and technology.
This all contrasts rather starkly with the United States. On Wednesday the United States Federal Reserve <a href="https://www.federalreserve.gov/monetarypolicy/files/monetary20180613a1.pdf" target="_blank">raised official interest rates by 25 basis points</a> – the second such bump this year. The Fed also signalled two more hikes this year.
In the US unemployment is <a href="https://ycharts.com/indicators/unemployment_rate" target="_blank">down to 3.8% and inflation is picking up</a>. Fed chair Jay Powell needs to raise rates steadily to avoid inflation being too high, as opposed to too low.
<img src="https://counter.theconversation.com/content/98240/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">I bet Governor Lowe wishes he had that problem to navigate.
<a href="https://theconversation.com/profiles/richard-holden-118107" target="_blank">Richard Holden</a>, Professor of Economics and PLuS Alliance Fellow, <a href="http://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a>
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/vital-signs-poor-wage-growth-means-interest-rates-could-be-low-for-a-long-time-98240" target="_blank">original article</a>.
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Poor wage growth means interest rates could be low for a long time: Richard Holden

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EXPERT OBSERVATION
As expected, the Reserve Bank Board decided to leave the cash rate at 1.5% at its June policy meeting.
The Governor’s decision statement also showed little substantive change although there were some notable shifts in the discussion around housing and labour markets.
A subsequent speech by the RBA Governor added more colour, indicating that while the economy was still moving in the right direction, the outlook for consumers, labour markets and wages growth remained uncertain and progress towards the Bank’s expected lift in incomes and inflation would be slow.
With labour market updates continuing to show job gains moderating and the economy’s ‘full employment’ unemployment rate likely to have moved lower, progress could be very slow indeed – more ‘glacial’ than ‘gradual’.
The key parts of the June decision statement were unchanged from May.
The closing paragraph was identical, retaining the line that “Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual.” The core narrative of the statement was also essentially unchanged: a strengthening global economy with financial conditions expansionary (notwithstanding recent events and some increase in short term rates); an Australian economy tracking towards growth a little above 3%; consumers a continuing source of uncertainty but indicators pointing to a gradual reduction in unemployment and the outlook pointing to a gradual pick-up in inflation.
Where there were changes, these tended to be mainly ‘housekeeping’ in nature, either incorporating recent developments, rolling commentary to reflect the local data calendar or simply the passage of time.
Where shifts went a little further was around housing and labour markets.
The housing slowdown in Sydney and Melbourne was noted, as per May. More significantly, the statement notes a slowdown in investor housing credit, retaining a line that “APRA’s supervisory measures and tighter credit standards have been helpful in containing the build-up of risk in household balance sheets” but adding that “while there may be some further tightening of lending standards, the average mortgage interest rate on outstanding loans is continuing to decline.”
Together this is a strong indication that, to the extent that we are seeing an additional tightening in lending standards weigh on housing markets, the Bank views this as part of an important ‘de-risking’ exercise that is likely to have few material spillover effects to the wider economy.
That looks to be an optimistic assessment in our view. Firstly, rates and conditions on the ‘marginal’ loan are more important for market conditions.
Secondly, the slight decline in the average mortgage rate ignores a likely rise in average repayments as borrowers shift from ‘interest only’ to ‘principal and interest’ loans.
And thirdly, the discussion ignores potential negative spillovers via confidence and wealth effects (see the ‘Aus consumer incomes, wealth and demand’ article in our latest monthly Market Outlook report for a more detailed discussion).
The Governor’s statement carried a little less conviction around the labour market, the unemployment rate described as “little changed at around 5½ per cent for much of the past year” compared to last month when it was described as having “declined over the last year but … been steady … for some months” with a comment contrasting the improving labour market with low wages growth cut back to simply observe “wages growth remains low”.
While we warn against ‘over-reading’ these sorts of language changes we note that the RBA’s official forecasts currently have only a modest decline in the unemployment rate – down 0.25% to 5.25% by mid 2020 – and that the ‘full employment’ level below which conditions would be expected to see wage inflation pick up is thought to be somewhat lower.
This more circumspect assessment of prospective labour market conditions showed through in a more recent speech from the Governor on June 13. This reiterated the Bank’s general view that the economy is moving in the right direction, noting the slightly stronger than expected March quarter GDP result.
The Governor also repeated the broad expectation that “the next move in interest rates will be up, not down”. However, that line was more heavily qualified, with particular respect to the focus of the speech: uncertainties around labour markets and wages. Many conditions need to be met before the Bank would contemplate a move: the economy would need to continue “moving in the right direction”; household incomes would need to be “growing more quickly than they are now”; labour market slack would need to be lessening; and the Bank would need to be reasonably confident that inflation is moving back towards target. Most of this would require wages growth faster than the 2% pace we are current experiencing.
The RBA is likely uneasy about the latest labour market data.
Official figures continue to show a loss of momentum in jobs growth with utilisation flattening at levels indicating significant slack. Private business surveys suggest hiring should hold up but the latest Westpac Consumer Sentiment survey showed a notable weakening in unemployment expectations.
On wages, growth may have troughed but evidence of a meaningful lift remains scant. Certainly, a return to 3% wage growth looks a long way off.
We continue to expect policy to be unchanged in 2018 and 2019 and suspect the Governor’s resolve will be sorely tested by a return to sub-par growth against a backdrop of little or no progress towards its labour market, wage and inflation goals. 
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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RBA is optimistic about the spillover effects of tightening in housing lending standards: Westpac's Matt Hassan

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EXPERT OBSERVER
Borrowers continue to choose variable rate home loan products as demand for fixed rate home loans fell for the eigth consecutive month.
Variable rate home loans accounted for over 82% of all home loans written throughout May 2018 – up over 2% from the month prior, and almost 7% higher than the 12-month average. This trend will continue as borrowers develop apathy towards the Reserve Bank of Australia’s stagnant cash rate.   Indeed, we continue to see borrowers opt for the flexible nature of variable rate home loans which may offer a redraw facility, offset accounts and the ability to make extra repayments. These features are not typically associated with fixed rate loans.
Click here <a href="https://www.propertyobserver.com.au/images/2018/6/14/choice1.jpg" target="_blank">to enlarge.</a>
<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/2018/6/14/choice1.jpg" alt=""> While a fixed rate product provides repayment certainty, variable home loan rates have been relatively stable for a prolonged period of time giving borrowers little incentive to fix. This week’s Housing Finance data from the Australian Bureau of Statistics found that 52,116 home loans were approved throughout April, down 1.4% from the previous month. Unsurprisingly, the value of investment loans dipped somewhat, falling 0.9% to $10.7 billion in April, which could reflect tighter lending standards and serviceability policies. However, May data may show an increase in investment loans following APRA lifting the cap on investor loan growth at the end of April. ABS data also shows the value of owner-occupied housing loans in April rose just 0.2% to $20.9 billion.
Click here <a href="https://www.propertyobserver.com.au/images/2018/6/14/choice2.jpg" target="_blank">to enlarge.</a>
<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/2018/6/14/choice2.jpg" alt="">   The data also showed, in original terms, the number of first home buyer commitments as a percentage of total owner-occupied housing finance commitments rose to 17.6% in April 2018 from 13.7% in January 2018.
This increase is significant and first home buyers seem to be propping up the market.     Looking ahead, I expect to see a combination of factors, such as historically low interest rates, easing property prices and access to FHOGs, to maintain home loan demand - whether variable or fixed - but preparation is key.   With increased scrutiny on lending practices, buyers looking to secure housing finance should take practical steps to improve their serviceability and speak to their local mortgage broker, who can help take the guesswork out of the process and find the right financial product for their personal circumstances.
Susan Mitchell is the CEO of Mortgage Choice.
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