<p><a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> has lodged plans for a $750 million, three-tower mixed-use precinct that would complete the long-running redevelopment of Carlton's former Carlton United Breweries site.</p>

<p>The proposal at <a href="https://www.apartments.com.au/new-apartments/185-195-queensberry-street-carlton-vic-3053">46-78 Bouverie Street and 185-195 Queensberry Street</a> spans a 6,468 sqm site, the last remaining undeveloped parcels within the former brewery's 2007 masterplan.</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the development will comprise two purpose-built student accommodation towers and a third build-to-sell apartment tower above a shared commercial podium and basement.</p>

<p>Across the three towers, SP Setia is proposing 606 build-to-sell apartments and 1,499 student accommodation units containing 2,009 beds.</p>

<p>The apartments will sit in the tallest tower, which will rise nearly 200m and 55 storeys. It will become&nbsp;one of the more substantial new build-to-sell apartment projects at the northern edge of Melbourne's CBD.</p>

<p>The apartment mix is weighted toward smaller inner-city product, with 188 studios, 206 one-bedroom apartments, 192 two-bedroom apartments and 20 three-bedroom apartments</p>

<p><img alt="First look: SP Setia plans three-tower finale for Carlton’s former CUB precinct" data-entity-type="file" data-entity-uuid="8271bc87-1b0a-41b7-ac73-a425ee375261" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/3_2.png?VersionId=G4lw23o90B1boX4k4dj7rdz2ZEajS9wy" /></p>

<p>Part of the precinct will be a large-scale&nbsp;3,684 sqm supermarket and a further 2,198 sqm of speciality retail, creating close to 5,900 sqm of new commercial space within the precinct.</p>

<p>But one of the biggest components of the proposal is what sits between the buildings.</p>

<p>Around 4,650 sqm, or roughly 72 per cent of the site, will be publicly accessible open space, incorporating plazas, pedestrian connections, landscaped laneways and retail spill-out areas.</p>

<p>The ground plane is intended to finally complete pedestrian connections envisaged when the CUB masterplan was first approved nearly two decades ago, stitching together Victoria Street, Queensberry Street, Bouverie Street and Swanston Street through the former brewery precinct.</p>

<p>Urbis said the development would "complete the CUB precinct", with the public realm providing important north-south and east-west connections through what is currently the final undeveloped portion of the masterplanned site.</p>

<p>SP Setia is also exploring a new linear park within the Bouverie Street road reserve, with the concept to be developed further with the City of Melbourne through the planning process.</p>

<p>The proposal is being pursued through the Victorian Government's Development Facilitation Program under Clause 53.23 for significant residential development with affordable housing.</p>

<p>The planning report acknowledges the proposed heights exceed those contemplated under the original Comprehensive Development Plan and masterplan, but argues the built-form context has changed considerably over the past two decades.</p>

<p>Urbis said the three towers would instead create a stepped transition between Carlton and the Hoddle Grid, rising progressively from the 94.1-metre Tower One along the Queensberry Street edge to the 199.44-metre Tower Three closer to the established CBD-scale buildings to the south.</p>

<p><img alt="SP Setia" data-entity-type="file" data-entity-uuid="e885a07a-592c-40fc-bf82-e6dbaf32da54" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.52.24%E2%80%AFAM.png?VersionId=7s_ErUkSKAdY1mAWp3GRZgMNCGtwhk5m" /></p>

<p>SP Setia plans to deliver the development across three stages.</p>

<p>Stage One would deliver the basement, podium and retail areas for the entire precinct alongside the first student tower. Tower Two would follow in Stage Two, before the 606-apartment Tower Three is delivered as the final stage.</p>

<p>If approved and delivered, the project would close out a redevelopment process that has been underway since the former brewery masterplan was approved in 2007, adding more than 2,600 student beds and apartments to a precinct already home to Swanston Central, the Barak Building, RMIT Design Hub and several large student accommodation developments.</p>

<p>&nbsp;</p>

<p>&nbsp;</p>


Joel Robinson

SP Setia plans three-tower finale for Carlton’s former CUB precinct

<p>Melbourne developer Lowe Living is seeking to add to its growing bayside apartment pipeline, filing plans for a boutique eight-residence development in tightly held Middle Park.</p>

<p>Lowe Living, which has built much of its development portfolio across Melbourne's affluent bayside and south-east suburbs, is behind the plans for the 730 sqm site at <a href="https://www.apartments.com.au/new-apartments/123-125-erskine-street-middle-park-vic-3206">123-125 Erskine Street</a>, just off Armstrong Street and within the Armstrong Street Neighbourhood Activity Centre.</p>

<p>The developer is seeking approval for a five-storey residential building above two basement levels, with just eight large-format apartments and 18 car spaces.</p>

<p>“This is a deliberately very different proposition for us,"&nbsp;Tim Lowe, Co-Founder of Lowe Living, said.</p>

<p>"Eight residences is exceptionally boutique, but that's precisely what this site calls for.</p>

<p>“There is a strong community in Middle Park and the surrounding suburbs who have spent decades building a life here. They no longer want the maintenance of a large period home, but they aren't prepared to compromise on space, quality or location. We think there is a real opportunity to capture that hyper local market. A site like this rarely comes to market.”</p>

<p><img alt="Lowe " data-entity-type="file" data-entity-uuid="875fe572-0f14-4d90-9e11-55b28dd07731" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.42.49%E2%80%AFAM.png?VersionId=GDNQRv9BfpR9r1zkZ5UDyUM4ZvpIksut" /></p>

<p>The low-density proposal has been designed by Cera Stribley and is being progressed through the Victorian Government's Great Design Fast Track pathway, having already secured eligibility from the Minister for Planning.</p>

<p>The Office of the Victorian Government Architect supported its eligibility after finding the proposal demonstrated consistency with the program's seven design principles, while the project's financial feasibility has also been independently confirmed by Invest Victoria.</p>

<p>The project is targeting the downsizer market, with the planning documents describing the homes as larger-format residences and noting the two penthouses could otherwise have been configured as four separate apartments.</p>

<p><img alt="Lowe 2" data-entity-type="file" data-entity-uuid="60ab0987-2da6-4175-adac-315dcf6053c6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.43.15%E2%80%AFAM.png?VersionId=bOCPH0B2MFwlmaRW.TTCF9TzyifgVoQI" /></p>

<p>The site has dual frontage to Erskine Street and Canterbury Place and currently comprises a collection of commercial buildings used as offices, including a former heritage bakehouse, a former stable, a later gabled addition and a central courtyard.</p>

<p>It sits within the Commercial 1 Zone and the Armstrong Street Commercial Precinct heritage overlay, with the existing property classified as a contributory heritage place.</p>

<p>Heritage has subsequently played a significant role in Cera Stribley's design.</p>

<p>The front section of the former bakehouse facing Erskine Street will be retained, including its return walls, street-facing hipped roof and chimneys, while the Erskine Street façade and part of the western return wall of the former stable will also be incorporated into the new development.</p>

<p>Levels four and five will be set back five metres from the retained stable façade, while bricks removed through demolition are proposed to be salvaged and reused within the new building where possible.</p>

<p><img alt="Lowe 3" data-entity-type="file" data-entity-uuid="e97927a9-a2de-4a0f-83b6-65451238abfa" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.43.06%E2%80%AFAM.png?VersionId=VR44AChLrX9q1XPB9GvVQV.ALXXbe4gC" /></p>

<p>Rather than presenting as a single five-storey building to Erskine Street, Cera Stribley has broken the development into a series of distinct forms.</p>

<p>A three-storey infill element will sit between the retained bakehouse and stable façades, with the upper levels recessed behind the heritage fabric. Canterbury Place will similarly feature two three-storey podium forms, separated by a central pedestrian accessway, before the upper two levels step back from the street.</p>

<p>A pedestrian through-link will run through the centre of the project between Erskine Street and Canterbury Place, creating entrances from both sides of the site and introducing landscaping and communal areas through the ground plane.</p>

<p>Landscape architect Acre has designed planting across the ground level, private terraces and upper levels, including a feature canopy tree at level three and integrated planting and arbours across the level four terraces. Five existing Erskine Street trees are proposed to be retained.</p>

<p>Sustainability is also a significant component of the Great Design Fast Track application. The apartments are targeting an average eight-star NatHERS rating, with no residence below 6.5 stars, while the project has achieved a 75 per cent BESS score. Seven of the eight apartments are designed for cross-ventilation, with the remaining residence using mechanically assisted natural ventilation.</p>

<p>The plans also incorporate an 8kWp rooftop solar system, a 5,000-litre rainwater tank and infrastructure allowing future electric vehicle charging for every residence.</p>

<p>Lowe has a strong portfolio across Melbourne's blue-chip suburbs. They recently launched <a href="https://www.apartments.com.au/new-apartments/jardin-house-by-lowe-living-camberwell-335-camberwell-road-camberwell-vic-3124">Jardin House by Lowe Living</a> in Camberwell, their first development in the Stonnington LGA.</p>


Lowe Living unveils Middle Park apartment development

<p data-end="288" data-start="269"><strong data-end="288" data-start="269">Article summary</strong></p>

<ul data-end="888" data-start="289">
	<li data-end="442" data-section-id="8tsh6o" data-start="289"><strong data-end="374" data-start="291">DVB Projects is preparing to launch its second Gold Coast apartment development</strong>, with demolition now underway at 137 Old Burleigh Road, Broadbeach.</li>
	<li data-end="573" data-section-id="1nyxl3e" data-start="443"><strong data-end="513" data-start="445">The 34-level tower will comprise just 49 ultra-luxury residences</strong>, including half-floor, full-floor and penthouse apartments.</li>
	<li data-end="717" data-section-id="oiyimj" data-start="574"><strong data-end="646" data-start="576">The launch follows strong demand at DVB's nearby Sea Glass project</strong>, which is more than 50 per cent sold and currently under construction.</li>
	<li data-end="888" data-section-id="epk9o9" data-start="718"><strong data-end="787" data-start="720">The development adds to the transformation of Old Burleigh Road</strong>, with premium beachfront apartment projects continuing to reshape the tightly held Broadbeach strip.</li>
</ul>

<p data-end="1011" data-start="790"><a href="https://www.apartments.com.au/developers/dvb-projects">DVB Projects</a> is preparing to launch its second Gold Coast apartment development, with demolition now underway on the Broadbeach site as the Sydney developer moves closer to bringing the ultra-luxury project to market.</p>

<p data-end="1296" data-start="1013">The 34-level tower at <a href="https://www.apartments.com.au/new-apartments/137-old-burleigh-road-broadbeach-qld-4218">137 Old Burleigh Road</a> will comprise just 49 residences, ranging from half-floor apartments through to full-floor homes and a penthouse. The launch follows the strong sales performance of DVB's nearby Sea Glass development. More than half of the apartments at Sea Glass, on the other side of Broadbeach, have been snapped up, well ahead of its late 2027 completion</p>

<p data-end="1296" data-start="1013"><img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="2944b4be-c84e-4b54-8dc1-c712e76704c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E02_Exterior_Street%20Level%20Entrance.jpg?VersionId=YoNig7pRdrE3HCue7sUj78LzJteeQf3H" /></p>

<p>The start of demolition at 137 Old Burleigh Road signals DVB Projects’ underlying confidence in the Gold Coast’s luxury beachside apartment sector.</p>

<p>“We see the Gold Coast as one of the most compelling lifestyle markets in Australia, particularly at the premium end where demand continues to deepen,” said Dean Brown, Managing Director of DVB.&nbsp;</p>

<p>“This project has been carefully designed to respond to that demand - delivering large-format residences with a level of quality, privacy and amenity that is still relatively rare in the apartment market on the beachside."</p>

<p>Brown says the site itself is "exceptional."</p>

<p>"Old Burleigh Road is one of the most tightly held beachfront strips, and opportunities to deliver a project of this scale and calibre in this location are extremely limited.”</p>

<p><img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="398f377a-c037-455e-9250-0c5e0d84c35b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/I12_FF%20Balcony.jpg?VersionId=NwOiRWGMubR1c8wthuEfggklcja7al9." /></p>

<p>The project will comprise 40 half-floor residences of approximately 260 sqm, alongside eight full-floor residences spanning around 524 sqm.</p>

<p>A single penthouse will crown the building, featuring a private pool, barbecue area, indoor gym and dedicated entertaining spaces.</p>

<p>Residents will have access to a resort-style suite of amenities, including a 20-metre pool with daybeds, a gymnasium, hot and cold plunge pools, a sauna, and private residents’ lounge and dining facilities.</p>

<p><img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="d1642bb0-9a66-4427-a022-dfc0988c6287" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/A02_Pool%20to%20View.jpg?VersionId=c0IXPyn_Gp_Kn3XCwzMrqIVkAdCEwVXP" /></p>

<p>Sales agent Todd Matheson, of <a href="https://www.apartments.com.au/project-marketer/pezet-matheson">Pezet Matheson</a>, which is marketing both 137 Old Burleigh Road and Sea Glass, said 137 Old Burleigh Road would address a clear gap in the market for genuine luxury products.</p>

<p>“There are very few opportunities on the Gold Coast where buyers can secure a residence of this size and quality in a new building,” Matheson said.</p>

<p>“What we’re seeing is a growing cohort of downsizers and interstate buyers who still want space - they’re not willing to compromise on living area, entertaining or finishes.</p>

<p>“This project has been designed with that buyer in mind. It offers the scale of a home, combined with the convenience and security of apartment living, in one of the coast’s most desirable positions.”</p>

<p><img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="59aae0ca-5639-4320-8aca-d0bf60f48e43" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E01_Exterior%20Hero.jpg?VersionId=DS8Zfy2WtgUEtdfe0TEUuf1W1GfcZq8S" /></p>

<p>Located on a 1,156 sqm site one block from the beachfront, the development will replace an ageing walk-up building and is expected to contribute to the ongoing transformation of the Old Burleigh Road strip into one of the Gold Coast’s most prestigious residential corridors.</p>

<p>With the development moving into the delivery phase, 137 Old Burleigh Road is slated to hit the market later this year.</p>

<p>[smartcode_project_cta:default project_id=145141]</p>


DVB Projects to launch second Broadbeach apartment tower as demolition commences

<p><a data-end="327" data-is-only-node="" data-start="250" href="https://www.apartments.com.au/developers/norus-projects" rel="noopener" target="_new">Norus Developments</a> has lodged plans for a new apartment development in Clayton that would add further momentum to the suburb's emerging Green Street corridor.</p>

<p>Plans have been lodged for the consolidated site at <a href="https://www.apartments.com.au/new-apartments/1359-1365-centre-road-clayton-vic-3168">1359-1365 Centre Road</a>, where Norus is seeking approval for 218 apartments across a 12-storey apartment building designed by <a href="https://www.apartments.com.au/architects/life-architecture-and-urban-design">Life Architecture</a>.</p>

<p>The proposal sits within the Clayton Major Activity Centre at the threshold of the planned Green Street corridor, a landscaped pedestrian connection intended to improve links through the precinct towards Clayton Railway Station.</p>

<p>The development would replace the site's existing collection of low-scale residential and commercial buildings with a single consolidated building, introducing significantly greater housing density to this part of Centre Road.</p>

<p>A retail tenancy is proposed at ground level to activate the Centre Road frontage, accompanied by transparent street interfaces and landscaping intended to create a more pedestrian-focused edge to the development.</p>

<p><img alt="First look: Norus Developments plans landscape-led apartment project for Clayton’s emerging Green Street" data-entity-type="file" data-entity-uuid="0a5a763a-d9e9-4253-af2f-88008de27ebf" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Clayton%20a.png?VersionId=S2WJJbat1XVkZwB9SnYtygirXgWHiklX" /></p>

<p>The building has been designed with stepped massing and upper-level setbacks to manage its transition towards surrounding residential properties. The planning report describes the approach as one that integrates the building into the landscape rather than treating landscaping as a secondary element.</p>

<p>"A strong landscape and public realm strategy underpins the proposal," Urbis states in the planning report.</p>

<p>"Public benefits include an affordable housing contribution, a new pocket park, generous landscaped setbacks, deep soil planting and integrated Water Sensitive Urban Design."</p>

<p>The report adds that these elements are intended to create "a permeable, pedestrian-focused ground plane that enhances walkability, supports urban cooling and reinforces the emerging Green Street character."</p>

<p>Biophilic and passive design principles extend through the residential levels, with planting, daylight, natural ventilation and views towards landscaped areas forming part of the amenity strategy.</p>

<p>Parking would be concentrated away from the public realm, with 145 car spaces proposed from the rear laneway rather than dominating the Centre Road frontage.</p>

<p>The proposal follows an extensive pre-application process with the City of Monash. Three formal meetings were held between the project team and Council from December 2025 to March 2026, with the scheme evolving through several concept iterations before the current design was lodged.</p>

<p>The project arrives as Clayton prepares for substantial change around its established activity centre and the wider Suburban Rail Loop precinct. Its position on Centre Road places the development within an existing concentration of shops, services and public transport, while the Green Street connection is intended to strengthen pedestrian access towards Clayton Railway Station.</p>


First look: Norus plans landscape-led apartment project for Clayton’s emerging Green Street

<p><a href="https://www.apartments.com.au/developers/gardner-vaughan-group">Gardner Vaughan Group</a> has officially commenced construction on Bronze on Chevron, celebrating the sod turning of its first-ever Gold Coast development and marking a significant milestone in the company's continued expansion across South East Queensland.&nbsp;</p>

<p>Following the successful delivery of premium residential developments throughout Brisbane and the Sunshine Coast, <a href="https://www.apartments.com.au/new-apartments/bronze-on-chevron-8-mawarra-street-chevron-island-qld-4217">Bronze on Chevron</a> represents Gardner Vaughan Group's entry into the Gold Coast market. Bronze will deliver 119 one, two, three and four-bedroom apartments above two ground-level retail tenancies.</p>

<p>[smartcode_project:default project_id=107520 project_image_fid=367193]</p>

<p>The recent sod turning ceremony was attended by Deputy Mayor Mark Hammel, President of the Surfers Paradise Surf Life Saving Club, Cassandra Sedgman, project consultants, purchasers, project partners and invited guests to celebrate the commencement of construction.&nbsp;</p>

<p>Gardner Vaughan Group Chief Executive Officer Simon Betteridge said Bronze on Chevron represented an exciting new chapter for the business.&nbsp;</p>

<p>"We've spent almost four decades building homes that respond to the way people want to live, and we're excited to bring that experience to <a href="https://www.apartments.com.au/developments/chevron-island-qld-4217">Chevron Island</a>," Betteridge said.</p>

<p>"Bronze on Chevron is particularly significant because it marks Gardner Vaughan Group's first development on the Gold Coast following many successful projects across Brisbane and the Sunshine Coast."</p>

<p>[smartcode_project:default project_id=107520 project_image_fid=367183]</p>

<p>Betteridge said the ground breaking is a proud moment for the&nbsp;team and their purchasers, who can now see their future homes beginning to take shape.&nbsp;</p>

<p>"As both developer and builder, we're able to oversee every aspect of the project from design through to construction, ensuring the quality and attention to detail Gardner Vaughan Group has become renowned for."&nbsp;</p>

<p>Designed by acclaimed architectural practice <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker</a>, Bronze on Chevron has been thoughtfully designed to complement Chevron Island's evolving streetscape while embracing its relaxed coastal lifestyle.</p>

<p>The development will offer generous residences with refined interiors, premium finishes and resort-style amenities, with completion anticipated in early 2029.&nbsp;</p>

<p>[smartcode_project_cta:default project_id=107520]</p>


The development will offer generous residences with refined interiors, premium finishes and resort-style amenities, with completion anticipated in early 2029

Gardner Vaughan Group breaks ground on first Gold Coast development, Bronze on Chevron

<p>National Australia Bank (NAB) has brought forward the timing of the first RBA cash rate cut by three months.</p>

<p>NAB is now expecting a cut in February, in line with ANZ and Westpac, having initially thought a cut wouldn't come until May.</p>

<p>Commonwealth Bank, the nation's largest lender, still thinks the first cut will come in December.</p>

<p>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.</p>

<p>"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.</p>

<p>They added that the cadence of the cuts may be faster than its central profile.</p>

<p>"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.</p>

<p>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;</p>

<p>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.</p>

<h2><strong>What would a rate cut in February look like for borrowers?</strong></h2>

<p>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;</p>

<table border="1" cellpadding="0" cellspacing="0">
	<tbody>
		<tr>
			<td colspan="3">
			<p><strong>Impact of 0.25% pt cut in February 2025</strong></p>
			</td>
		</tr>
		<tr>
			<td>
			<p><strong>Current loan size</strong></p>
			</td>
			<td>
			<p><strong>Drop in monthly repayment</strong></p>
			</td>
			<td>
			<p><strong>New monthly repayment</strong></p>
			</td>
		</tr>
		<tr>
			<td>
			<p>$600,000</p>
			</td>
			<td>
			<p>-$92</p>
			</td>
			<td>
			<p>$3,907</p>
			</td>
		</tr>
		<tr>
			<td>
			<p>$750,000</p>
			</td>
			<td>
			<p>-$114</p>
			</td>
			<td>
			<p>$4,884</p>
			</td>
		</tr>
		<tr>
			<td>
			<p>$1M</p>
			</td>
			<td>
			<p>-$153</p>
			</td>
			<td>
			<p>$6,512</p>
			</td>
		</tr>
		<tr>
			<td colspan="3">
			<p>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.</p>
			</td>
		</tr>
	</tbody>
</table>

<p>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.</p>

<p>“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.</p>

<p>“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."</p>

<p>&nbsp;</p>


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

NAB bring forward first RBA cut to February 2025

<html><body>
<p>EXPERT OBSERVER</p>
<p class="x_MsoNormal">As generally expected the US Federal Reserve raised the key Fed Funds rate by another 0.25% for the seventh time since starting to hike in December 2015. This takes the Fed Funds rate to a range of 1.75% to 2%.</p>
<p class="x_MsoNormal">Supporting this the Fed sees growth as “solid” and it revised slightly upwards growth and inflation forecast for this year (with core inflation now expected to be at its 2% inflation target) and it revised down the unemployment forecast to 3.6%.</p>
<p class="x_MsoNormal">Consistent with this the median expectation of Fed officials moved up from three rate hikes for this year (ie the so-called “dot plot”) to four and it remains for three hikes next year, which taken together saw the profile for Fed interest rate expectations move higher relative to that seen in March. See the next chart.</p>
<p class="x_MsoNormal">Click here <a href="https://www.propertyobserver.com.au/images/2018/6/14/chart1.jpg" target="_blank">to enlarge.</a></p>
<p class="x_MsoNormal"><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/chart1.jpg" alt=""></p>
<p class="x_MsoNormal">What’s more there was no reference to international developments (eg on trade or Italy) as potentially slowing the Fed down and the Fed’s post meeting statement removed a reference to the Fed Funds rate likely remaining below longer run levels for some time.</p>
<p class="x_MsoNormal">Taken together (and while it only took one Fed official to change the dot plot from 3 to 4 hikes for this year) the Fed has yet again become a bit more hawkish. The Fed is continuing to raise rates gradually, but its becoming a bit less gradual.</p>
<p class="x_MsoNormal">Fed Chair Powell also indicated that starting next year the Fed will have a press conference after every meeting. While this is in the interest of transparency and doesn’t signal anything necessarily about more frequent hikes it does make every meeting “live” for a rate move.</p>
<p class="x_MsoNormal">Our assessment remains that the Fed will hike four times this year (so two more to go - in September and December) and like the Fed we expect three hikes next year.  US money market expectations, which for example see just over two hikes over the next 12 months, remain too dovish (see the previous chart) </p>
<p class="x_MsoNormal">While the market reaction to the Fed’s announcement was a bit confused (US shares down slightly, ten year bond yields little changed and the $US down slightly) ultimately we see continued Fed tightening putting upwards pressure on bond yields and the US dollar. But because US monetary policy is still a long way from being tight it won’t yet threaten the strong US growth outlook or the ongoing rising trend in share markets. That said, the uncertainty around US inflation and interest rates will be a continuing source of volatility in share markets and serve to constrain returns this year.</p>
<p class="x_MsoNormal">For Australia, the Fed’s latest hike confirms that US growth is strong and this is good for Australia. However, the RBA is a long way from following the Fed higher in terms of interest rates because there is still a lot more spare capacity in the Australian labour market compared to the US. See the next chart. We don’t expect the RBA to start raising rates until 2020 at the earliest.</p>
<p class="x_MsoNormal">Click here <a href="https://www.propertyobserver.com.au/images/2018/6/14/chart2.jpg" target="_blank">to enlarge.</a></p>
<p class="x_MsoNormal"><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/chart2.jpg" alt=""> </p>
<p class="x_MsoNormal">Australian official interest rates have now fallen further below those in the US. Historically, a low and falling interest rate differential relative to the US has seen the $A fall and so we expect further downside in the $A over the year ahead as US rates continue to rise further above Australian rates. However, strong commodity prices should prevent a fall to $US0.48 as occurred in 2001 which was the last time Australian rates were below US rates!</p>
<p class="x_MsoNormal">Click here <a href="https://www.propertyobserver.com.au/images/2018/6/14/chart3.jpg" target="_blank">to enlarge.</a></p>
<p class="x_MsoNormal"><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/chart3.jpg" alt=""> </p>
<p class="x_MsoNormal"><span class="s1"><a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author"><em>SHANE OLIVER</em></a></span><span class="s2"><em> is head of investment strategy and economics and chief economist at </em><a href="https://www.ampcapital.com.au/home"><span class="s1"><em>AMP Capital</em></span></a><em> and is responsible for AMP Capital's diversified investment funds.</em></span></p>
<p class="x_MsoNormal"> </p>
</body></html>

soliver-smf6LQXgW9

US strong growth good for Australia: Shane Oliver

<html><body><div class="page" title="Page 1">
<div class="section">
<div class="layoutArea">
<div class="column">EXPERT OBSERVER</div>
<div class="column"> </div>
<div class="column">As widely expected, the Fed increased the target range for the federal funds rate by 0.25 per cent to 1.75-2.00 per cent. This was the seventh increase in interest rates of the current monetary policy tightening cycle. The decision by the Fed voters was a unanimous 8-0.</div>
<div class="column"> </div>
<div class="column">The Fed is now forecasting two further rate increases in 2018 (four in total, up from three previously) and three further hikes in 2019. The 2020 projection is for at least one rate hike.</div>
<div class="column"> </div>
<div class="column">Economic growth (GDP) forecasts were increased to 2.8 per cent in 2018, up from the previous forecast of 2.7 per cent. The 2019 forecast was unchanged at 2.4 per cent. Growth is projected to decelerate to 2.0 per cent by 2020 and to 1.8 per cent over the longer run.</div>
<div class="column"> </div>
<div class="column">The unemployment rate is expected to fall to 3.6 per cent in 2018, down from 3.8 per cent in 2018. The unemployment rate is expected to fall further to 3.5 per cent in 2019-2020.</div>
<div class="column"> </div>
<div class="column">Inflation is expected to reach the Fed's “symmetric” 2.0 per cent target this year (previously 1.9 per cent). The Fed expects the core Personal Consumption Expenditures (PCE) deflator (inflation) to increase to 2.1 per cent in 2019 and stay there through to 2020.</div>
<div class="column"> </div>
<div class="column">Changes in US monetary policy settings can affect rates in Australia as well as the sharemarket and currency.</div>
<div class="column"> </div>
<div class="column">Click here <a href="https://www.propertyobserver.com.au/images/2018/6/14/RATES-HIGHER.jpg" target="_blank">to enlarge.</a>
</div>
<div class="column"> </div>
<div class="column"><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/RATES-HIGHER.jpg" alt=""></div>
<div class="column"> </div>
<div class="column"><strong>What happened?</strong></div>
<div class="column"> </div>
<div class="column">The US economy and labour market are firing on all cylinders. The US central bank, the US Federal Reserve, increased the target range for the federal funds rate by 0.25 percentage points to 1.75-2.00 per cent, as expected. Interest rate have increased seven times since December 2015.</div>
<div class="column"> </div>
<div class="column">More interest rate increases are forecast this year and next. Policymakers upgraded their projected number of rate hikes to four this year as unemployment falls further below “full employment” and inflation overshoots its “symmetric” two per cent target.</div>
<div class="column"> </div>
<div class="column">Inflation is gradually increasing after the economy’s seasonal ‘soft patch’ in the March quarter. Annual growth of the consumer price index stands at 2.8 per cent in April, the highest rate since February 2012. A sharp rebound in economic growth to around 3-3.5 per cent is expected during the June quarter on the back of a pick-up in consumer spending.</div>
<div class="column"> </div>
<div class="column">And core consumer prices (excludes food and energy) are already at 2.2 per cent per annum in April. Only the US Federal Reserve’s preferred core personal consumer expenditure deflator (PCE) measure remains below target at 1.8 per cent in April, but that’s expected to breach the two per cent target by year-end.</div>
<div class="column"> </div>
<div class="column">The jobs bonanza in the US continues. A record 92 consecutive months of job gains has pushed the unemployment rate down to 3.8 per cent in May - the lowest level since April 2000.</div>
<div class="column"> </div>
<div class="column">If the current pace of job creation continues, the unemployment rate could potentially fall to 3.5 per cent for the first time since 1969 by year-end. The unemployment rate is well below the US Federal Reserve’s estimate of the non-accelerating inflation rate of unemployment (“NAIRU”) which is currently at 4.5 per cent.</div>
<div class="column"> </div>
<div class="column">And in a further sign that the US is at or close to “full employment”, job openings (JOLTS series) by a record 4.3 per cent in April – job vacancies are now exceeding the number of unemployed workers by a gap of 352,000. In the 12 months through April, the US economy created a whopping net 2.4 million jobs according to Bloomberg.</div>
<div class="column"> </div>
<div class="column">Click here <a href="https://www.propertyobserver.com.au/images/2018/6/14/employment-rate.jpg" target="_blank">to enlarge.</a>
</div>
<div class="column"> </div>
<div class="column"><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/employment-rate.jpg" alt=""></div>
<div class="column"> </div>
<div class="column">US wages growth has been lacklustre due to structural, technological and demographic changes. However, given reduced spare capacity in the labour market, a gradual increase in wages growth is expected. The annual growth rate for average hourly earnings reached 8-year highs of 2.8 per cent in February, but has since fallen to 2.7 per cent in May. That said, another measure of pay and benefits – the employment cost index for private sector wages increased by 2.9 per cent – the largest annual increase in 11 years. And the National Federation of Independent Businesses (NFIB) has recently reported that a net 35 per cent of businesses are increasing worker compensation – the highest since records began 32 years ago.</div>
<div class="column"> </div>
<div class="column">Click here <a href="https://www.propertyobserver.com.au/images/2018/6/14/wages.jpg" target="_blank">to enlarge.</a>
</div>
<div class="column"> </div>
<div class="column">
<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/wages.jpg" alt=""> </div>
<div class="column"> </div>
<div class="column">While there are multiple risks to the US economic outlook – increasing inflation, rising budget deficit, record-high government debt, global political turbulence and growing ‘trade war’ concerns – the economy appears set to grow by around 3 per cent this year on the back of stimulus from the Trump Administration’s US$1.5 trillion corporate tax cuts. Should the US expand for another year, it will exceed the 10-year economic boom of the 1990s – the last time US interest rates were higher than their Aussie counterparts.</div>
<div class="column"> </div>
<div class="column"><strong>US Federal Reserve decision</strong></div>
<div class="column"> </div>
<div class="column">Today’s decision by the US Federal Reserve was well telegraphed and uniformly expected by financial markets. The addition of another projected rate hike in the second half of this year has nudged-up the interest rate tightening trajectory.</div>
<div class="column"> </div>
<div class="column">In its press release the Federal Open Market Committee’s (FOMC) reiterated that the pace of economic growth should pick-up, unaffected by a slightly more aggressive pace of rate hikes: “The committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labour market conditions, and inflation near the committee’s symmetric 2 percent objective over the medium term”.</div>
<div class="column"> </div>
<div class="column">The statement removed previous language saying that the main rate would remain “for some time” below longer- run levels. Other changes included a reference of “further gradual increases” instead of “adjustments”. Policymakers also said that “indicators of longer-term inflation expectations are little changed”. Previously, the statement made separate references to survey-based and market-based measures of these expectations.</div>
<div class="column"> </div>
<div class="column">The median path for the fed funds rate was changed in 2018 to include an addition fourth rate hike and one less rate hike in 2020. The FOMC’s Summary of Economic Projections shows the median interest rate projections (the “dot plot”) implies two further 0.25 per cent interest rate increases in the second half of 2018 (to 2.4 per cent, up from 2.1 per cent previously); three 0.25 per cent interest rate increases in 2019 (to 3.1 per cent, up from 2.9 per cent previously); and one 0.25 per cent interest rate increase in 2020 (to 3.4 per cent).</div>
<div class="column"> </div>
<div class="column">The policy-relevant core PCE deflator inflation projections were little changed. Core PCE inflation is expected to lift to 2.0 per cent in 2018, up from 1.9 per cent previously forecast. Projections in 2019 and 2020 were unchanged at 2.1 per cent.</div>
<div class="column"> </div>
<div class="column">The FOMC upgraded its GDP forecasts and lowered its unemployment rate projections. The FOMC projects GDP growth of 2.8 per cent in 2018 (previously 2.7 per cent) and 2.4 per cent in 2019 and 2.0 per cent in 2020 (both unchanged). Meanwhile, the FOMC expects the unemployment rate to be 3.6 per cent in 2018 (previously 3.8 per cent) and 3.5 per cent in both 2019 (previously 3.6 per cent) and 2020 (previously 3.6 per cent).</div>
<div class="column"> </div>
<div class="column">The Fed is targeting a range for the Fed Funds rate and uses the interest on excess reserves rate (IOER) as one of its main tools. With the rate creeping towards the high end of its target range recently, the Fed hiked the IOER rate by 0.20 per cent to 1.95 per cent as “it is intended to foster trading in the federal funds market at rates well within the FOMC’s target range”.</div>
<div class="column"> </div>
<div class="column">The Fed continues to unwind its huge balance sheet. Holdings have declined to around US$4.3 trillion, the lowest since May 2014. A total of US$88 billion worth of US Treasuries have now been “rolled-off” at maturity. Eventually, holdings will be reduced by around US$50 billion per month until a “new normal” balance sheet holding is achieved.</div>
<div class="column"> </div>
<div class="column">US sharemarkets finished lower on the slightly “hawkish” tone of the FOMC’s policy statement. The Dow Jones fell by 120 points or 0.5 per cent with the S&amp;P 500 index lower by 0.4 per cent, while the Nasdaq lost just 8.1 points or 0.1 per cent.</div>
<div class="column"> </div>
<div class="column">US 2-year yields rose by 2 basis points to 2.57 per cent and 10-year yields rose by 1 point to 2.976 per cent. The US Treasury yield curve from 5 to 30 years flattened to levels last seen in August 2007. The US dollar retreated after spiking to session highs. The Aussie dollar did a round trip. The Aussie dollar traded between US75.30 cents and US76.05 cents and was near US75.70 cents in late US trade. Other major currencies fluctuated as investors absorbed the first of three big central bank reports this week.</div>
<div class="column"> </div>
<div class="column"><strong>What are the implications for interest rates and investors?</strong></div>
<div class="column"> </div>
<div class="column">We expect US economic growth to re-accelerate in the June quarter to a growth rate of around 3 per cent per annum, before finishing the year at a pace of around 2.7 per cent. Financial conditions remain accommodative despite a tightening in recent months due to the stronger greenback, rising share market volatility and lifting term premium (the excess return that investors demand for holding a longer-dated bond).</div>
<div class="column"> </div>
<div class="column">The Trump Administration’s fiscal expansion will likely lend support to late cycle US economic growth. The ‘leg- up’ from US$1.5 trillion worth of corporate tax cuts and additional government spending of around US$300 billion is expected to add around 0.5 percentage points to growth in 2018. Robust business investment, strong capital spending plans and firm consumer spending should support continued growth.</div>
<div class="column"> </div>
<div class="column">One of the challenges for Fed policymakers is to determine the full impact of the Trump tax-cut plans. And with US output and the labour market at near full capacity, concerns are building about an overheating economy. Normally fiscal stimulus occurs when economic growth is lacklustre or at recessionary levels.</div>
<div class="column"> </div>
<div class="column">Former Fed Chairman Ben Bernanke said recently that he’s concerned that “in 2020 Wile E. Coyote is going to go off the cliff”, implying a possible US economic downturn after the fiscal stimulus fades and the economy overheats. Further, Mr Bernanke said that “the economy is already at full employment”.</div>
<div class="column"> </div>
<div class="column">The Fed will also be contending with a sharply deteriorating US budget deficit and government debt situation. According to the US Congressional Budget Office, the federal budget deficit ballooned to US$530 billion in the first eight months of fiscal year 2018 up by US$97 million over the same period last year. The deficit is expected to surpass US$1 trillion by 2020 if the current growth rate in government spending continues. The US gross government debt load has breached US$21 trillion or 106 per cent of GDP.</div>
<div class="column"> </div>
<div class="column">The Trump Administration’s fiscal expansion will be funded by an increase in the US budget deficit, resulting in an increase in the issuance of US Treasury bonds. Government debt sales are set to more than double in 2018, lifting net issuance to US$1.3 trillion, the most since 2010, and occurring at a time when the Fed is shrinking its bond holdings (“Quantitative Tightening”). And the Fed’s interest rate hikes will likely expand the budget deficit even further by raising the Trump Administration’s cost of issuance, thereby further increasing the supply of US Treasuries. Rising supply is already weighing on fixed income markets. The 10-year US Treasury yield curve recently rose to a 7-year high near 3.1 per cent.</div>
<div class="column"> </div>
<div class="column">If the Fed meets market pricing expectations for potential interest rate hikes, it will probably succeed in flattening the yield curve further – especially with the term premium curve flat already – then more likely we’ll see further episodic market volatility.</div>
<div class="column"> </div>
<div class="column">Australian investors and businesses won’t escape the increase in US borrowing costs. Rising US Treasury bond yields are dragging their Aussie counterparts higher despite the Reserve Bank’s neutral policy stance.</div>
<div class="column"> </div>
<div class="column">Global interest rates are lifting and so are bank funding costs, pressuring margins. Aussie banks derive around 40 per cent of their funding from overseas. Australian short term interest rates are already near the highest in two years with the 90 day bank bill yield at 2.06 per cent. And there is a risk of home lending standards being tightened, placing additional pressure on banks when it comes to the determination of mortgage rates.</div>
<div class="column"> </div>
<div class="column">The Aussie dollar has remained resilient in the face of growing US interest rate differentials. The improving domestic economic backdrop, lifting commodity prices, firm Chinese economic growth, narrowing current account deficit and pick-up in the terms of trade is lending support to the Aussie. The US’ deteriorating credit quality, including rising debt and deficit and concerns over a sovereign downgrade have the potential to weigh on the greenback.</div>
<div class="column"> </div>
<div class="column">CBA currency strategists expect the Aussie dollar to lift to US78 cents by the end of 2018 and to US80 cents by June 2019.</div>
<div class="column">
<div class="page" title="Page 4">
<div class="layoutArea">
<div class="column">
<p>Ryan Felsman is a senior economist at CommSec.</p>
<p> </p>
</div>
</div>
</div>
</div>
</div>
</div>
</div></body></html>

jrobinson-rf4aSBido9

US rates overtake Australia for first time in 17 years after seventh hike: CommSec

<html><body>
<p>EXPERT OBSERVATION</p>
<p>The ANZ/Roy Morgan weekly consumer sentiment jumped 6.5 points (5.6%) to 21-week high of 123.0 points.</p>
<p>The Westpac/Melbourne Institute survey of consumer sentiment index rose by 0.3% to 102.1 in June. The index is above its long-term average of 101.5. A reading above 100 denotes optimism.</p>
<p>In the latest quarterly survey 22.5% of respondents thought the ‘wisest use of savings’ was to pay down debt.</p>
<p>In the Reserve Bank Governor speech entitled “Productivity, wages and prosperity” the Governor highlighted evidence of a growing “skills shortage” in Australia.</p>
<p>The consumer confidence figures have implications for retailers, and other consumer-focussed businesses.</p>
<p><strong>What does it all mean?</strong></p>
<p>When you weigh all the ‘big picture’ influences, Aussie consumers have little to be despondent about. The economy has completed 26 years of uninterrupted economic growth and the pace of annual growth now tops 3%. But inflation is contained, interest rates are at generational lows, unemployment is below the long-term average and sharemarket returns are up more than 10% on a year ago. The main worry is the high price of petrol and the fact that Aussie consumers and travellers would probably like the Aussie dollar a little higher than where it is currently.</p>
<p>Rising home prices didn’t drive consumer sentiment higher in the past few years and the rebalancing probably won’t lead to weaker consumer confidence. Overall, consumers tend to keep everything in perspective. In most capital cities, home prices have posted solid gains over the past five years.</p>
<p>Roy Morgan believes that the early start to winter clearance sales by department stores and chains may have also been a factor in lifting confidence last week.</p>
<p>While consumers are confident, they also remain conservative. Almost a quarter of consumers surveyed thought the wisest use of new savings was to pay down debt – the second highest response behind leaving the money in the bank. Almost 12% thought real estate was the best investment with around 9% opting for shares.</p>
<p>The Reserve Bank Governor has continued to indicate that the next move in interest rates will be up, but the move is “still looks to be some time away”. There needs to be a lift in inflation and wages before the Board is confident to lift rates.</p>
<p>The Reserve Bank Governor has highlighted growing evidence of a “skills shortage” in Australia. Governor Lowe believes this adds to the case that higher wages and prices are in prospect. However he stresses that this will be a gradual process.</p>
<p>The Reserve Bank Governor said the design of the tax system was important for future productivity. He didn’t elaborate on the point – perhaps he should have.</p>
<p><strong>What do the figures show?</strong></p>
<p><strong>Weekly consumer confidence</strong></p>
<p>The ANZ/Roy Morgan weekly consumer sentiment jumped 6.5 points (5.6%) to 21-week high of 123.0 points. All five components rose in the latest week.</p>
<p><a href="https://www.propertyobserver.com.au/images/2018/6/13/consumer1.jpg" target="_blank">Click here to enlarge.</a></p>
<p><a href="https://www.propertyobserver.com.au/images/2018/6/13/consumer1.jpg" target="_blank"><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/2018/6/13/consumer1.jpg" alt=""> </a></p>
<p><strong>Monthly consumer confidence</strong></p>
<p>The Westpac/Melbourne Institute survey of consumer sentiment index rose by 0.3% to 102.1 in June. The index is above its long-term average of 101.5. A reading above 100 denotes optimism. The survey was conducted from June 4-10.</p>
<p>The current conditions index rose by 2.4%, but the expectations index fell by 1.0%.</p>
<p>Three of the five the components of the index increased in March:</p>
<p>- The estimate of family finances compared with a year ago rose by 4.5%;</p>
<p>- The estimate of family finances over the next year rose by 2.8%;</p>
<p>- Economic conditions over the next 12 months fell by 1.0%;</p>
<p>- Economic conditions over the next 5 years fell by 3.1%;</p>
<p>- The measure on whether it was a good time to buy a major household item rose by 1.0%.</p>
<p>Housing outlook: A good time to buy a dwelling? The index rose by 4.5% in June is up by 16.3% from a year ago. And house price expectations fell by 7.3% and is down by 10.2% on a year ago.</p>
<p>Unemployment expectations: Unemployment expectations rose by 5.7% in June, but are down by 9.6% over the year.</p>
<p>Wisest place for savings: On the question of the ‘wisest place for savings’, banks (27.7%) led the way from paying down debt (22.5%). Only 11.6% of respondents selected real estate and 8.6% nominated shares. The proportion of consumers opting to put money in superannuation (6.8%) was the second highest in a decade. Only 4.6% of people said they would prefer to spend any extra savings. Interestingly the proportion of consumers favouring cash management trusts (3.3%) was at a 12-year high.</p>
<p><a href="https://www.propertyobserver.com.au/images/2018/6/13/debt3.jpg" target="_blank">Click here to enlarge.</a></p>
<p><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/2018/6/13/debt3.jpg" alt=""> </p>
<p><strong>Reserve Bank Governor Speech</strong></p>
<p>“The national accounts provided confirmation that the Australian economy is moving in the right direction. If this continues to be the case, it is likely that the next move in interest rates will be up, not down. It is, however, important to remember that the environment in which interest rates are increasing is also likely to be one in which people's incomes are growing more quickly than they are now. This will help.”</p>
<p>“One area that we continue to watch carefully is consumption growth. Over the year, household consumption rose by 2.9%. This is a reasonable outcome, although growth in the March quarter was on the soft side.”....”we are paying close attention to household finances.”</p>
<p>“While we can't be definitive about what constitutes full employment, most conventional estimates for Australia are that it means an unemployment rate of around 5%....It is possible, though, that we could do better than this, especially if we approach the 5% mark at a steady pace, rather than too quickly.”</p>
<p>The Governor has identified lower wage growth in the mining sector, increase in labour force participation, labour force underutilisation, and the fact that benefits of new technologies are accruing unevenly across the community as some of the factors explaining lower growth of wages.</p>
<p><a href="https://www.propertyobserver.com.au/images/2018/6/13/wage-growth.jpg" target="_blank">Click here to enlarge.</a></p>
<p> <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/2018/6/13/wage-growth.jpg" alt=""></p>
<p>“some pick-up in wages growth would be a welcome development. It would help deliver a rate of inflation consistent with the target, it would help with the debt situation and it would add to our sense of shared prosperity.... In my judgement, a return, over time, to a world where wage increases started with a 3 rather than a 2 is both possible and desirable.”</p>
<p><strong>What is the importance of the economic data?</strong></p>
<p>Westpac and the Melbourne Institute release the Index of Consumer Sentiment each month. According to Melbourne Institute: “The survey of consumer sentiment was first undertaken in 1973 and was conducted on a quarterly basis until 1976, a six-weekly basis from 1976 to 1986, and has been conducted monthly ever since.” Confident consumers may be more inclined to spend, especially on major items.</p>
<p><strong>What are the implications for interest rates and investors?</strong></p>
<p>Aussies remain optimistic. When you weigh up all the influences, it is easy to see why. More confident consumers are more likely to spend – positive for retailers. Rising employment, improved job security and stable interest rates represent a heady mix, giving shoppers the ammunition to embrace the mid-year sales.</p>
<p>CommSec doesn’t expect a change in official interest rates until early 2019. But the area to watch is the job market and especially survey evidence of skills shortages, leading to higher wages.</p>
<p><em><strong>Craig James</strong> is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>. </em></p>
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Confident consumers still keen to pay down debt: CommSec

How do we sustain Australia's prosperity? RBA Governor Philip Lowe

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<p>The Victorian government has stepped in to protect real estate agent commission payments after agents were using non-compliant contracts sold by the Real Estate Institute of Victoria (REIV) that had been approved by Consumer Affairs Victoria.</p>
<p>The faulty contracts were Exclusive Sales Agreement (ESA), legally binding documents that give an agent the right to sell a vendor's home and be paid for their services. </p>
<p data-gtm-vis-first-on-screen-7770372_137="7127" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-recent-on-screen-7770372_137="9693061" data-gtm-vis-has-fired-7770372_137="1">The Victorian government said it would amend the Estate Agents Act 1980 to "protect agent commissions after contracts with incomplete rebate statements were used".</p>
<p>Amendments will be introduced into the Victorian Parliament after <a href="http://www.afr.com/real-estate/residential/vic/estate-agents-commissions-under-threat-after-real-estate-institute-of-victoria-blunder-20180511-h0zyb6">a Ray White St Albans agent was ruled ineligible for commission</a> on a land sale because the County Court ruled the ESA form was non-compliant.</p>
<p data-gtm-vis-first-on-screen-7770372_137="9693066" data-gtm-vis-total-visible-time-7770372_137="900">In April, Victoria's Court of Appeal upheld the initial 2017 County Court ruling that denied the Ray White agent his commission.</p>
<p data-gtm-vis-first-on-screen-7770372_137="9693066" data-gtm-vis-total-visible-time-7770372_137="900">There has been another case yet to be heard where a vendor, Marika Sutherland, seeks a ruling preventing agents Globe Real Estate from collecting an $82,000 commission on the 2017 sale of her Beaumaris home.</p>
<p data-gtm-vis-first-on-screen-7770372_137="9693066" data-gtm-vis-total-visible-time-7770372_137="900">Despite speculation of a likely flood of claims against both the REIV and CAV, the situation has not escalated but no agent who used these forms will be penalised because of an error in the paperwork, said Minister for Consumer Affairs Marlene Kairouz.</p>
<p>"We're fixing this problem, giving agents who acted in good faith reassurance their commissions will be protected by law," she added.</p>
<p>The changes would not apply to disputes over commissions already dealt with by the court.</p>
<p>The property law expert Robert Hay, QC, warned there was no legal defence for those agents who are challenged over commissions.</p>
<p>"As it stands, there's not much they can do. There could be lots of innocent agents, who could be disgorged of their commissions,'' he told Fairfax Media.</p>
<p>Lawyers acting for Sutherland will seek $138,500 – the 10% deposit paid on the $1,385,000 sale of her home at 37 Oak Street, Beaumaris, in February 2017 – from Globe Real Estate, plus interest and legal costs.</p>
<p>The deposit, of which $81,616 is due to be paid out in commission, remains held in the trust account of Globe Real Estate's lawyers Marsh &amp; Maher following a dispute over payment. The property settled in April last year.</p>
<p data-gtm-vis-first-on-screen-7770372_137="20564" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">In August, Sutherland's solicitor Bill Gioutlou filed a motion in the Supreme Court seeking a declaration that the ESA form used by Globe Real Estate did not comply with section 49A of the Estate Agents Act of 1980 and because of this, Globe Real Estate is "not entitled to retain any commission or money ... in respect of the sale of the property". </p>
<p>Bentleigh-based Globe Real Estate, which is owned by Yufang "Kiki" Jiang, opposes the motion.</p>
<p>In October last year, Globe Real Estate joined the REIV as a third party to the proceedings alleging the REIV was ultimately responsible for any non-compliance.</p>
<p data-gtm-vis-first-on-screen-7770372_137="44578" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">This would entitle Globe Real Estate to claim from the REIV relief, including any costs, losses or damages that arise out of the legal proceedings.</p>
<p>It is understood the REIV, which in its filed defence denies any negligence in providing the ESA form and notes it was approved by Consumer Affairs Victoria, lobbied the state government to retrospectively amend real estate laws.</p>
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Victorian government steps in to protect agent commissions from non-compliant contracts

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<p>Moody's Investors Service says that Sympli, the joint venture between ASX Limited and InfoTrack - a wholly owned subsidiary of Australian Technology Innovators Pty Limited - will, subject to regulatory approval, provide the first seamless and fully integrated solution for online conveyancing services in Australia. </p>
<p>"The venture will not just rival PEXA, the current sole electronic lodgement network operator in the country, but will become the first company in Australia to replace the whole paper-based property settlement process with digital services," says Shawn Xiong, a Moody's Analyst. </p>
<p>Moody's explains that while PEXA currently monopolizes the last settlement stage of the conveyancing process, the InfoTrack-ASX venture will provide digital services for the entire conveyancing process. </p>
<p>Over the next two years, Moody's expects that the move online will mostly benefit PEXA because of its first-mover advantage. </p>
<p>But Sympli will benefit from InfoTrack's existing market position and relationships in the Australian conveyancing market, as well as its legal and technological capabilities, particularly its smart contract technology.</p>
<p>This situation, combined with ASX's significant experience and existing infrastructure in providing integrated electronic settlement services, will create a one-stop solution for industry practitioners.</p>
<p>"As a result, Sympli should win market share over time," Moody's concluded</p>
<p>The shift to electronic from paper-based settlements in the Australian conveyancing industry presented an unprecedented opportunity for digital-based property services providers such as the InfoTrack-ASX venture, adds Xiong. </p>
<p>Moody's analysis is contained in its recent report <em>Property Services — Australia: InfoTrack and ASX venture to drive competition in electronic property services.</em></p>
<p><span style="font-size: 12.16px;">It was co-authored by Xiong with Trung Vu, a Moody's Associate Analyst. </span></p>
<p>ASX and InfoTrack announced the establishment of Sympli, a 50:50 joint venture that will provide electronic property settlement services likely starting at the end of 2018. </p>
<p><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/2018/6/8/MOODYS%201.jpg" alt=""></p>
<p>Moody's points out that the property services industry is fragmented, with industry players serving only parts of the conveyancing process. </p>
<p>Meanwhile, most state governments — including Western Australia (WA), New South Wales (NSW), South Australia and Victoria (VIC) — have committed to transitioning the property industry to a paperless environment.</p>
<p>And, mandates are in place in WA, NSW and VIC to push all transactions online by December 2017, July and August 2019, respectively. </p>
<p><a href="https://www.propertyobserver.com.au/images/2018/6/8/MOODYS%202.jpg" target="_blank">Click here to enlarge:</a></p>
<p><a href="https://www.propertyobserver.com.au/images/2018/6/8/MOODYS%202.jpg" target="_blank" style="font-size: 12.16px;"> </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/2018/6/8/MOODYS%202.jpg" alt="" style="font-size: 12.16px;"></p>
<p>Moody's says that service providers with a large reliance on traditional information brokerage and manual property settlements — such as SAI Global Holdings — will likely struggle to grow in light of the new competition.</p>
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Moody's praises Sympli, the new online conveyancing service

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<p>The RBA have released their chart pack for the June cash rate decision.</p>
<p>We focus on the key charts which will have helped the institution come to its decision to hold rates at 1.5 percent for the 20th consecutive meeting.</p>
<p>Housing prices took a sharp downturn, however household debt continues to rise.</p>
<p>Click here <a href="https://www.propertyobserver.com.au/images/2018/6/7/prices-debt.jpg" target="_blank">to enlarge.</a></p>
<p><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/2018/6/7/prices-debt.jpg" alt=""></p>
<p>House prices continue their downward trend.</p>
<p>Click here <a href="https://www.propertyobserver.com.au/images/2018/6/7/prices.jpg" target="_blank">to enlarge.</a></p>
<p><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/2018/6/7/prices.jpg" alt=""></p>
<p>Consumer sentiment is continuing to hover above average.</p>
<p>Click here <a href="https://www.propertyobserver.com.au/images/2018/6/7/sentiment.jpg" target="_blank">to enlarge.</a></p>
<p><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/2018/6/7/sentiment.jpg" alt=""></p>
<p>Owner occupier home loan approvals continue to outstrip investors after running close in 2016.</p>
<p>The graph below shows a recent sharp dip in investor approvals, while there's been a surge in owner-occupier approvals over the last few years.</p>
<p>Click here <a href="https://www.propertyobserver.com.au/images/2018/6/7/approvals.jpg" target="_blank">to enlarge.</a></p>
<p><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/2018/6/7/approvals.jpg" alt=""></p>
<p>To see the full chart pack <a href="http://www.rba.gov.au/chart-pack/" target="_blank">click here.</a></p>
<p> </p>
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RBA's June chart pack cites house price drop

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<p><span>Mortgage Choice has strongly refuted allegations in the media that its current franchise model encourages poor behaviour or practices.</span></p>
<p><span> The company has robust compliance processes and credit policy controls in place that franchisees are required to adhere to, </span><span>Susan Mitchell, CEO of Mortgage Choice said.</span></p>
<p><span> “Our franchisees are very diligent and want to do the right thing for their customers. </span></p>
<p><span>"We take any allegation of fraudulent behaviour extremely seriously and we have a very thorough and structured compliance regime in place.  </span></p>
<p><iframe src="https://www.youtube.com/embed/PX1QGbvt4z8" frameborder="0" width="360" height="365"></iframe></p>
<p><br><span>“The wellbeing of our franchisees is our number one concern. We provide any business owner experiencing hardship with personalised support, including from our field-based teams. </span></p>
<p><span>"We are well progressed in consulting with franchisees on a new remuneration model that will help them to succeed and invest in growing their businesses.” </span><br><br><span>While Mortgage Choice believes brokers in the network still highly value the services the company provides, it acknowledges that the balance between services offered and remuneration provided needs adjusting. </span><br><br><span>Mortgage Choice is in advanced discussions with franchisees and is aiming to have a new remuneration model in place by August 2018.</span><br><span> </span><br><span>Mortgage Choice is not subject to any legal action, the broker pointed out.</span></p>
<p><span>The broker issued a video</span>.<span><br></span></p>
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Mortgage Choice denies franchise model encouraged poor lending practices

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<div class="column">EXPERT OBSERVATION</div>
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<div class="column">The record economic expansion is well into its 27th year. The Australian economy grew by 1.0 per cent in the March quarter after growing by an upwardly-revised 0.5 per cent (previously 0.4 per cent) in the December quarter – the equal best quarterly growth rate since December 2011. Annual economic growth rose from 2.4 percent to 3.1 per cent – the strongest growth rate in 21 months.</div>
<div class="column"> </div>
<div class="column">The biggest contribution to growth came from net exports (+0.4pp), government consumption (+0.3pp), household consumption (+0.2 pp), dwelling investment (+0.1pp), non-dwelling construction (+0.1pp). Private equipment was flat. The only drag on growth came from public investment (- 0.1pp).</div>
<div class="column"> </div>
<div class="column">Real gross national income rose by 1.7 per cent in the March quarter to be up 2.4 per cent on the year. In nominal terms GDP increased by 2.2 per cent in the quarter and rose by 3.9 per cent over the year.</div>
<div class="column"> </div>
<div class="column">Gross value added per hours worked in the market sector rose by 1.0 per cent in the March quarter, but was down by 0.1 per cent on the year. Hours worked in the market sector fell by 0.2 per cent in the March quarter, but was up by 2.4 per cent on the year.</div>
<div class="column"> </div>
<div class="column">Thirteen of the 19 industry sectors expanded in the March quarter. Strongest growth was by Administration and Support Services (+3.0 per cent), Mining (+2.9 per cent) and Manufacturing (+2.4 per cent). Agriculture, forestry and fishing (-1.7 per cent) and Accommodation and Food Services (-1.3 per cent) recorded the biggest falls in output. Two sectors both added 0.2 percentage points to GDP growth and six sectors each added 0.1 percentage point to GDP growth. Only one sector detracted 0.1 percentage points.</div>
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<div class="column">Click here <a href="https://www.propertyobserver.com.au/images/2018/6/6/Commfigure1.jpg" target="_blank">to enlarge.</a>
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<div class="column"><strong>What does it all mean?</strong></div>
<div class="column"> </div>
<div class="column">The Aussie economy is in rude health. Economic growth rebounded during the March quarter, recording the equal best quarterly growth rate since the December quarter of 2011. Annual growth lifted to 3.1 per cent, the best growth rate in almost two years.</div>
<div class="column"> </div>
<div class="column">We share the Reserve Bank’s view that growth will be stronger this year than last year. The economy is tipped to grow by “a bit above 3 per cent” in 2018 and 2019.</div>
<div class="column"> </div>
<div class="column">Aussie economic activity is being supported by still-firm household consumption, strong government spending on public transport-related and infrastructure projects and a pick-up in LNG exports. Business inventories also lifted during the quarter.</div>
<div class="column"> </div>
<div class="column">Today’s national accounts also highlighted that the drag from the end of the mining construction boom is receding. Growth in exports accounted for half of the quarterly uplift in growth. The mining sector and commodity prices are continuing to recover due to firm demand from China.</div>
<div class="column"> </div>
<div class="column">The Reserve Bank has reiterated that household consumption remains a “key uncertainty” for the economic outlook. While today’s contribution was mildly positive, developments in the housing market, where home prices in Sydney and Melbourne are falling, will need to be monitored closely. And household debt remains elevated.
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<p><span>Overall, we need to see economic growth stay near 3 per cent levels and the unemployment rate below 5 per cent to see sufficient tightening of the labour market to generate upward pay pressures on employers before interest rates can lift.</span></p>
<p>Click here <a href="https://www.propertyobserver.com.au/images/2018/6/6/commfigure2.jpg" target="_blank">to enlarge.</a></p>
<p><span><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/2018/6/6/commfigure2.jpg" alt=""> </span></p>
<p><strong>What do the figures show?</strong></p>
<p>The Aussie economy rose by 1.0 per cent in the March quarter after lifting by an upwardly-revised 0.5 per cent in the December quarter. It was the equal strongest quarterly growth rate since the December quarter of 2011.</p>
<p>The economy grew by 3.1 per cent over the year to March – the strongest annual growth rate in 21 months. Growth has averaged 2.6 per cent over the decade and averaged 2.8 per cent over the last 15 years.</p>
<p>The non-farm economy rose by 1.1 per cent in the March quarter after increasing by 0.6 per cent in the December quarter. Annual growth stands at 3.6 per cent.</p>
<p>Farm GDP fell by 1.9 per cent in the March quarter after declining by 1.8 per cent in the December quarter. Farm GDP fell by 14.9 per cent over the year.</p>
<p>At current prices, GDP rose by 2.2 per cent in the March quarter after 0.9 per cent increase in the December quarter. Annual growth stands at 3.9 per cent. As at March 2018, the Australian economy was valued at $1,815 billion.</p>
<p>The biggest contribution to growth came from net exports (+0.4pp), government consumption (+0.3pp), household consumption (+0.2pp), dwelling investment (+0.1pp), non-dwelling construction (+0.1pp). Private equipment was flat. The only drag on growth came from public investment (-0.1pp).</p>
<p>In terms of domestic price pressures, the household consumption implicit price deflator rose by 0.6 per cent in the March quarter after increasing by 0.6 per cent in the December quarter. Annual growth stands at 1.6 per cent. Real non-farm unit labour costs fell by 1.6 per cent in the March quarter after increasing by 0.5 per cent in the December quarter. Real non-farm unit labour costs rose by 1.1 per cent over the year.</p>
<p>Gross value added per hours worked in the market sector rose by 1.0 per cent in the March quarter, but was down by 0.1 per cent on the year. Hours worked in the market sector fell by 0.2 per cent in the March quarter, but was up by 2.4 per cent on the year.</p>
<p>The only data available is state final demand (more accurate data would include net exports but it is not available for all states and territories). In the March quarter, growth was strongest in Tasmania (up 2.0 per cent), Victoria (up 1.9 per cent), NSW (up 0.7 per cent) and Queensland (up 0.5 per cent). State final demand fell in South Australia (down 0.2 per cent), ACT (down 0.8 per cent), Western Australia (down 1.1 per cent) and in the Northern Territory (down 2.0 per cent).</p>
<p>Consumer spending lifts. Household spending rose by 0.3 per cent in the March quarter to be up 2.9 per cent for the year. Only four of the 17 sectors recorded weaker spending in the quarter. Spending rose most for Electricity, gas and other fuel (up 2.3 per cent) and Communications (up by 1.5 per cent). Spending fell most for Alcoholic beverages (down 2.0 per cent) followed by Hotels, cafes and restaurants (down by 1.8 per cent).</p>
<p>Thirteen of the 19 industry sectors expanded in the March quarter. Strongest growth was by Administration and Support Services (+3.0 per cent), Mining (+2.9 per cent) and Manufacturing (+2.4 per cent). Agriculture, forestry and fishing (-1.7 per cent) and Accommodation and Food Services (-1.3 per cent) recorded the biggest falls in output. Two sectors both added 0.2 percentage points to GDP growth and six sectors each added 0.1 percentage point to GDP growth. Only one sector detracted 0.1 percentage points.</p>
<p>Click here <a href="https://www.propertyobserver.com.au/images/2018/6/6/commfigure3.jpg" target="_blank">to enlarge.</a></p>
<p><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/2018/6/6/commfigure3.jpg" alt=""></p>
<p><strong>Other points:</strong></p>
<p>Profit share rises. In seasonally adjusted terms, the ratio of profits to total factor income rose from 27.0 per cent to 27.8 per cent in the March quarter. The wages share fell from 52.9 per cent to 52.4 per cent.</p>
<p>Household savings ratio falls. The household saving ratio fell from 2.3 per cent in seasonally adjusted terms to 2.1 per cent in the March quarter – the lowest level since December 2007. In trend terms household saving rose from 2.1 per cent to 2.2 per cent.</p>
<p>Imports rose as a share of spending. The imports to sales ratio rose from 0.390 in the December quarter to 0.397 in the March quarter.</p>
<p>The inventory to sales ratio fell from 0.610 per cent to 0.603 per cent in the March quarter.</p>
<p><strong>What is the importance of the economic data?</strong></p>
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<p><span>The quarterly </span><span>National Income, Expenditure and Product release (national accounts) </span><span>from the Bureau of Statistics is an </span><span>assessment of Australia’s economic performance. Detailed </span><span>estimates are provided on incomes (wages, profits), spending (such as household, dwelling investment and trade (exports and imports) and production. Other data includes household saving and the economic performance of States and Territories. The main use of the national accounts figures is as a historical record of economic performance. The information has little forward-looking value for currency, interest rate or share markets. </span></p>
<p><span>What are the implications for interest rates and investors?</span></p>
<p>Australia’s record-breaking expansion continues. Importantly, economic growth is strengthening. After a below- par level of activity, largely due to weather disruptions to our export sectors in 2017, output rose back above long- term trend levels in early 2018.</p>
<p>The year has begun strongly with the equal best quarterly growth in output for over six years. And the annual growth rate is near the best in two years. The Reserve Bank is tipping annual growth of 3.25 per cent in 2018. We appear to be on track, though its early days.</p>
<p>Productivity continues to be a key focus and is a necessary ingredient to lift sluggish wages growth. And extra workers taken on by business need to start adding to output. Pleasingly, levels of productivity broadly picked-up over the quarter and year, despite remaining below long-term trend levels.</p>
<p>While the business sector is humming along nicely at the moment, complemented by the fiscal expansion from the government’s infrastructure projects, close attention will continue to be paid to the household sector. Home prices are falling for the first time in five years. Victorian and NSW households are still spending. But consumption remains weak in the mining states. Also, Aussies are drawing down on their savings in the face of weak income growth and rising cost of living pressures. But this may be a sign of confidence in the jobs market.</p>
<p>Employee compensation grew by 1.2 per cent in the March quarter, supported by rising company profits, up by 5.2 per cent – a trend that needs to continue in order to see wages lift sufficiently to boost inflation and interest rates. CommSec expects no change to official interest rates until February 2019.</p>
<p>Ryan Felsman is a senior economist at CommSec.</p>
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No change to official interest rates until February 2019: CommSec

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<p>Accusations from Mortgage Choice franchisees accusing the aggregator of running a harsh business model and remuneration structure have triggered a promise to change its remuneration model.</p>
<p>Mortgage Choice released an announcement on the ASX yesterday in response to an investigation by Fairfax Media and ABC’s 7.30. The investigation had been looming for some time among tweets as franchisees readied to set up a fund to take legal action.</p>
<p>Towards the end of last year they agreed to commit $200,000, but put this on hold after Mortgage Choice said it would review the structure.</p>
<p><span>The media report outlined how the broker previously employed an up-front commission model and changed this to a performance-based model based on loan targets in the wake of the 2007-2008 Global Financial Crisis. </span></p>
<p><span>But it never changing back to the original structure once the crisis had passed.</span></p>
<p><span><span>The recently appointed Mortgage Choice chief executive Susan Mitchell admitted the model was “outdated.”</span></span></p>
<p>In the ASX statement from company secretary David Hoskins, Mortgage Choice advised it would be working closely with franchisees about a more “competitive remuneration model”.</p>
<p>The statement said the purpose of this would be to “increase franchisee remuneration and reduce franchisee income volatility to allow them to grow their business and assist more customers with their home loan needs”.</p>
<p>CEO of Mortgage Choice, Susan Mitchell, said she anticipated the changes would support the long term sustainable growth of Mortgage Choice.</p>
<p>“We want to continue to help Australians with their financial services needs for many years to come and having thriving, growing franchisees that have the confidence to invest in their business is critical to achieving this.”</p>
<p>Mortgage Choice expects to finalise a new remuneration model in this coming July and implement an opt-in basis across the network in August.</p>
<p>Documents suggest almost half of Mortgage Choice’s franchisees were considering legal action to get a better and fairer remuneration scheme.</p>
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<p>Mortgage Choice saw its shares plunge 40 per cent on Tuesday after Fairfax and the ABC reported 173 of its franchisees were considering a fighting fund to take on the home loan giant. Shares were up 1 percent in Wednesday morning trade.</p>
<p><a href="http://www.abc.net.au/7.30/" target="_blank" title="www.abc.net.au">On ABC’s 7.30</a>, a number of struggling Mortgage Choice franchisees spoke about having to sell their houses because of their financial struggles brought on by the business.</p>
<p>Franchisees are reportedly being pressured to sign $1.5 million in loans per month, much higher than the national average of any other company.</p>
<p>If brokers fail to meet that target, Mortgage Choice takes a greater section of the franchisee’s profit.</p>
<p>Melbourne franchisee Russell Chellew told the program he’s become physically sick since owning his own Mortgage Choice franchise.</p>
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<p><span>Mortgage Choices advised shareholder that change in the remuneration model does not affect the FY2018 cash result.</span></p>
<p><span>"Market updates will include guidance on a one off adjustment to the FY2018 IFRS result based on the change in the average payout rate to franchisees once this is known."</span></p>
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