Sydney-based fund manager and developer EG is seeking to turn part of the former Roche pharmaceutical campus in Cromer into a 130-home residential community, introducing a mix of low-rise apartments, townhouses and duplexes to the tightly held Northern Beaches market.

The SJB-designed masterplan has been prepared for the 3.2-hectare site at <a href="https://www.apartments.com.au/new-apartments/100-south-creek-road-cromer-nsw-2099">100 South Creek Road</a>, part of the former Roche landholding that EG acquired for $55 million in 2017 through its Yield Plus Infrastructure Fund No. 2.

EG is proposing what SJB describes as a new "urban village" set within the site's significant existing tree canopy.

<img alt="Cromer" data-entity-type="file" data-entity-uuid="482c9a58-49f1-4c53-a12e-aaa02336229f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-24%20at%2011.20.57%E2%80%AFAM.png?VersionId=hZP8_XfPnfNq500dbcjlpVwYU1ebhF9_" />

Around three hectares of the site is considered developable, with the balance incorporating a riparian corridor that would be rehabilitated and revegetated as part of the proposal.

The indicative masterplan comprises approximately 72 apartments in low-rise residential buildings and another 58 townhouses and duplexes.

The apartment component would include around five one-bedroom, 37 two-bedroom and 30 three-bedroom residences, while the townhouse and duplex component would be spread across several different housing typologies. The overall scheme would deliver around 19,500 sqm of gross floor area at an FSR of 0.6:1.

Parking for the apartment component is currently estimated at around 112 resident spaces and 14 visitor spaces, while the townhouse and duplex component would have 116 resident and 12 visitor spaces.

A significant part of the masterplan revolves around retaining the established landscape character of the former Roche campus.

SJB's plans show heavily treed setbacks along both Campbell Avenue and South Creek Road, a centrally located collection of significant native and exotic trees retained as communal open space, and the regeneration of the northern bushland area.

The existing creek corridor along the site's western edge would also be rehabilitated and revegetated, creating additional separation between the new homes and the neighbouring Northern Beaches Business Park.

A heritage-listed cottage and its garden setting would be retained and restored, with SJB flagging its potential adaptive reuse as communal space.

The proposal also includes new communal recreation areas, pedestrian connections to Campbell Avenue and South Creek Road, and a contribution toward improvements to the adjoining Michele Reserve.

Vehicular access would be restricted to South Creek Road, with no vehicle entry proposed from Campbell Avenue. The main internal road would largely follow the site's existing driveway to minimise the impact on established trees.

SJB said residential redevelopment presented an opportunity to retain the majority of the site's heritage-listed mature trees while delivering a broader range of housing types than typically seen across the Northern Beaches.

"The site being 3.27 hectares in area represents one of the largest vacant sites in common ownership in the Cromer and Dee Why area capable of residential renewal," SJB noted in the masterplan.

The architect said the proposal would particularly target housing diversity through townhouses and other "missing middle" typologies suitable for singles, young families, downsizers and retirees.

<img alt="Cromer" data-entity-type="file" data-entity-uuid="e3f5d841-8491-427e-8ada-c70d3d03d6bc" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-24%20at%2011.21.02%E2%80%AFAM.png?VersionId=xTV7r.q8lrTzC9vKzMS9zMbjm9wKwhgm" />

The site emerged following the subdivision of the former Roche campus into eastern and western parcels.

EG has already transformed the western portion into the Northern Beaches Business Park, which incorporates heritage-listed office space, modern warehouses and indoor recreation facilities.

The proposed residential community, referred to as Cromer East in SJB's plans, adjoins established housing to the north, east and south-east, while the business park sits beyond the creek corridor to the west.

It is also within 250 metres of Pittwater House School and Northern Beaches Secondary College, while bus stops within a three-to-five-minute walk provide connections to Dee Why, Brookvale and express services to the Sydney CBD. Cromer Park and the South Creek open space corridor are also nearby.

EG acquired the broader 7.5-hectare former Roche campus in 2017 for $55 million through its Yield Plus Infrastructure Fund No. 2. The campus at the time comprised more than 25,000 sqm of industrial and office buildings set within landscaped grounds.

The current residential site represents the eastern portion of that original holding.

EG's investment strategy for the fund has centred on acquiring income-producing real estate with longer-term rezoning and repositioning potential, particularly assets benefiting from infrastructure and changing land-use patterns.

EG also has an established residential track record across Sydney, including Bosco in Five Dock, Tempo in Drummoyne, The Flour Mill in Summer Hill and Pindari in Randwick.

The developer says it has delivered more than 1,000 homes to date, with a further 3,000-plus residences across its development pipeline.

Joel Robinson

First look: EG plans 130 apartments on former Roche pharmaceutical campus in Cromer

<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.

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.

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.

Across the three towers, SP Setia is proposing 606 build-to-sell apartments and 1,499 student accommodation units containing 2,009 beds.

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.

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

<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" />

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.

But one of the biggest components of the proposal is what sits between the buildings.

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.

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.

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.

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.

The proposal is being pursued through the Victorian Government's Development Facilitation Program under Clause 53.23 for significant residential development with affordable housing.

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.

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.

<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" />

SP Setia plans to deliver the development across three stages.

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.

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.

&nbsp;

&nbsp;

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

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.

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.

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.

“This is a deliberately very different proposition for us,"&nbsp;Tim Lowe, Co-Founder of Lowe Living, said.

"Eight residences is exceptionally boutique, but that's precisely what this site calls for.

“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.”

<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" />

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.

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.

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.

<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" />

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.

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.

Heritage has subsequently played a significant role in Cera Stribley's design.

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.

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.

<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" />

Rather than presenting as a single five-storey building to Erskine Street, Cera Stribley has broken the development into a series of distinct forms.

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.

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.

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.

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.

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.

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.

Lowe Living unveils Middle Park apartment development

Article summary

<ul data-end="888" data-start="289">
	<li data-end="442" data-section-id="8tsh6o" data-start="289">DVB Projects is preparing to launch its second Gold Coast apartment development, with demolition now underway at 137 Old Burleigh Road, Broadbeach.</li>
	<li data-end="573" data-section-id="1nyxl3e" data-start="443">The 34-level tower will comprise just 49 ultra-luxury residences, including half-floor, full-floor and penthouse apartments.</li>
	<li data-end="717" data-section-id="oiyimj" data-start="574">The launch follows strong demand at DVB's nearby Sea Glass project, which is more than 50 per cent sold and currently under construction.</li>
	<li data-end="888" data-section-id="epk9o9" data-start="718">The development adds to the transformation of Old Burleigh Road, with premium beachfront apartment projects continuing to reshape the tightly held Broadbeach strip.</li>
</ul>

<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.

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

<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" />

The start of demolition at 137 Old Burleigh Road signals DVB Projects’ underlying confidence in the Gold Coast’s luxury beachside apartment sector.

“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;

“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."

Brown says the site itself is "exceptional."

"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.”

<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." />

The project will comprise 40 half-floor residences of approximately 260 sqm, alongside eight full-floor residences spanning around 524 sqm.

A single penthouse will crown the building, featuring a private pool, barbecue area, indoor gym and dedicated entertaining spaces.

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.

<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" />

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.

“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.

“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.

“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.”

<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" />

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.

With the development moving into the delivery phase, 137 Old Burleigh Road is slated to hit the market later this year.

[smartcode_project_cta:default project_id=145141]

DVB Projects to launch second Broadbeach apartment tower as demolition commences

<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.

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>.

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.

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.

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.

<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" />

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.

"A strong landscape and public realm strategy underpins the proposal," Urbis states in the planning report.

"Public benefits include an affordable housing contribution, a new pocket park, generous landscaped setbacks, deep soil planting and integrated Water Sensitive Urban Design."

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."

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.

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.

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.

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.

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

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 weekly ANZ/Roy Morgan consumer confidence rating fell by 3.5 per cent last week. Sentiment towards household finances and the economy fell, despite a recovery in global stock markets and strong jobs data. However, the index remains above its long-term average of 112.9.  
<div class="x_WordSection1">
Consumers’ inflation expectations rose to 4.7 per cent last week, up from 4.4 per cent in the previous week. This is the equal highest reading in 13 months. The consumer assessment comes at a time when US markets are pricing-in higher inflation. The strongest US wages growth since June 2009 prompted the market sell-off a few weeks ago.
Assistant Governor Michele Bullock spoke on “Household Indebtedness and Mortgage Stress” in Sydney this morning. The Assistant Governor allayed concerns about household debt and mortgage stress. She highlighted that the “the overall level of stress among mortgaged households remains relatively low”. She also cited the HILDA survey, suggesting that “mortgage repayments were not at levels that would indicate an unusual or high level of financial stress for most owner-occupiers”. In fact, “the number of households experiencing financial stress has fallen steadily since the mid-2000s”. This view is in contrast to some private sector surveys which have pointed to rising financial/mortgage stress and the negative impact on household consumption.
<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/2018/2/21/comm1.jpg" alt="">
Reserve Bank Board minutes: The minutes from the February 6 Board meeting were issued. The Board’s neutral policy bias remain intact with a period of record low interest rate stability ahead for the foreseeable future. It noted that “inflation also remained low, but was expected to increase gradually as the economy strengthened and wage pressures rose over the forecast period.”
The consumer confidence figures have implications for retailers, and other consumer-focussed businesses. The Reserve Bank Board minutes provides guidance on interest rate settings.
</div>
 
<div class="x_WordSection2">
What does it all mean?
·         Political uncertainty in Canberra, falling home prices and lingering concerns about stock market volatility weighed on household’s views toward their finances and the economic outlook last week.
·         The weaker consumer confidence rating occurred despite record jobs growth and a recovery in share markets during the survey period. In fact, the Australian S&amp;P/ASX 200 Index, while down so far in February (-1.6 per cent to February 19), has outperformed US equities (Dow Jones Industrial Index, -3.6 per cent).  
·         Aussie households are also acutely aware of global developments. Inflation pressures are building in the US. Rising inflation in the form of wages growth and interest rate anxiety prompted the recent sell-off on Wall Street.
·         The US is enjoying full employment with the unemployment rate at 16-year lows of 4.1 per cent. Strong jobs growth and a tightening labour market have contributed to average hourly earnings jumping to 2.9 per cent on an annual basis in January, the largest increase since June 2009. 
·         And on Friday, the US January core Consumer Price Index increased by 0.35 percentage points - the highest monthly result in 12 years.
·         Despite US economic outperformance, the Aussie labour market is strengthening. In fact, a record 16 consecutive months of jobs growth has been posted with the annual pace of jobs creation (403,100) the highest in 12½ years.
·         Record jobs growth has lifted the consumer sentiment rating off its most recent lows back in August. And while consumer prices remain subdued because of global competition, Aussies’ expectations for price rises are growing. Certainly buoyant business conditions and profits are pre-conditions for pay rises. Skilled job vacancies are beginning to emerge in some industries.
·         The Reserve Bank Governor Philip Lowe recently spoke about the benefits of stronger wage growth. He was concerned that annual wage growth near 2 per cent was seen as the new norm. Governor Lowe said that a 2.5 per cent inflation rate was consistent with a 3.5 per cent lift in wages. 
·         In today’s February meeting minutes, the Board surmised that “it was possible that ongoing strength in the demand for labour might result in wage growth picking up by more than anticipated, both in Australia and abroad.”
·         The Reserve Bank appears comfortable with the rebalancing of the Aussie housing market and overall levels of household debt. Putting things into perspective, Assistant Governor Michele Bullock concluded that “the overall level of stress among mortgaged households remains relatively low” and “mortgage stress has fallen over the past decade”.
·         The Assistant Governor also remarked that risks from “household mortgage stress are not particularly acute at the moment”, with large mortgage buffers and other data suggesting “mortgage stress has fallen over the past decade”. Similarly, for investors, Ms. Bullock noted that these mortgagees tend to have higher deposits, higher incomes, more assets, have been “resilient to the recent (regulatory) changes” and that the risk to financial stability from this source also “remained low”.         
What do the figures show?
Consumer Sentiment
·- The weekly ANZ/Roy Morgan consumer confidence rating fell by 3.5 per cent to 115.3. Confidence is down by 3.2 per cent over the year, but well above the average of 113.5 since 2014 and average of 112.9 since 1990.
- All five components of the index fell in the latest week:
- The estimate of family finances compared with a year ago was down from +5.9 to +4.2;
- The estimate of family finances over the next year was down from +25.2 to +23.6;
- Economic conditions over the next 12 months was down from +13.2 to +7.0; 
- Economic conditions over the next 5 years was down from +16.5 to +6.3; 
- The measure of whether it was a good time to buy a major household item was down from +36.9 to +35.6.  
- The measure of inflation expectations 2 years ahead rose to 4.7 per cent from 4.4 per cent.
<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/2018/2/21/comm2.jpg" alt="">
 
Household Indebtedness and Mortgage Stress speech:
- Last paragraph: “The information we have suggests that, while there are some pockets of financial stress, the overall level of stress among mortgaged households remains relatively low.”
- “Appropriately prudent lending standards will continue to play an important role in ensuring that the financial system remains stable and households borrow responsibly.”
- On mortgage serviceability: “As recently as 2016, mortgage repayments were not at levels that would indicate an unusual or high level of financial stress for most owner-occupiers.” From the HILDA survey: “the median ratio of mortgage servicing payments to income has been fairly stable through time, remaining around 20 per cent in 2016”. Also, “financial stress for owner-occupiers with mortgage debt has not changed much over the past decade, and is actually lower than in the early 2000s. Around 12 per cent of such households indicated that they would expect difficulty raising funds in an emergency in 2016.”
<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/2018/2/21/comm3.jpg" alt="">
- On measures of financial stress: “Banks' non-performing housing loans have been trending upwards over the past few years, although they remain very low in absolute terms at around 0.8 per cent of banks' domestic housing loan books. Much of this rise is attributable to a rise in non-performing loans in the mining-exposed states of Western Australia and Queensland – not unexpected given the large falls in employment and housing prices in some of these regions.”
- On investor borrowing: “The recent increases in interest rates on investor loans, in response to APRA's measures to reduce the growth in investor lending, has probably affected the cash flows of investors. Interest rates on outstanding variable-rate interest-only loans to investors have increased by 60 basis points since late 2016. However, over the past few years, lenders have been assessing borrowers' ability to service the loan at a minimum interest rate of at least 7 per cent. So while interest rates and required repayments have likely risen, many borrowers should be relatively resilient to the recent changes.”
<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/2018/2/21/comm4.jpg" alt="">
 
Reserve Bank Board minutes:
- Last paragraph: “Taking into account the available information, the Board judged that holding the stance of monetary policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time.”  
- “Members noted that global growth could continue to surprise on the upside, given the synchronised nature of the current upturn. Stronger demand could induce higher global inflation than expected, which would have implications both for financial asset prices and exchange rates. Stronger global growth would boost growth and inflation in Australia, particularly if the exchange rate were to depreciate.”
- “Household debt levels remained elevated and members agreed that household balance sheets still warranted careful monitoring.”
- “Strong competition in the retail sector, which had placed downward pressure on the prices of consumer durables and food for some time, was expected to persist in the next few years.”
- Business conditions had remained at a relatively high level in recent quarters. Private non-mining business investment had increased by more than expected in the September quarter, to be nearly 10 per cent higher over the preceding year. Members noted that the prospects for private non-mining investment were more positive than they had been for some time.”
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- “Members observed that, while standard variable interest rates for housing loans had been little changed since mid 2017, the average outstanding variable rate had declined slightly as new and refinanced loans were typically being offered at lower rates.”
- “The unemployment rate was expected to decline a little further over this period to 5¼ per cent, consistent with GDP growth rising to be above potential.”  
- “Over 2017, progress had been made in reducing the unemployment rate and bringing inflation closer to target.”
- “There was still a risk that growth in consumption might turn out to be weaker than forecast if household income growth were to increase by less than expected.” 
- “Members noted that there had continued to be positive spillovers from the pick-up in public infrastructure investment, particularly in New South Wales and Victoria.”
- “The Australian dollar had appreciated a little on a trade-weighted basis over prior months, but had remained within the relatively narrow range in which it had been over the preceding couple of years.”
<h1>What is the importance of the economic data?</h1>
- The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
The Reserve Bank releases minutes of its monthly Board meeting a fortnight after the event. The minutes give a guide to Reserve Bank thinking on interest rate settings.
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<h1>What are the implications for interest rates and investors?</h1>
- Consumer confidence has improved since bottoming in August last year. Sentiment was at 4-year highs at the beginning of the year on the back of strong jobs gains and record low interest rates. The economic backdrop has not fundamentally changed despite recent share market volatility. 
- Political uncertainty in Canberra is nothing new to most Aussies. Hung parliaments and small government majorities have been the norm since 2010.
- But Aussie households are becoming acutely aware of building global inflationary pressures. All eyes will be on tomorrow’s quarterly Wages Price Index print.
- The Reserve Bank expects inflation to only increase gradually as the economy continues to strengthen on the back of robust business investment and infrastructure-related government spending. The global economic backdrop is supportive.
- The Bank’s liaison program also implied a recovery in retail sales following recent global competition-related weakness, a gradual rise in rents and a moderation in average outstanding variable mortgage rates.
- In an environment of weak income growth, household consumption and elevated mortgage debt remains an uncertainty this year. It is expected that as spare capacity in the labour market recedes over the year, this could boost wages growth, albeit gradually. 
- On a positive note, the Reserve Bank believes that Aussie mortgage stress is “relatively low”. And while debt levels are high, the number of owner-occupiers currently experiencing acute financial stress is not growing rapidly. 
- CommSec doesn’t expect a change in interest rates until late 2018 at the earliest.
 
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jrobinson-rf4aSBido9

Reserve Bank content, but consumers cautious: CommSec

jonathanchancellor-7SQnKwU6yx

Housing market conditions had generally eased in areas where growth had earlier been strong: RBA minutes

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The RBA have noted they are aware of the number interest-only loans which were penned before the recent tightening of mortgage lending.
Speaking at the Responsible Lending and Borrowing Summit on Tuesday, RBA assistant governor Michele Bullock said a "large proportion of interest-only loans are due to expire between 2018 and 2022".
Bullock said most of her focus has been on owner-occupiers, who account for around two-thirds of housing debt outstanding.
She said investors have less incentive than owner-occupiers to pay down their debt.
"Many take out interest-only loans so that their debt does not decline over time," Bullock said.
"If housing prices were to fall substantially, therefore, such borrowers might find themselves in a position of negative equity more quickly than borrowers with an equivalent starting LVR that had paid down some principal."
 
<img class="lazy620x0" src="http://www.afr.com/content/dam/images/h/0/w/c/e/g/image.imgtype.afrArticleInline.620x0.png/1519080192171.gif" alt="By early 2017, 40 per cent of the debt did not require principal repayments." width="620">
Bullock said there is always a balance to be struck with lending standards.
"If they are too tight, access to credit will be unreasonably constrained, potentially impacting economic activity and restricting some households from making large purchases that they can afford," Bullock suggested.
"If they are too loose, however, borrowers and lenders could find risks building on their balance sheets which, if large enough, might have implications for financial stability."
 
 
 
 
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Large proportion of interest only loans due to expire between 2018 and 2022: RBA

There are clearly households experiencing financial stress: RBA assistant governor

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The Australian Prudential Regulatory Authority has released a proposal that will require banks to differentiate risk weightings for residential mortgages.
It could potentially increase the cost of writing higher-risk loans.
The proposal seeks changes to the risk weightings banks should apply to owner-occupier, investor, interest-only and non-standard loans.
The paper noted APRA's view that there are "potential systemic vulnerabilities" to the financial system created from high levels of residential mortgages lending for investment purposes.
The Australian Broker news website reported ANZ and Westpac Group had introduced confidential changes to their assessment and approval of borrowers.
ANZ was adjusting the discretion available for its frontline mortgage assessors.
A spokesman for ANZ said the bank recently added "a higher level of approval for some discretions" used in its home loan policy for assessing serviceability.
Mortgage brokers claim banks seem to be showing less flexibility in interpreting guidelines on such matters as irregular income when assessing loan applications, BrokerNews advised after a report in the AFR.
The report also said that Westpac recently introduced strict tests of residential property borrowers' current and future capacities to repay their loans.
The change is said to be intended to identify scenarios that might affect borrowers' capacity to pay back their loans. These include having dependents with special needs that might require borrowers to spend on long-term care and treatment.
When asked for comment, a Westpac spokesperson told Australian Broker that the AFR report was based on a note the bank sent to brokers on Monday (12 February).
Earlier this month, Westpac amended its borrowing terms, including allowing the use of desktop valuations only for a maximum LVR of 90%.
A Westpac spokesperson told Australian Broker that the bank has also updated its household expenditure measure in line with the benchmark published by the Melbourne Institute for Social and Economic Research.
This followed Westpac's announcement in December that it would require home loan borrowers to disclose what they owe on short-term buy-now, pay-later loans on digital credit platforms like AfterPay and ZipPay. 
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j.ballantyne1990-6AQqhLzZaK

High risk home loans targeted by APRA

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Online lender <a href="http://loans.com.au/" target="_blank" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://loans.com.au&amp;source=gmail&amp;ust=1518571026670000&amp;usg=AFQjCNEDFZS7g-pwfjSJyfsyomnKSrxPtw">loans.com.au</a> has cuts home loan interest rates for homebuyers to just 3.52 percent.
Its managing director Marie Mortimer said the decisive 12 basis point cut would force the banks to lower their rates or continue losing market share to <a href="http://loans.com.au/" target="_blank" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://loans.com.au&amp;source=gmail&amp;ust=1518571026670000&amp;usg=AFQjCNEDFZS7g-pwfjSJyfsyomnKSrxPtw">loans.com.au</a>.
“We have grown from nothing in 2011 to almost $6 billion in loans under management today by consistently offering the lowest interest rates to Australian borrowers,” Ms Mortimer said. 
For owner occupier borrowers who are purchasing or refinancing, the site has dropped the rate on its streamlined Essentials product to just 3.52 per cent, and its Offset product to 3.60 per cent.
For investors, the innovative Smart Loan Package starts at 3.89 percent.
Mortimer said the new rates would help the site in its mission to rapidly drive online lending from five to 25 per cent of the Australian lending market.
Parent company Firstmac has surged to become the 14th largest residential mortgage lender in Australia, ahead of household names including Citbank, Heritage Bank, and Newcastle Permanent.
It is also Australa’s largest non-bank lender with aspirations to become an ADI.  
 
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Online lender loans.com.au cuts rates for investors and home buyers

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A three bedroom Edmonton house has been sold for $330,000 by mortgagees. 
The <a href="https://www.realestate.com.au/sold/property-house-qld-edmonton-127134422" target="_blank">south Cairns</a> home in Queensland was sold by Therese Plath from Ray White.
It had sold at $350,000 in 2014.
Located at 17 Maren Street, it came with three bedrooms, two bathrooms and swimming pool.
Other features in this home include security screens throughout, garden shed, external covered laundry and double carport.
According to CoreLogic, the suburb's median house price is $350,000.
 
 
 
 
 
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Loss taking Edmonton, South Cairns home sold by mortgagee 

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The APRA benchmark of no more than 30 per cent of new lending by Australian banks being on interest-only terms was not overly restrictive for borrowers who genuinely need the form of finance.
While roughly 1-in-3 loans granted can still be on an interest-only basis, APRA boss Wayne Byres advised last week that data for the last quarter of 2017 shows that only about 1-in-5 loans were interest-only.
Byres said it had required the major interest-only lenders to establish strategies that incentivise more borrowers to repay their principal.
"The industry has been quite successful in doing so:, and the number of interest-only loans with high LVRs continued to fall to quite low levels.
"All of that is positive for the quality of loan portfolios," he told the A50 Australian Economic Forum dinner.
"While the direction in asset quality is positive, we’re not declaring victory just yet.
"We still want to see that the improvements the industry has made are truly embedded into industry practice.
"And we can modify our interventions as more permanent measures come into play.
"That will include, amongst other things, further strengthening of borrower serviceability assessments by lenders, strengthened capital requirements for mortgage lending imposed by us, and comprehensive credit reporting being mandated by the Government.
"Through these initiatives, we are laying the platform to make sure prudent lending is maintained on an ongoing basis," he said.
Lending restrictions put in place by APRA on interest-only loans cost borrowers $500 million a year, according to the Productivity Commission.
In its draft report released following its review into competition in the Australian financial system, the PC has suggested that macro-prudential measures introduced to reduce IO lending were “blunt interventions."
“We estimated that the cost borne by taxpayers as a result of changes in home loan investor rates following APRA’s intervention on interest-only loans in 2017 was up to $500 million per year,” the PC report reads.
The PC claimed that the regulator’s measures boosted lender’s profits, reduced market competitiveness and hiked interest rates.
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APRA says IO loans now sit at 1 in 5 loans

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The Reserve Bank has made no changes to forecasts for economic growth and underlying inflation. “It will be some time, however, before the economy reaches current estimates of full employment and inflation returns to the midpoint of the target.”
The number of loans (commitments) for home owners (owner-occupiers) fell by 2.3 per cent in December - the third fall in four months. 
The value of new housing commitments (owner occupier and investment) fell by 1.6 per cent in December. Owner-occupier loans fell by 1.0 per cent and investment loans fell by 2.6 per cent. The value of loans actually advanced was $22 billion – the second highest amount on record.
The home loan data have implications for builders, housing-reliant businesses, finance providers, retailers, and companies dependent on consumer and business spending.
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What does it all mean? 
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· Move on, move on, nothing to see here. That is the clear message from the Reserve Bank. Interest rates are going nowhere. The defining sentence is: “It will be some time, however, before the economy reaches current estimates of full employment and inflation returns to the midpoint of the target.”
· The Reserve Bank Governor spoke last night and stressed that rates would likely remain unchanged for some time. The key area to watch is the job market, especially “how quickly spare capacity is absorbed.”
· If inflation continues to hold near 2 per cent, there will be no reason to either lift or cut rates. Of course, if you have a healthy economy, with few imbalances, that is what you want – interest rate stability. The economy is in good shape and expected to stay that way over 2018.
· Unemployment is expected to be broadly between 5.0-5.5 per cent for the next 2½ years. So-called “full employment” is near 5 per cent. So wages aren’t likely to soar, thus keeping inflation low and interest rates stable.
<h1>What do the figures show?</h1>
<h1>Key messages from the Reserve Bank report</h1>
“Over the course of 2017, the unemployment rate declined and inflation increased a little. The accommodative setting of monetary policy has played a role here. Further progress on both fronts is expected over the next couple of years. It will be some time, however, before the economy reaches current estimates of full employment and inflation returns to the midpoint of the target.”
“Strong competition among retailers is contributing to ongoing deflation in prices of consumer durables and several other retail categories; food prices (excluding volatile fruit and vegetable prices) have been broadly flat for some time.”
“The forecasts for inflation are similar to those published in the November Statement. Inflation is likely to increase gradually over time, as the economy and labour market strengthen.”
“Financial market volatility has picked up in recent days, most notably in equity markets as market participants have begun to reassess the outlook for global inflation and the speed of withdrawal of monetary accommodation.”
“Domestically, the recent run of activity data has been in line with, or a little stronger than, expectations at the time of the November Statement on Monetary Policy. The labour market has been particularly strong.”
“Household consumption growth was weak in the September quarter but indications are that it recovered in the December quarter. Consumption growth is expected to be a little above its decade average in the period ahead.”
“It is unclear whether participation rates will increase further and, if so, by how much; this represents an uncertainty around the question of how spare capacity in the labour market is likely to evolve.”
“..the unemployment rate is likely to remain above estimates of full employment in Australia for some time.”
Housing finance - number
·  The number of loans (commitments) by home owners (owner-occupiers) fell by 2.3 per cent in December – the third fall in four months. Loans are up 0.5 per cent on the year.
·  Loans by owner-occupiers for the construction of homes fell by 1.1 per cent in December – the fourth fall in five months.
·  Loans to buy newly-erected dwellings fell by 3.8 per cent in December – the biggest fall in 10 months.
·  Loans for the purchase of established dwellings (excluding refinancing) fell by 3.9 per cent in December – the biggest fall for almost two years.
·   The number of refinancing transactions rose by 0.4 per cent in December after rising 1.8 per cent in November.
·   Changes in home loan across the country: NSW (down 2.5 per cent); Victoria (down 2.6 per cent); Queensland (down 0.7 per cent); South Australia (down 1.1 per cent); Western Australia (up 1.0 per cent); Tasmania (down 2.3 per cent); Northern Territory (up 0.5 per cent); ACT (down 7.1 per cent).
Housing finance - value
·  The value of new housing commitments (owner occupier and investment) fell by 1.6 per cent in December. Owner-occupier loans fell by 1.0 per cent and investment loans fell by 2.6 per cent.
·  The value of loans by owner-occupiers and investors to build new homes fell by 5.8 per cent in December, down from a record $3.42 billion to $3.22 billion.
Housing finance – other statistics
·         The value of cancelled loans fell by 2.0 per cent in December after rising by 3.5 per cent in November.
·         Commitments actually advanced (loans made) rose by 3.2 per cent in December to 2-year highs after lifting 8.6 per cent in November.
·         The proportion of first-time buyers in the home loan market eased from a 5-year high of 18.0 per cent to 17.9 per cent in December (decade-average 17.9 per cent). 
·         The proportion of fixed rate loans fell from 15.8 per cent to a 9-month low of 14.9 per cent in December.
·         And the average home loan across Australia stood at $393,200 in December, up by 4.6 per cent on the year.
Chinese inflation
· The annual rate of consumer prices fell from 1.8 per cent to 1.5 per cent as expected in January. The annual rate of producer prices in January fell from 4.9 per cent to 4.3 per cent (forecast 4.4 per cent).
<h1>What is the importance of the economic data?</h1>
· The Reserve Bank releases its Statement on Monetary Policy each quarter. The Statement is the Reserve Bank’s assessment of economic and financial conditions and also contains the latest inflation views. The Statement is crucial is assessing the short-term outlook for interest rates.
· Housing Finance data is produced monthly by the Bureau of Statistics and shows commitments by lenders, such as banks, to provide finance for housing purposes. The lending figures relate to those looking to buy or build homes to live in as well as those seeking to buy or build homes for investment purposes. Generally people get their finance organised first, so the figures are regarded as a leading indicator on the housing market.
<h1>What are the implications for interest rates and investors?</h1>
·  Interest rates are firmly on hold. It is of little value to signal the timing or direction of rate moves at the current time.
· Investors are fretting about the potential for higher inflation and thus higher interest rates. But in China, the pace of inflation is actually easing. Even here in Australia the Reserve Bank expects inflation to hold near 2 per cent for some time and the current inflation rate is still below the Reserve Bank’s 2-3 per cent target zone.
· The steam continues to be taken out of the housing market. A healthy $22 billion was actually advanced to home buyers in December – the second largest amount ever. But exuberance has been replaced with caution.
Craig James is chief economist at CommSec.
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Long period of interest rate stability is likely: CommSec's Craig James 

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Conditions in the established housing market have cooled in recent months, the RBA has noted in its statement of monetary policy issued this morning.
Housing prices in Sydney have declined a little, conditions in Melbourne have eased following several years of strong price growth and conditions in most other capital cities remain subdued.
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In Perth, housing prices were flat in the last quarter of 2017. In Brisbane, apartment prices have been relatively stable, following earlier price falls, while detached house prices have increased slightly.
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Conditions in established housing markets continued to ease in the second half of 2017. 
"This was most evident in Sydney, where housing prices have declined and auction clearance rates are below their decade average (Graph 3.12).
 
Click here <a href="https://www.propertyobserver.com.au/images/2018/2/9/Graph_12.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/2018/2/9/Graph_12.jpg" alt="">
"In Melbourne, housing price growth has declined and auction clearance rates have trended lower in recent months." 
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It suggested in Sydney and Melbourne, the decline in established housing price growth has been most pronounced for detached houses and for the most expensive properties; prices in both of these categories tend to have larger cycles than other market segments (Graph 3.13). 
The increased supply of housing and an apparent reduction in demand from foreign buyers for newly built properties are likely to be placing downward pressure on prices in Sydney, Melbourne and Brisbane though this is being offset to some extent by increased population growth, especially in Melbourne.
 The value of housing loan approvals has been broadly stable in aggregate since the end of 2016, though the composition has shifted towards owner-occupiers and away from investors, it noted.
 
Click here <a href="https://www.propertyobserver.com.au/images/2018/2/9/graph13.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/2018/2/9/graph13.jpg" alt="">
Overall, growth in advertised rents picked up in the second half of 2017 due to increases in Sydney and Melbourne. 
Rents in Brisbane appear to have stabilised following earlier declines. Advertised rents in Perth have continued to decline, consistent with the ongoing high vacancy rate, but to a lesser extent than previously. 
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"If housing prices were to fall significantly, households might respond by curtailing their consumption expenditure and dwelling investment," it reported.
"Employment in the construction sector would also be weaker.
"Lower housing market activity would affect state government revenues, which may affect decisions about expenditure on activities such as infrastructure projects."
It noted however if, on the other hand, population growth were to pick up or the reported reduction in foreign demand for newly constructed properties turns out to be temporary, housing prices may be stronger than expected.
"In such a scenario, dwelling investment could increase, rather than broadly stabilise, or stay higher for longer than currently forecast.
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Household indebtedness is high and debt levels relative to income have edged higher because household credit growth has continued to outpace weak income growth.
"Steps taken by regulators to address the risks in household balance sheets have seen the growth in riskier types of lending to households moderate, but risks remain," it noted adding a highly indebted household sector is likely to be more sensitive to changes in income, wealth or interest rates. 
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