Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

Joel Robinson

First look: SP Setia targets St Leonards skyline with 40-storey TOD tower

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

First look: Urban Property Group unveils Newcastle’s latest tower at Wickham interchange

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

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The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
</section>
</section>

[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

Local Little Bay residents, along with buyers from premium postcodes across Sydney’s affluent Eastern Suburbs, have dominated purchases in developer-builder Urban Property Group’s first Eastern Suburbs apartment development, <a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a>.

The $250 million coastal project, one of the first new developments in the area in several years, has proven particularly popular with downsizers, especially those from Coogee and Bondi. One Double Bay downsizer paid $4.7 million for a four-bedroom penthouse, setting a new local apartment price record in the process.

Buyers have been attracted to the combination of coastal tranquillity, premium design and amenity-rich neighbourhood living. The walkable village setting, along with proximity to three of Sydney’s leading golf courses, New South Wales Golf Club, St Michael’s Golf Club and The Coast Golf Club, has also been a key drawcard.

[smartcode_project:default project_id=112343 project_image_fid=352689]

Built across two low-rise buildings designed by <a href="https://www.apartments.com.au/architects/hill-thalis-architecture-urban-projects-pty-ltd">Hill Thalis</a> and set along a lush, landscaped green spine, designed by leading landscape architect <a href="https://www.apartments.com.au/landscape-architect/arcadia-landscape-architecture">Arcadia</a>, ESTE Little Bay offers a collection of one, two, three and four-bedroom residences with interiors by Richards Stanisich.

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> Sales Director, Tom McIvor said the response to ESTE has been "nothing short of extraordinary."

“Buyers have been quick to recognise ESTE as a rare opportunity to invest in a coastal sanctuary that offers both seclusion and connectivity to the heart of Sydney,” McIvor said.

[smartcode_project:default project_id=112343 project_image_fid=352687]

<a href="https://www.apartments.com.au/project-marketer/srm-residential">SRM Residential</a> Senior Director, <a href="https://www.apartments.com.au/project-marketer/srm-residential">Clayton Ross</a> said the local market has responded incredibly well, driven by ESTE’s exceptional location and the rarity it offers.

“We’ve seen strong interest from a variety of buyer groups, all of whom are drawn to the exclusivity and quality of the build and construction by the 4.5-star iCIRT-rated builder / developer, Urban Property Group. There’s truly nothing else like it along Sydney’s coastline.”

[smartcode_project:default project_id=112343 project_image_fid=352690]

The project also includes robust buyer protections, including Resilience Insurance’s Latent Defects Insurance, providing 10 years of structural cover, and an independent iCIRT-rating of the developer.

“The iCIRT-rating adds another layer of confidence,” Ross added. “Buyers see it as a safeguard for their investment and their lifestyle.” A highlight of ESTE’s offering is its exclusive wellness amenities, including a heated rooftop infinity pool and outdoor heated spa, a state-of-the-art Technogym fitness centre, and a sauna.

<a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a> is topped out and is on track to complete towards the end of 2026, with residents moving in before Christmas.

[smartcode_project_cta:default project_id=112343]

Eastern Suburbs buyers snap up ESTE Little Bay apartments

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

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

NAB bring forward first RBA cut to February 2025

<html><body>
National Australia Bank (NAB) and realestate.com.au have announced a five year partnership aimed at combining the property search with securing finance.
“By partnering with NAB, we are building a truly innovative solution that will marry property search and property finance,” said Tracey Fellows, CEO of REA Group, which operates realestate.com.au.
“We will be assisting home buyers throughout their entire property journey, whether it be buying, renting, investing or selling.”
Anthony Cahill, COO at NAB, said that the partnership would combine online property searching and home lending in a manner unseen both nationally and globally.
“We’re combining our respective expertise to deliver more to Australian property buyers and create a game-changing experience,” he said.
With the partnership just announced, details on the exact products to be offered have yet to be announced.
</body></html>

j.ballantyne1990-6AQqhLzZaK

Realestate.com.au website partners with NAB to offer home loans

<html><body>
GUEST OBSERVATION
The December RBA minutes are consistent with the recent narrative out of the RBA which points to policy on hold, according to Commonwealth Bank's economic update.
The level of inflation and spare capacity in the economy gives the bank scope to cut rates if the economic data makes the case.
But today’s minutes suggest it would take a shift in the economic landscape for the cash rate to move lower from here.
To recap, the RBA left the cash rate unchanged at 1.5% at the December board meeting. And the final paragraph contained an unchanged neutral bias.
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This was reaffirmed in today’s minutes.
Namely, that: “having eased monetary policy earlier in the year, the Board judged that holding the stance of policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time.”
"In our view, there is a paragraph in the December minutes that contains the thumb print of new governor Philip Lowe," the updated stated.
The key lines being that the board discussed the “effect of lower interest rates on asset prices and the decisions by households to borrow, particularly given the already high levels of household debt”.
“The Board had sought to balance the benefits of lower interest rates in supporting growth and achieving the inflation target with the potential risks to household balance sheets.”
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"Members recognised that this balance would need to be kept under review.”
These are indications that the RBA, under Governor Lowe, is placing a little more emphasis in policy settings on asset prices and financial stability than it did under former governor Stevens.
Here we recall that there have been a series of developments since RBA governor Lowe took the helm that mean the hurdle for more policy easing is a notch higher than it was under Glenn Stevens.
First, there were tweaks to the RBA’s policy framework. The inflation target was reaffirmed as 2-3% per annum.
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But “on average over the cycle” was replaced with “over time”. There was also a drafting change that, at least cosmetically, makes the link between monetary policy and financial stability a little more direct.
These two changes point to a central bank that appears more willing to tolerate inflation outside of the target band for a little longer than they may have done in the past.
On the international economy, the bank is a little more upbeat than previously, noting that developments had been “more positive” in recent months and that the Chinese economy had “remained resilient”.
The RBA is a little more hawkish on global inflation, noting that the outlook is more “balanced” than it has been for a while.
On the domestic economy, the RBA noted that, “year-ended growth was expected to decline”. Here we note that the December board meeting predates the QIII GDP ‘shocker’.
And while the RBA was expecting a soft print, the 0.5% fall in GDP would not have been in their growth profile.
As such, we expect the bank to downgrade their GDP forecasts in the February statement on monetary policy (SMP).
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Growth is expected to pick up to be “above potential” later in the forecast period as the impact of declining mining investment on the economy wanes.
"We agree and would add that on our estimates we are about 85% through the expected decline in mining investment," the update stated.
The RBA lacked conviction in its assessment on the labour market by indicating that there was still “considerable uncertainty” about its “momentum”.
Clearly the bank is struggling with the rare combination of a downward trend in both employment growth and the unemployment rate.
On that score, last week’s comprehensively strong November employment report will settle some nerves in Martin Place around the health of the labour market.
The pulse of jobs growth was easing into the November print (which predates the December board meeting) so the solid increase in jobs over the month (all full-time), coupled with a lift in participation and fall in the underutilisation rate would have been a welcome update.
Interestingly, the RBA mentioned a new hours-based measure of labour market underutilisation that had declined to a similar extent as the unemployment rate.
The Bbank stuck to the recent script on the housing market by noting that: “Conditions had strengthened overall over preceding months, although there was considerable variation across the country.”
On the AUD, the Board had very little to say which is probably related to their satisfaction with what has been happening.
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Commodity prices have been firming, but since mid-November (i.e. over the past month) the AUD has fallen 41⁄4% against the USD and 13⁄4% on a TWI basis.
The fall largely reflects USD strength which is the ideal outcome for the Australian economy at the moment.
The Outlook
With no meeting in January, the next RBA Board meeting is seven-odd weeks away.
There will be a lot of economic data out between now and then. And overlying that, financial markets will continue to adjust to the new economic paradigm under a Trump presidency.
We think that the RBA faces a tough job in returning inflation to target. But new Governor Philip Lowe looks more willing to tolerate inflation outside of the target band if it reduces the risk of financial imbalances and the further build of up debt in the household sector.
In addition to today’s minutes, governor Lowe’s comments from his CEDA address in November that: “It is unlikely to be in the public interest, given current projections for the economy, to encourage a noticeable rise in household indebtedness, even if doing so might encourage slightly faster consumption growth in the short term” are still ringing in our ears."
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"To us, Lowe’s comments are a strong hint that the governor doesn’t want to take the cash rate lower. And he reminded us today that the cash rate had been “lowered in aggregate by 31⁄4 ppts” over this easing cycle," the update stated.
The risks over the next year continue to lie with a cut and the market is pricing in a small (10%) chance that policy is eased again.
But the house view is that those risks don’t materialise and we have policy on hold at 1.5% over 2017.
Gareth Aird is senior economist with Commonwealth Bank.
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Market pricing implies 10% chance interest rates will go lower: Gareth Aird

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GUEST OBSERVATION
The Reserve Bank board minutes make for interesting reading, although there was no significant surprise in views.
Board members were upbeat about the improvement in the global economy – particularly China and were also aware of the likelihood of the weaker domestic September quarter economic growth result.
Interestingly, policymakers highlighted a couple of concerns at the time of the December 6 Board meeting – in particular the complications of “an appreciating exchange rate” on rebalancing the economy and “uncertainty about the moment in the labour market”.
Since the board meeting the Australian dollar has lost well over two cents (2.4%) against the US dollar and is even 1.3% lower against the trade weighted index.
Importantly the latest round of employment data showed a substantial rebound in full-time employment.
No doubt it is still early days but the improvements would give policymakers a degree of comfort.
Looking forward it is likely that the lift in commodity prices should support medium-term employment in the commodity states.
The focus for central bank official would be on how the business investment profile shifts over the coming year.
It is clear that a lift in non-mining business investment will be need to support broader economic growth.
Overall inflation remains well contained despite the lift in commodity prices.
Simply interest rate settings are likely to remain stable until well into 2017.
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Members noted that the international environment had been more positive in recent months, while observing that significant risks to the outlook for global activity persisted.
The Chinese economy had remained resilient, supported by expansionary fiscal policy and rapid growth in financing.
“There was still considerable uncertainty about the momentum in the labour market,” the minutes said.
The unemployment rate had declined over the past year, as had measures of excess capacity that accounted for the number of additional desired hours of work.
Part-time employment had grown strongly over the previous year, but employment growth overall had slowed.
Members noted that there was expected to be excess capacity in the labour market for some time, which was consistent with further indications of subdued labour cost pressures.
This suggested that inflation would remain low for some time before returning to more normal levels.
“Members noted that these factors had assisted the economy in its transition following the mining investment boom and that an appreciating exchange rate could complicate the adjustment.”
“Housing market conditions had strengthened overall over preceding months, although there was considerable variation across the country and between houses and apartments. Housing credit growth had picked up a little, particularly for investors.”
“Prices for a number of Australia's key commodities, including coking coal, iron ore and base metals, had increased noticeably over the June and September quarters, which had contributed to the increase in Australia's terms of trade of about 6% over that period.
“3Commodity prices had risen further over November, suggesting that an increase in the terms of trade in the December quarter was likely.
“Taking into account the information that had become available over the previous month, and having eased monetary policy earlier in the year, the Board judged that holding the stance of policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time.”
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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.
CommSec expects the Reserve Bank to remain on the interest rate sidelines for an extended period.
Could the next move in interest rates be a rate hike rather than a rate cut? It’s important not to get too far ahead of ourselves.
Inflation is still historically low. And while there is speculation of growth-focussed policies in the US, they haven’t been fleshed out.
However you get a sense that inflation has reached an inflexion point.
Savanth Sebastian is senior economist with CommSec.
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RBA board members upbeat about improvment in global economy: Savanth Sebastian

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GUEST OBSERVATION
The new governor of the Reserve Bank Philip Lowe has used the minutes to the December board meeting to clearly lay out his delicate policy challenge over the next year.
We have been used to monetary policy being largely driven by changes in the inflation outlook or prospects for economic growth.
While these factors remain entirely relevant for the bank, the minutes note that the board members took time to assess the policy decisions made since the latest easing cycle began in late 2011.
The key issue for discussion was around the impact of lower interest rates on asset prices and borrowing decisions.
The definitive quote is: “Over recent years the board had sought to balance the benefits of lower interest rates in supporting growth and achieving the inflation target with the potential risks to household balance sheets. Members recognised that this balance would need to be kept under review.”
I think this observation, which figures so prominently in the minutes, is signalling that the hurdle to even lower rates which would be aimed at boosting demand is very high.
With housing markets in the south-east remaining vibrant the risks of further cutting rates appear to be quite concerning for the board.
That view has certainly been a key aspect of our view that the cash rate was likely to remain on  hold for an extended period following the (inflation-motivated) rate cut in August.
Observations around the economy were broadly in line with the governor’s statement on December 6.
At the time of the meeting the board was unaware that the Australian economy contracted by 0.5% in the September quarter.
However it was aware that growth in the September quarter was likely to be weak and certainly weaker than had been expected at the time of the November statement on monetary policy.
However, as we saw in the government’s mid-year economic and fiscal outlook which printed yesterday the official forecasts (not necessarily exactly held by the RBA) imply average quarterly growth rates of 0.8% in the December(2016), March ( 2017) and June (2017) quarters.
Hence the minutes still refer to “growth picking up to be above potential later in the forecast period”.
The views on the labour market are less confident than we saw in the last set of minutes – “there was still considerable uncertainty about the momentum in the labour market”.
Having noted this quote it is however interesting that the detailed discussion on the labour market seeks to align the fall in the unemployment rate with a similar hours-based measure, providing more credibility to that fall.
The commentary on the housing market remains upbeat while recognising that there was considerable variation across the country and between houses and apartments.
There is also some positive commentary around the consumer.
We now know that consumer spending in the September quarter was well below average but the minutes point out that since then retail sales have grown at an above average pace and liaison with retailers suggested that trading conditions had remained “steady”.
The minutes are also seeking to paint a better picture for non-mining investment than the downbeat capital expenditure survey that printed in late November – “Over the past few years the national accounts had tended to report stronger outcomes [than the capex survey]”.
The commentary around China remains unchanged with activity being supported by accommodative policy although longer term risks associated with rising debt remain elevated.
The minutes had no real insights into the outlook for the US or markets. Uncertainty around Mr Trump’s policy agenda remains the challenge.
With the negative GDP print for September not being known at the time of the meeting this was always going to be a difficult set of minutes to write.
In the event the board has chosen to highlight in the minutes aspects of the discussion that provide a reasonably upbeat assessment of the economy: growth is expected to bounce back; spare capacity in the labour market, while ongoing, appears to have been reduced; the housing market has strengthened; consumer spending and non- mining investment prospects have improved.
However of most significance is the policy commentary that, I believe, implies a fairly clear signal that monetary policy is now representing asymmetric forward risks with the benefits to spending from the lower rates not compensating for instability in asset markets. Of most concern here are the elevated levels of household debt.
It has been Westpac’s view for some time that rates are likely to remain on hold through 2017 and 2018 and the discussion in these minutes gives no reason to qualify that view.
Bill Evans is the chief economist with Westpac.
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RBA won't risk financial stability with another rate cut in 2017: Bill Evans

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Carol Schwartz has been appointed to the Reserve Bank of Australia (RBA) board, replacing Heather Ridout.
She describes herself as "a dove with a hawk's wings" when it comes to prioritising economic growth and inflation.
"It's a balance, isn't it," Schwartz said in an interview with Bloomberg.
"You have to be very careful about growth, you always have to have an eye for growth. But at the same time, obviously, inflation has an impact that one has to be incredibly aware of."
Schwartz, with a background in property and retail, will commence a five-year term from mid-February.
Schwartz has previously served as a non-executive director of the Bank of Melbourne, the chair of Industry Superannuation Property Trust and as national president of the Property Council of Australia.
Three of the RBA's nine board members are women.
Schwartz said the real estate industry must always be "vigilant" about the outlook: "Looking out for signs of overheating as well as looking out for signs of great opportunity.
"The property market always has pockets of opportunity, but at the same time one needs to be aware of those areas where things may be overheating and take a step backwards."
"The economy is patchy," Schwartz said, when asked for her take on it.
"As it always is. You've always got areas that are doing well and areas that aren't doing so well, and periods of time even in one year, particularly in retail where you might have several good months and then unexpectedly several bad months. And there are a lot of factors that impact on that."
Her current directorships include Stockland, Qualitas Property Partners and Trawalla Group.
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jchancellor-FAypfDUnLy

Carol Schwartz joins RBA board

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Minutes of the Monetary Policy Meeting of the Reserve Bank Board
Sydney – 6 December 2016
Members Present
Philip Lowe (Governor and Chair), Guy Debelle (Deputy Governor), John Akehurst, Kathryn Fagg, John Fraser (Secretary to the Treasury), Ian Harper, Allan Moss AO, Heather Ridout AO, Catherine Tanna
Others Present
Christopher Kent (Assistant Governor, Economic), Chris Ryan (Acting Assistant Governor, Financial Markets), Luci Ellis (Head, Financial Stability Department), Alexandra Heath (Head, Economic Analysis Department)
Anthony Dickman (Secretary), Andrea Brischetto (Deputy Secretary)
Domestic Economic Conditions
Members commenced their discussion of the domestic economy by noting that the unemployment rate was unchanged at 5.6 per cent in October, somewhat more than ½ percentage point below its peak in mid 2015.
Despite a rise in full-time employment in October, all of the growth in employment over 2016 had been in part-time employment, with an increased share of people in the labour force reporting that they would like to work more hours.
Members discussed various measures of labour underutilisation, including those that account for the number of hours sought by the unemployed and the additional hours desired by those who are underemployed (and who are also recorded as actively searching for additional hours).
Such hours-based measures of underutilisation had declined to a similar extent as the unemployment rate since late 2015 and, unlike the heads-based measure, had not increased recently.
Wage growth had remained low and continued to be lower than implied by the historical relationship with the unemployment rate.
The wage price index (WPI) had increased by a little less than expected in the September quarter and year-ended growth in the WPI had eased a little further.
Although there had been some evidence from enterprise agreements that growth in construction wages had picked up recently, these agreements covered a relatively small share of the total workforce.
Members noted that the September quarter national accounts would be released the day after the meeting.
Based on recent data, GDP growth was likely to be weaker than expected at the time of the November Statement on Monetary Policy and lower in year-ended terms than estimates of potential growth.
Consumption growth was expected to have remained below average in the September quarter.
The volume of retail sales, which represent around one-third of total consumption, had been little changed in the quarter, pointing to continued weakness in growth of goods consumption.
In contrast, in recent months, the value of retail sales had grown at an above-average pace and liaison with retailers suggested that trading conditions had remained steady.
Households' perceptions of their personal finances had remained at above-average levels.
Members noted that the work done on residential construction had fallen in the September quarter, suggesting that the national accounts measure of dwelling investment was likely to have declined in the same period.
Although residential building approvals had declined sharply in October, the significant amount of work in the pipeline suggested that the level of dwelling investment activity would remain high.
Nevertheless, the contribution of dwelling investment to growth was expected to decline over the forecast period.
Overall, conditions in the established housing market had strengthened over recent months. Members noted, however, that supply and demand conditions had continued to vary across the country.
In Sydney and Melbourne, housing price inflation had picked up and auction clearance rates were at high levels.
Outside of Sydney, increases in prices of apartments had generally been smaller than increases in prices of detached houses.
Investor housing loan approvals had picked up noticeably and credit growth had also increased a little over recent months, particularly in New South Wales.
In contrast, housing market conditions had remained weak in Perth. Rental markets had been subdued overall and continued to be particularly weak in Perth.
Business investment looked to have been a little weaker than expected in the September quarter.
The ABS capital expenditure survey and separate data on non-residential building work done had suggested that mining investment fell in the quarter. Further falls were anticipated, but the subtraction from GDP growth in 2016/17 was expected to be smaller than in 2015/16.
Capital expenditure for the non-mining activity covered by the survey, which is less than half of the activity covered in the national accounts measure of non-mining business investment, was little changed over the year to September.
Capital expenditure survey data on investment intentions continued to point to a decline in non-mining investment in 2016/17.
Members also noted that, over the past few years, the national accounts had tended to report slightly stronger outcomes for non-mining business investment than implied by the data on capital expenditure intentions.
Non-residential building approvals had increased in recent months, but the pipeline of non-residential construction work was low.
Private sector survey measures of business conditions and non-mining capacity utilisation had been above their long-run averages, but had eased since earlier in the year.
Export volumes increased in the September quarter, led by service exports.
Prices for a number of Australia's key commodities, including coking coal, iron ore and base metals, had increased noticeably over the June and September quarters, which had contributed to the increase in Australia's terms of trade of about 6 per cent over that period.
Commodity prices had risen further over November, suggesting that an increase in the terms of trade in the December quarter was likely.
Oil prices had increased over recent months, partly in response to announcements by OPEC about reductions to supply.
International Economic Conditions
Growth in GDP of Australia's major trading partners had picked up a bit over recent months, although growth remained a little below average.
Members noted that there had been a general improvement in survey measures of global business conditions.
They also noted that the downside risks to global inflation appeared to have diminished somewhat, in part because commodity prices had increased significantly over 2016 to date.
Prospects for fiscal expansion in some countries had also contributed to expectations that inflation would increase.
However, inflation had remained below most central banks' targets and monetary policies had continued to be accommodative.
Economic activity in China had continued to be supported by accommodative financial conditions and public spending, particularly on infrastructure.
However, high and rising levels of debt remained a risk to the outlook over the longer term.
Members observed that measures had been introduced to dampen housing price inflation in a number of cities and that this posed an additional risk that growth in housing market activity might be lower in the period ahead.
Producer prices had increased over the preceding year, following declines over several years, and measures of consumer price inflation had edged higher.
In the United States, GDP growth had been around estimates of potential over the past year.
While business investment had been weak, consumption growth had continued to be supported by strong labour market outcomes.
Members noted that it was too early to know much about the effect of the outcome of the US Presidential election on the outlook for US economic activity and inflation, or the potential spillovers to other economies.
There was uncertainty about the policy agenda of the incoming administration.
A range of estimates suggested that the plans for fiscal policy could provide a boost to economic activity over the next few years and place some upward pressure on inflation.
Working in the other direction, however, if policies were enacted to restrict trade, there could be significant adverse effects on the economic outlook in the United States and beyond.
Economic activity in the euro area had continued to recover. Members noted that some economies in the euro area were facing larger structural challenges than others.
In Italy, the level of GDP remained lower than it had been prior to the global financial crisis, non-performing loans had remained at a high level and gross public debt was around 135 per cent of GDP.
Labour market conditions had continued to tighten in most advanced economies. In the United States, this had led to a modest pick-up in nominal wage growth, but unit labour costs had been rising at an above-average rate.
Growth in wages and unit labour costs had also been above average in Japan.
In the United States, core inflation had been only a little below the Federal Reserve's goal during 2016, while core inflation in Japan had moderated over the course of the year to date and inflation expectations had remained relatively low.
In the euro area, inflation had remained lower than the target of the European Central Bank, but measures of longer-run inflation expectations had stabilised.
Financial Markets
Members commenced their discussion of financial markets by noting that there had been some large market movements following the outcome of the US Presidential election, but that movements had been generally orderly and the increase in volatility had been short-lived.
US Treasury yields had risen sharply following the outcome of the US Presidential election, reflecting the assessment in financial markets that the Trump administration's policies overall were likely to boost growth and inflation, although there was considerable uncertainty around this.
Sovereign bond yields had also increased in the other major economies, though by less than in the United States. Members observed that the increase in US Treasury yields, while large, was not as large as some other movements in recent decades and yields remained very low by historical standards.
The US Federal Open Market Committee (FOMC) left the policy rate unchanged at its November meeting. Members noted that markets had fully priced in an increase in the policy rate at the FOMC's December meeting and expected a steeper, although still gradual, path for future rate increases owing, in part, to the fiscal stimulus expected to be pursued by the Trump administration.
European sovereign bond spreads to German Bunds had widened ahead of the Italian referendum and upcoming elections in some other countries.
There had been little movement in corporate bond spreads in the major economies in the previous month.
Share market indices in the United States fell immediately following the outcome of the US Presidential election, but very quickly recovered to be higher over November as a whole.
The sectoral pattern of movements across US stocks reflected the expected effects of the Trump administration's policies as well as higher oil prices.
In Japan, the depreciation of the yen and better-than-expected growth had contributed to a rise in share prices. European share prices had declined slightly in November.
Emerging market bonds and equities were generally sold off following the outcome of the US Presidential election, reflecting market expectations of a possible increase in trade protection and increased US dollar debt-servicing costs for firms in emerging market economies, given higher US yields and exchange rate depreciations against the US dollar.
The depreciation of the Mexican peso against the US dollar was particularly marked. Several emerging market central banks had intervened in the foreign exchange market. The US dollar had also appreciated against most advanced economy currencies.
A notable exception was the appreciation of the UK pound against the US dollar during November.
The Chinese renminbi had appreciated on a trade-weighted basis over November, but had depreciated against the US dollar.
Net private sector capital outflows had increased over the September quarter and the Chinese authorities had recently introduced a number of measures to increase scrutiny of capital outflows.
Members noted that the Australian dollar had depreciated by 2 per cent against the US dollar since the previous meeting but had appreciated against the yen and some other Asian currencies, to be little changed on a trade-weighted basis.
Australian government bond yields and share prices rose in November.
As in other markets, resource stocks had outperformed the broader market, reflecting higher commodity prices, while high-dividend yielding stocks had fallen owing to higher bond yields.
Australian banks' bond issuance was above average in November and strong in 2016 overall.
Banks had issued more longer-term bonds in recent years in response to increased demand from investors searching for yield and the forthcoming introduction of new prudential requirements.
Members noted that banks' deposit rates had been little changed during November.
While the cost of new bond issuance had increased, it remained below that seen at the start of 2016.
Some banks had announced increases to advertised lending rates, mostly for housing and in particular to investors.
Pricing in domestic financial markets indicated that market participants did not expect a reduction in the cash rate at the December meeting.
Considerations for Monetary Policy
In considering the stance of monetary policy, members discussed the policy decisions made throughout the easing phase since late 2011, during which the cash rate had been lowered in aggregate by 3¼ percentage points.
The lower rates had helped support the economy in the transition following the mining investment boom and, more recently, had been in response to lower-than-expected inflation.
Members discussed the effect of lower interest rates on asset prices and the decisions by households to borrow, particularly given the already high levels of household debt.
Over recent years the Board had sought to balance the benefits of lower interest rates in supporting growth and achieving the inflation target with the potential risks to household balance sheets.
Members recognised that this balance would need to be kept under review.
Turning to the policy decision for the December meeting, members noted that the international environment had been more positive in recent months, while observing that significant risks to the outlook for global activity persisted.
The Chinese economy had remained resilient, supported by expansionary fiscal policy and rapid growth in financing.
International financial markets had interpreted the outcome of the US election, specifically the implications for infrastructure spending, as being positive for growth and inflation in the United States.
At the same time, there were increased expectations that the Federal Reserve would increase policy rates at the next meeting of the FOMC.
Rising commodity prices had also contributed to an assessment that the outlook for global inflation was more balanced than it had been for some time, although inflation remained below most central banks' targets.
Domestically, data that had become available over the previous month indicated that GDP growth in the September quarter was likely to be lower than the forecast at the time of the November Statement on Monetary Policy.
Year-ended growth was expected to decline before picking up to be above potential later in the forecast period, supported by low interest rates and the lower exchange rate since 2013.
Members noted that these factors had assisted the economy in its transition following the mining investment boom and that an appreciating exchange rate could complicate the adjustment.
Falls in mining investment were expected to subtract less from GDP growth over time and resource exports were expected to continue to make a substantial contribution to growth.
There was still considerable uncertainty about the momentum in the labour market. The unemployment rate had declined over the past year, as had measures of excess capacity that accounted for the number of additional desired hours of work.
Part-time employment had grown strongly over the previous year, but employment growth overall had slowed.
Members noted that there was expected to be excess capacity in the labour market for some time, which was consistent with further indications of subdued labour cost pressures.
This suggested that inflation would remain low for some time before returning to more normal levels.
Housing market conditions had strengthened overall over preceding months, although there was considerable variation across the country and between houses and apartments.
Housing credit growth had picked up a little, particularly for investors.
The supervisory measures that had strengthened lending standards in the housing market had led some lenders to take a more cautious attitude to lending in certain segments.
At the same time, the increase in global bond yields had led some lenders to increase their rates on fixed-interest rate loans.
Taking into account the information that had become available over the previous month, and having eased monetary policy earlier in the year, the Board judged that holding the stance of policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time.
The Decision
The Board decided to leave the cash rate unchanged at 1.5 per cent.
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Rental markets remain subdued for investors: RBA December board minutes

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New borrowers should be better placed to withstand any adverse shocks to income or decline in housing prices than would otherwise have been the case, the latest RBA research suggests.
Its comments comes noting lenders have announced many changes to a range of price and non-price lending terms and conditions to strengthen their lending practices in response to supervisory expectations, according to the position paper entitled Macroprudential Policy Frameworks and Tools.
<a href="/images/2016/12/15/Graph%205.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/12/15/Graph%205.jpg" alt="">
It noted by April 2016, the pace of investor housing credit had declined from its recent peak of about 11 per cent to just below 5 per cent on a six-month annualised basis (Graph 6).
<a href="/images/2016/12/15/Graph%206.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/12/15/Graph%206.jpg" alt="">
It also noted loan approvals for investor housing have increased over recent months, accompanied by an increase in housing price growth, driven by Sydney and Melbourne in particular.
"Even so, the earlier tightening in lending standards has helped to increase the resilience of household sector balance sheets, and hence also those of lenders, as new borrowers should be better placed to withstand any adverse shocks to income or decline in housing prices than would otherwise have been the case."
The paper noted the lenders' many changes were to a range of price and non-price lending terms along with conditions to strengthen their lending practices in response to supervisory expectations.
"In particular, interest rates for both new and existing investor loans were increased,10 high-LVR lending.
"There is now a differential between the indicator rate for owner-occupier and investor housing loans for the first time since 1996."
The paper advised it was important new borrowers "do not overstretch themselves to purchase property or rely on expectations of future increases in housing prices to enable them to do so." 
The paper was written by David Orsmond and Fiona Price. The paper was intended to make the results of current economic research within the Bank available for discussion and comment, but the views expressed are those of the authors and not necessarily those of the Bank.
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New borrowers ought be able to withstand adverse shocks: RBA research

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The Commonwealth Bank has increased its standard variable investor home loan interest rates by 7 basis points, to 5.56 per cent per annum.
It also increased its Viridian Line of Credit interest rates by 15 basis points, to 5.78 per cent  per annum. No changes have been made to interest rates for owner occupiers with the owner occupier standard variable rate at 5.22 per cent per annum, the lowest among the major banks.
Business rates also remain unchanged. “We have carefully considered the current environment when making this decision – in particular the higher costs associated with funding mortgages, the increased capital costs associated with providing home loans, and the need to remain below the regulatory 10 per cent investor home loan growth cap.
We believe these changes balance the needs of our borrowers and shareholders, while helping to underpin the long-term sustainability of the Australian home loan market,” said Matt Comyn, Group Executive for Retail Banking Services. The new rates are effective from 16 December 2016. 
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Variable rates start to rise at CommBank

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Government infrastructure projects are popping up everywhere at the moment.
So what happens when one of those projects affects your land? In short, not much can be done to prevent the government taking your land (called compulsory acquisition).
But there's is a lot you can do to make sure you don’t get short-changed.   All Australian governments have the power to acquire any privately owned land, or an interest in privately owned land (such as an easement) for government use or projects.
In the ACT, that power is provided by the Lands Acquisition Act 1994 (“the Act”).
The Act sets out the process the ACT Government must follow to acquire your land, the compensation you're able to recover for your land and the steps you need to take to claim your compensation.   How does the Government take your land? If the Government has earmarked your land for a government project, it can acquire your land by either:
<ol>
<li>Coming to an agreement with you about what bit of your land (whole or part) it will take and the amount of compensation it will pay (ie acquisition by agreement); or </li>
<li>Taking your land by force, with the amount of compensation to be determined after your land has been acquired (ie compulsory acquisition). </li>
</ol>
If your land is compulsorily acquired, you'll be compelled by law to vacate your land regardless of whether you're willing to part with it.    While you'll be dispossessed of your land, you'll be entitled to compensation for your loss.   What's the process?   You’ll be notified   If the Government is considering acquiring your land, it's required to give you written notice of its intention to do so by way of a Pre-Acquisition Declaration.  The Pre-Acquisition Declaration will set out the details of the land the Government is considering acquiring and the purpose for acquiring the land.    You can try negotiating  Once you receive a Pre-Acquisition Declaration, you can start negotiating with the relevant Government authority facilitating the acquisition of your land to reach an agreement about the terms of the acquisition and the amount of compensations payable to you.   If negotiations fail, they’ll take it anyway  If an agreement can't be reached between you and the relevant Government authority, the Government must make a Compulsory Acquisition Declaration that your land is to be compulsorily acquired.  Once the Compulsory Acquisition Declaration is notified in the Legislative Assembly and published in a newspaper, the Government will own your land free from any other encumbrances such as a mortgage. Why bother negotiating?  The advantage of negotiating an agreement with the Government is you'll have certainty about the amount of compensation without having to go through a claim process along with quick payment. The disadvantage is you may not be compensated for all you’re entitled to.   How are you compensated? You, and every other person who has an interest in your land (eg tenants or holders of a license over your land) are entitled to an amount of money that will justly compensate for the Government’s acquisition of your land.  Put another way, the Government’s acquisition of your land must be on “just terms”.   The amount of compensation payable to you can be negotiated with the Government, as discussed above.  However, if you believe the offers being put to you by the Government don't accurately reflect your loss, you can make like Darryl Kerrigan and “tell him he’s dreaming’”.   The Government will then compulsorily acquire your property and you'll be required to put together your own claim for compensation. This will involve determining the amount of compensation you believe you're entitled to receive and obtaining evidence (including experts' reports) to support that view.    The Act sets out what matters are taken into account when assessing your claim for compensation.  They include the market value of your property, any special value that you derived from your property, any loss that you suffer as a result of the acquisition and any reasonable expenses you incur.   Sound costly? You’re right, it does, but we can help.  Depending on what was acquired, there may be considerable cost and time involved in briefing the relevant experts to obtain the evidence required to properly support your claim.  The Act says you'll receive compensation for any legal or other professional costs reasonably incurred by you in relation to the acquisition of your land.  In the matters that we've been involved in, we've been able to negotiate with the Government for an advance payment of compensation to cover our clients’ legal fees and professional costs so their cash flow isn’t greatly impacted by the acquisition process.   What you should do?  Don’t panic; get advice about your legal rights.   The process involved in compulsory acquisition of land can be complex.  For this reason, it's important the process is properly managed from the outset by or for you to ensure you get compensation for the loss of your land as quickly as possible, and for the full amount you're entitled to receive.   Meyer Vandenberg is working on claims for landowners whose land has been acquired by the ACT Government for a range of projects, including the light rail project. If you think your land may also be in the firing line tram line, or affected by another Government project, please call us to talk about how we can get you the most money possible to help you move on once your land is gone.       Bernice Ellis Partner   Justine Harper Lawyer
<a href="https://www.meyervandenberg.com.au/" target="_parent">https://www.meyervandenberg.com.au/</a>
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Compulsory acquisition - what happens when the tram takes your title

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Much like the final episode for a soap opera where the viewers are left waiting in the balance to know the outcome for the December quarter GDP.
Nobody saw this coming although for some strange reason I welcomed the result simply because it sent a firm message to Canberra to start doing something. Over the past six years all the federal government has done in terms of property prices is to pour more accelerants on the investment and established housing markets.
Despite tighter lending requirements being introduced in late 2014, Sydney real estate has continued to run amok climbing another 13.1 percent in the year to November. When you analyse the data over the last four years prices are up 60 percent and still increasing. What we do know with the current market is that prices are being driven by record low stock levels (see graphs below) marinated with record low interest rates.
As a result, we now see new data where the percentage of first home buyers in the owner – occupier market has plummeted to the lowest levels in twenty – five years. The banks internal data obviously has them concerned where over the past week they have raised the rates for interest only loans so they are now obviously starting to give the tree an almighty shake. It must also be noted that recently the banks stopped lending to Asian buyers in the off – the – plan markets although not much was said when these announcements were made.
 
Australian Treasury have just released a Working Paper – Foreign Investment and Residential Property Price Growth where they found there is absolutely no link to foreign buyers and high residential price growth. I wonder what market they are looking at when we see that Sydney house prices are up 60 per cent over the last four years. Maybe Treasury should ask the banks the reasons why they stopped lending?
Of course, they did not mention those Significant Investor Visas (SIV) which came into force on 24 November 2012 – aimed at attracting China’s super wealthy – China accounts for 89.9 per cent of SIVs issued. Since the introduction approximately 1600 SIVs have been issued for foreign applicants prepared to spend $5.000 million on complying investments. After a period of four years the applicants are eligible for permanent residency. The federal government is aware of recent reports that outlined that around 60,000 Chinese millionaires want to invest in Sydney and Melbourne.
The question I then put to the Prime Minister: Sydney and Melbourne are the two hottest property markets in Australia – why does he feel the need to further drive these markets by allowing 100 per cent of off – the – plan properties to be marketed offshore and why, do we need SIVs in the first place? If he were to cut off – the – plan from 100 per cent to 50 per cent and then shut – down the SIVs then we would start to see the property markets easing. Real estate agents will hate me for suggesting such a recommendation but I can live with that.
Whilst we are making much needed changes to the Australian property landscape it’s also high time investors had a cap on the number of properties they can own. With the Prime Minister’s popularity in the polls plummeting why not, introduce a Land Bank Tax and then get those 100,000 empty apartments in Sydney leased out to the market as they should be.
Now should you require further convincing please take a moment to analyse the following data that was extrapolated from pricefinder and compiled by our own RWM Research as at 1 December 2016. It certainly paints a very ugly picture that requires immediate action.
Mosman houses first then apartments below – 1998 to 1 December 2016.
<a href="/images/2016/12/09/RWM-Research-Mosman-Houses-Apartments.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/12/09/RWM-Research-Mosman-Houses-Apartments.png" alt="">
Source: RWM Research and pricefinder
Cremorne houses first then apartments below – 1998 to 1 December 2016.
<a href="/images/2016/12/09/RWM-Research-Cremorne-Houses-Apartments.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/12/09/RWM-Research-Cremorne-Houses-Apartments.png" alt="">
Source: RWM Research and pricefinder
Neutral Bay houses first then apartments below – 1998 to December 1 2016.
<a href="/images/2016/12/09/RWM-Research-Neutral-Bay-Houses-Apartments.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/12/09/RWM-Research-Neutral-Bay-Houses-Apartments.png" alt="">
Source: RWM Research and pricefinder
Now if you take a moment these same results would be mirrored across other Sydney suburbs so it should be clear by now the Sydney real estate market no longer requires your government’s stimulation. Who knows that by taking immediate action your embarrassing polling might even bounce? What the Sydney property markets actually need now is organic growth not artificial.
Whilst you are on the job please call your mate Mike Baird and tell him to take an axe to his insidiously high stamp duty which is why we have record low stock levels. You might even like to explain to him that from an economic stand – point less can mean more.
We will be back in 2017 where we will take – up where we left off and no, Australia will not be in recession when we return.
Have a Merry Christmas, a safe and wonderful New Year.
ROBERT SIMEON is a director of <a href="https://www.rwm.com.au/" target="_blank" title="RWM" rel="nofollow">Richardson Wrench Mosman and Neutral Bay</a> and has been selling residential real estate in Sydney since 1985. 
He has also been writing real estate blog <a href="https://www.rwm.com.au/news/" target="_blank" title="Virtual Realty News" rel="nofollow">Virtual Realty News</a> since 2000.
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