Abadeen has released the whole-floor penthouse crowning its recently completed <a href="https://www.apartments.com.au/buildings/park-residences-cremorne-2-sutherland-street-cremorne-nsw-2090">Park Residences</a> development in Cremorne, bringing the near-300 sqm residence to market for the first time.

Occupying the entire top floor of the boutique Lower North Shore development, the penthouse includes 221 sqm of internal living and a 74 sqm wraparound terrace, with a prized north-facing aspect taking in views across Middle Harbour.

The residence has been completed and fully furnished following a collaboration between Abadeen Executive Chairman Justin Brown and internationally recognised interior designer Jack Freeman, Founder and Managing Director of FREEMAN &amp; CO.

<a href="https://www.apartments.com.au/developers/abadeen">Abadeen</a> and Freeman approached the penthouse as a finished home, sourcing furniture, artwork, lighting and objects from Australia and overseas.

[smartcode_project:default project_id=114246 project_image_fid=378718]

Pieces from Parisian design house Pierre Augustin Rose sit alongside contemporary artworks and bespoke lighting, with Freeman drawing on recent visits to PAD Paris and Salone del Mobile Milano for the final collection.

Brown said the aim was to create a penthouse that felt more like a large-scale private home than a traditional apartment.

"The experience begins the moment the lift doors open. You're welcomed into an elegant dining room before the home opens into an extraordinary living space framed by sun-drenched harbour views.

"Every time someone walks through the front door they pause. It's not just the view, it's the incredible sense of space, the warmth created by the northern sunlight that fills the interiors, and the way every room connects so effortlessly.

"It has all the proportions of a luxury home, while delivering the effortless lifestyle and personalised experience of living in a world-class six-star hotel, combined with the simplicity and convenience of apartment living."

[smartcode_project:default project_id=114246 project_image_fid=378713]

A secure lift provides exclusive access to the penthouse level, opening to a dedicated arrival foyer and dining area before the residence expands into its main living and entertaining spaces.

Floor-to-ceiling glazing runs across the northern side of the home, connecting the interiors with the terrace and Middle Harbour outlook.

The penthouse also features a fireplace and substantial chef's kitchen, while the wraparound terrace has been designed to accommodate both everyday outdoor living and larger-scale entertaining.

[smartcode_project:default project_id=114246 project_image_fid=378720]

Freeman said the interiors had been deliberately kept restrained to complement the scale, natural light and outlook already established by the architecture.

"The penthouse is a serene study in quiet luxury," Freeman said.

"The interior pairs soft, sculptural forms with warm timber, pale stone and a restrained neutral palette. Curated artwork and metallic accents add depth, while abundant natural light creates a calm, effortlessly refined atmosphere. In my world, less is always more."

Freeman said the approach was centred around collecting individual pieces rather than simply decorating the apartment.

"Every material, every object and every piece of furniture has been curated with intention. I am a true believer in collecting versus decorating.

"The architecture already provided extraordinary natural light, remarkable volume and an uninterrupted connection to Middle Harbour. Our role was to complement those qualities with unique one-of-a-kind pieces of fine art and collectible design sourced from recent travels around the world."

[smartcode_project:default project_id=114246 project_image_fid=378694]

Among the collection are solid bronze sculptures by Lorenzo Quinn, alongside a curated crystalware collection and pieces sourced from international design fairs.

Park Residences sits opposite Cammeray Golf Club, Cammeray Croquet Club and Grand Slam Tennis Cammeray, around 300 metres from Neutral Bay Village and its established collection of restaurants, cafés and retail.

Brown said the combination of a whole-floor floorplan, northern aspect and proximity to Neutral Bay was becoming increasingly difficult to find on the Lower North Shore.

"Completed whole-floor penthouses with a sun-drenched north-facing aspect and sweeping Middle Harbour views are exceptionally rare," Brown said.

"Add a quiet position opposite golf, croquet and tennis facilities, a level walk to Neutral Bay Village and only minutes to the CBD, and you have a lifestyle that's incredibly difficult to replicate.

"This is a home that offers the privacy and generosity of a luxury residence together with the convenience of one of Sydney's best-connected harbourside locations."

The penthouse will be exclusively marketed by SRM Residential.

[smartcode_project_cta:default project_id=114246]

Joel Robinson

Abadeen unveils penthouse at Park Residences in Cremorne

New Brisbane developer Dalcott has unveiled Marrone, the first of three residential projects it is planning in and around Browning Street in South Brisbane.

<a href="https://www.apartments.com.au/new-apartments/marrone-south-brisbane-39-browning-street-south-brisbane-qld-4101">Marrone</a> will comprise 97 predominantly two- and three-bedroom apartments, with larger residences aimed squarely at the owner-occupier market.

The project will sit in a quiet pocket of South Brisbane between South Bank and West End, close to the restaurants, cultural attractions and riverfront amenity that have driven the suburb's continued transformation.

Dalcott is targeting buyers looking for more space and amenity than has traditionally been offered in the inner-city apartment market, particularly downsizers and professionals wanting to remain close to the city.

[smartcode_project:default project_id=149951 project_image_fid=377072]

Resident facilities will be concentrated around an extensive rooftop amenity offering, including a swimming pool, spa, infrared sauna, warm and cold magnesium plunge pools, private lounge, dining room and outdoor entertaining areas.

Dalcott Managing Director Lachlan Cottee said South Brisbane's combination of lifestyle, connectivity and established character had been central to the approach to Marrone.

“South Brisbane offers a combination of lifestyle, connectivity and character that’s difficult to replicate elsewhere in Brisbane,” Cottee said.

“Our focus has been on creating homes that feel connected to that environment while providing the level of design, functionality and quality that today's owner-occupiers expect.”

The residences will feature an expressive material palette. Italian Calacatta Viola marble, known for its deep burgundy veining, will be paired with aged brass tapware, Chestnut engineered timber flooring and Tuscan Oak joinery.

<img alt="Marrone" data-entity-type="file" data-entity-uuid="b8d833da-3b30-496a-ae30-07bdff371b50" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%2010.52.35%E2%80%AFAM.png?VersionId=P6DAgOfaQzIXljKKK5j3e5NhWtrHIu9G" />

Bathrooms will feature Nara Japanese ceramics and glass bricks, while clay, walnut and brass lighting will be used throughout the apartments.

Dalcott has appointed Realm Projects, led by Managing Director Shane Foley, to handle sales and marketing following previous sold-out collaborations between the groups.

Foley said the Brisbane apartment buyer had become increasingly focused on the quality of the home itself rather than simply securing an inner-city address.

“We expect to see strong demand from buyers who still want all the advantages of inner-city living but aren’t prepared to compromise on the quality of their home,” Foley said.

“Many will be downsizers looking to leave behind the maintenance of a traditional family home without giving up the space they enjoy, while others are likely to be professionals wanting a residence that reflects the way they live today.”

“Marrone responds directly to that demand, with generous floorplans, exceptional resident amenity and a location that places some of Brisbane’s best dining, entertainment and cultural attractions within walking distance.”

<img alt="Marrone" data-entity-type="file" data-entity-uuid="61f7b22f-899e-4c0f-940a-7d3ab1bfb93a" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%2010.52.44%E2%80%AFAM.png?VersionId=PvN1JYxBgUpyCB7efKo52WGdSDs9nmim" />

Marrone will be the first project delivered as part of Dalcott's broader investment in the precinct.

It will be followed by La Terra, a boutique project comprising penthouse-style, single-level apartments on a northeast corner site with extensive resident amenity and city views.

Cottee said Marrone represented the first stage of the group's longer-term plans for the area.

Dalcott was established in 2025 by Lachlan Cottee and Ben Dalgliesh, combining development and construction capability under an integrated model and focusing on architecturally considered residential projects.

Marrone will initially be offered through a pre-release registration campaign ahead of its broader public launch.

Dalcott targets owner-occupiers with South Brisbane debut Marrone

Parnell Developments is the latest to seek significant uplift through the NSW Government's Housing Delivery Authority on a Strathfield site previously approved for a much smaller apartment development.

Parnell has sought approval for a 32-storey mixed use tower across&nbsp;<a href="https://www.apartments.com.au/new-apartments/7-lyons-street-strathfield-nsw-2135">3-7 Lyons Street and 18 Parnell Street</a>, a&nbsp;1,857 sqm site around 400 metres from Strathfield Station. The building would yield 160 apartments, 15 per cent of which will be dedicated affordable as per the government mandate for buildings seeking additional uplift.

Approved previously was a nine-storey building back in 2022 with just over 30 apartments. That approval came prior to the project being&nbsp;progressively reconsidered as planning policy shifted toward greater density around transport hubs.

<img alt="Strathfield" data-entity-type="file" data-entity-uuid="c5af5281-a643-4eb2-b8c4-0081b59c04c7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%209.16.48%E2%80%AFAM.png?VersionId=37bd3mI7rHNpThOV_75VO8xsGFwWOi1u" />

Turner has designed the latest building that would replace&nbsp;existing detached homes across the four lots.

The apartment mix comprises 22 one-bedroom apartments, 107 two-bedroom and two-bedroom-plus configurations, and 31 apartments with three or more bedrooms. The scheme also includes 203 car spaces across six basement levels and 58 bicycle spaces.

The proposal has been designed around a three-storey podium addressing Lyons Street, with the tower rising above and stepping toward its upper levels.

Turner said the podium was deliberately scaled to respond to the existing street, while the taller element has been designed as part of the emerging skyline anticipated around Strathfield Town Centre and the wider Homebush transport-oriented development precinct.

The Lyons Street frontage would have a more active, pedestrian-focused character, incorporating the commercial tenancy, landscaping and a brick-framed podium with an awning.

<img alt="Strathfield" data-entity-type="file" data-entity-uuid="14b20874-b8c3-4ac7-bc03-92be9a69fb78" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%209.17.48%E2%80%AFAM.png?VersionId=av.9TxtqIRTC6v3PkSuu1rL9rreWoe2h" />

Parnell Street, which faces the railway corridor, has been given a different architectural treatment, with double-height breeze blocks, landscaping and communal areas used to soften the interface with the rail infrastructure.

The tower itself uses curved and recessed facade elements, with wave-like indentations across the northern elevation breaking the building into three vertical forms.

A palette of grey concrete, brick and breeze blocks is complemented by clay and terracotta accents, while the upper tower adopts a lighter expression through articulated slab edges, vertical fins and recessed glazing.

Residents would have access to 467 sqm of communal open space spread across three levels. The ground floor would accommodate the more active resident areas, including barbecue and group gathering spaces and an internal communal room capable of being used for working from home.

A more passive viewing deck is proposed at level three, overlooking the ground-level landscaping and neighbouring tennis courts, while a rooftop "sunset deck" at level 30 would provide another social and relaxation space.

<img alt="Parnell" data-entity-type="file" data-entity-uuid="c3dce401-a80f-4682-8471-4caa01180880" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%209.17.34%E2%80%AFAM.png?VersionId=Xyo8JVqbOhSJXNy6Ih.1cHL.O6i0bGR." />

&nbsp;

&nbsp;

&nbsp;

Strathfield has been earmarked for substantial change through the Strathfield Town Centre planning work and the nearby Homebush TOD precinct.

Turner's report says the project has been designed to act as a transition between the existing low and mid-rise development surrounding the site and the taller built form expected to emerge across the town centre.

The proposal is being assessed as State Significant Development under the HDA pathway, alongside the concurrent request to amend the Burwood Local Environmental Plan.

First look: New apartment tower pitched for Strathfield Town Centre precinct

An $18 million penthouse has hit the market in Main Beach as construction tops out on La Mer, the $155 million apartment development rising just metres from the beach.

Spanning around 600 sqm across the top two levels of the 29-storey tower on Main Beach Parade, the four-bedroom penthouse is one of the latest eight-figure residences to test the upper end of the Gold Coast apartment market.

Its launch comes amid continued activity at the very top of the market, following the $30 million off-the-plan sale of a Burleigh Heads penthouse earlier this year, which surpassed the Gold Coast's previous $24 million apartment record set in 2023.

The <a href="https://www.apartments.com.au/new-apartments/la-mer-main-beach-3580-main-beach-parade-main-beach-qld-4217">La Mer penthouse</a> has been designed as a private residence in the sky, with 360-degree views spanning the ocean, Broadwater, hinterland and Gold Coast skyline.

[smartcode_project:default project_id=95606 project_image_fid=378731]

All four bedrooms have ensuites, while the ocean-facing master retreat occupies around half of the upper level and includes its own lounge, private balcony, two walk-in wardrobes and an oversized ensuite with a freestanding stone bath positioned to take in the views.

The residence also features a kitchen designed to accommodate a private chef, a 3.6-metre island bench, expansive butler's pantry, wine cellar and integrated bar.

[smartcode_project:default project_id=95606 project_image_fid=378732]

A rooftop pool and substantial outdoor entertaining area with its own kitchen sit above the residence, while a grand staircase connects the two internal levels. The penthouse also has its own express lift.

OTP Group Director James Elliott, who is marketing La Mer, said the penthouse was expected to appeal to high-net-worth buyers seeking either a permanent Main Beach residence or Gold Coast holiday home.

“The La Mer penthouse represents exceptional value, considering its quality design, size, privacy and location, not to mention the 360-degree views capturing the beach and Gold Coast Broadwater,” Elliott said.

“We’re anticipating interest from high-net-worth individuals and couples seeking a residence or holiday home in the sought-after village enclave of Main Beach, taking advantage of the unprecedented growth underway in the area and neighbouring The Spit.”

[smartcode_project:default project_id=95606 project_image_fid=378736]

La Mer is being developed by developer-builder ODUS and Nazero, in partnership with funder Metrics Credit Partners.

ODUS Director Byron Sakha said topping out the tower had provided the opportunity to release the project's most significant residence.

“We’ve worked with internationally-recognised studio Sici Design on the penthouse interiors, with a focus on ensuring it isn’t luxury for luxury’s sake. Every element has been thoughtfully designed to enhance quality of life for those who call it home,” Sakha said.

“The views are the hero of virtually every space, but we’ve given equal attention to the fittings and finishes, so every detail exudes elegance and refinement.”

Sici Design Founder and Director Maria Papadopoulos said the extensive views became an integral part of the interior design rather than simply something the residence was designed around.

“The views weren't something we designed around, they became part of the design itself, with the true luxury of La Mer in its feeling of peace, calm and wellbeing,” Papadopoulos said.

“Luxury isn't defined by how something looks, but how it makes you feel, and we believe a luxurious home should be beautiful to live in, not stressful to maintain.”

The interiors combine Austral Dream Dolomite natural stone and travertine with timber flooring and a restrained coastal palette.

[smartcode_project:default project_id=95606 project_image_fid=378734]

Designed by Plus Studio, La Mer is one of the more boutique additions to the rapidly changing Main Beach apartment market.

The tower comprises just 24 full-floor, three-bedroom plus multipurpose room apartments below the two-level penthouse, giving the project a considerably lower density than many of the larger towers being developed across the Gold Coast.

Residents will have access to a pool and spa, gym, sauna, barbecue facilities, private sun lounges, yoga lawn and outdoor beach shower.

The penthouse has been released as part of the final collection of residences at La Mer, with remaining apartments priced from $4.3 million.

Construction is expected to complete later this year, with a fully furnished display apartment now open on level four.

[smartcode_project_cta:default project_id=95606]

ODUS releases $18 million penthouse crowning La Mer Main Beach

<a href="https://www.apartments.com.au/developers/far-east-consortium">Far East Consortium</a> is preparing to commence construction on <a href="https://www.apartments.com.au/new-apartments/640-bourke-street-melbourne-640-bourke-street-melbourne-vic-3000">640 Bourke Street</a> this October, marking the next milestone for the Melbourne CBD development and its higher-end Eliza Collection.

Spanning levels 44 to 68 of the 68-storey <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a>-designed tower, the Eliza Collection has been conceived as a lower-density offering within the broader development, with only five apartments on each floor, dedicated lift access and a collection of resident spaces reserved exclusively for Eliza Collection residents.

The Eliza Collection forms part of Far East Consortium's broader move toward larger-format residences at 640 Bourke Street, where the number of apartments was reduced from earlier plans as apartment sizes increased.

[smartcode_project:default project_id=509 project_image_fid=365685]

"What it's meant for 640 Bourke is we've actually reduced the number of apartments. We've increased the overall size of the apartments. We don't have any studios in here, and what that does for a project is it elevates it," Far East Consortium Director of Sales and Marketing Lauren Sheldon said.

Rothelowman Associate Jun Chang said the design process provided an opportunity to create more generous floorplans.

"We were given the opportunity to be more generous. The apartments became bigger and squarer than any other apartments which had been designed in the CBD before that."

[smartcode_project:default project_id=509 project_image_fid=368869]

That thinking carries through to the Eliza Collection, where the residences have been designed around the space and functionality associated with a larger home, but positioned high above the centre of Melbourne.

Kitchens are equipped with Gaggenau appliances, a butler's pantry, temperature-controlled wine cabinet and sculptural pendant lighting, while engineered timber flooring, stone and porcelain finishes and custom cabinetry feature throughout the broader interiors.

Privacy and security are another point of distinction. Eliza Collection residents have dedicated lift access, while 640 Bourke Street will provide concierge services and secure resident parking. Short-stay accommodation, including Airbnb, will not be permitted within the development.

[smartcode_project:default project_id=509 project_image_fid=365689]

Eliza Collection residents will also have exclusive access to selected amenity spaces across levels one and three of the restored Eliza Tinsley building. These include the Salon with grand piano, an art therapy room, private dining rooms and treatment rooms.

They sit within more than 3,000 sqm of amenity planned across 640 Bourke Street, alongside facilities including a pool, gym, whisky lounge and further social and wellness spaces.

The Eliza Tinsley building itself is central to the wider project's identity. Rather than treating the existing Eliza Tinsley façade as a separate element, Rothelowman used it as a starting point for the architecture of the new tower, with the historic building to accommodate the project's gallery and lobby.

"It's a significant asset and wants to be celebrated and experienced by all residents every single time they go in and out of the building," Rothelowman Principal Stuart Marsland said.

[smartcode_project:default project_id=509 project_image_fid=368872]

The tower will rise behind the retained heritage building at 640 Bourke Street, placing residents within walking distance of Southern Cross Station, Flagstaff Gardens, Queen Victoria Market and the Docklands waterfront.

With construction scheduled to begin in October, Far East Consortium has established an onsite display gallery at 640 Bourke Street, including fully built apartments that allow the project's layouts, materials and finishes to be inspected at full scale.

A fully built Eliza Collection apartment is also available to view at the display suite by appointment ahead of the planned October construction commencement.

Eligible purchasers who buy before construction commences can secure the full available off-the-plan stamp duty savings, subject to eligibility and applicable conditions.

[smartcode_project_cta:default project_id=509]

Far East Consortium brings Eliza Collection to 640 Bourke Street ahead of October construction start

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 RBA Chart Pack summarises macroeconomic and financial market trends in Australia and provides some information about developments for our main trading partners. 
The graphs in the Chart Pack are updated monthly. 
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<img src="/images/2016/12/08/Screen%20Shot%202016-12-08%20at%2012.35.16%20PM.png" alt="" width="776" height="522">
 
 
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jonathanchancellor-7SQnKwU6yx

RBA's December 2016 Chart Pack shows housing lending rates slide

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GUEST OBSERVER
The economy contracted by 0.5 percent in the September quarter after an upwardly-revised 0.6 percent increase in the June quarter (previously up 0.5 percent).
The Aussie dollar fell half a cent in response. It was the first contraction in the economy for 5½ years.  
Annual economic growth slowed from 3.1 percent to 1.8 percent.
Contribution to growth: The biggest contribution to growth came from household investment (+0.3 percentage points) followed by inventories (+0.1pp). The biggest drag on growth was public investment (-0.5pp) followed by net exports (-0.2pp) and dwelling investment, ownership transfer costs and commercial construction (all -0.1pp)
Income: Real gross national income rose by 0.9 percent in the September quarter to be up 3.2 percent on the year. In nominal terms GDP lifted 0.5 percent in the quarter and rose by 3.0 percent over the year.
Productivity: Gross value added per hours worked in the market sector fell by 0.8 percent in the September quarter after rising by 1.7 percent in the June quarter. Annual growth was 0.7 percent.
Industry sectors: Eleven of the 19 industry sectors expanded in the September quarter. The strongest sector was Agriculture, forestry and fishing, up 7.5 percent and adding 0.2 percentage points (pp) to growth. Finance and insurance services added 0.1pp. The Construction sector fell by 3.6 percent in the quarter (-0.3pp). Mining, “Other services” and Rental, hiring and real estate services all took 0.1pp off growth.
What does it all mean?
This will turn out to be just a blip on the radar screen, but a very important blip. Many Australians have become complacent. And that includes businesses and politicians. The only way the economy can grow is by Australians spending, investing and employing. Australians didn’t do this in the September quarter. The Reserve Bank has been intimating for some time, monetary policy is reaching its limits. Infrastructure spending may prove useful in coming quarters in providing fresh momentum to the economy.
In the September quarter the economy was hit by a perfect storm. Not only was there the reaction to the UK ‘Brexit’ vote, there was also the Federal election and then there was the uncertainty about the US elections. And clearly, when there is a lot of uncertainty around, consumers and businesses tend to delay decisions to spend, invest and employ. A big fall in public investment also accounted for the bulk of the contraction of activity in the quarter.
While spending measures of the economy were weak in the September quarter, income measures were actually quite strong. And the farm sector was also strong in the quarter and should also be a key contributor to growth in coming quarters. For those who may have forgotten after 25 years of consistent economic growth, a ‘technical recession’ involves two consecutive quarters of contraction in the economy. We don’t believe there are grounds for another quarter of contraction. And indeed it would be amazing if there was some variant of ‘recession’ with a jobless rate of 5.6 per cent.
The Reserve Bank is always looking ahead and so must we. The outlook for the economy remains bright with record home building, a record winter crop, unemployment at 3½-year lows and super-low interest rates. Already the data for the December quarter has been more upbeat including retail spending and job ads.
The Reserve Bank warned yesterday that annual economic growth would slow before it picked up in 2017. That is our expectation also. The economy should grow near its ‘potential’ rate of 3 per cent in 2017. We continue to believe that interest rates will remain on hold in coming months. But no one will be thinking of rate hikes any time soon.
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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cjames-5S2v74qSNK

Economy shrinks, wake-up call for Australia: CommSec's Craig James

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GUEST OBSERVER
The RBA kept its cash rate steady at 1.50 percent, as widely expected. 
The post- meeting statement also very clearly retained the RBA’s neutral policy stance. At this stage, the RBA clearly has close to no appetite to consider that it should cut rates further. 
This is despite the RBA’s own expectation that tomorrow’s Q3 GDP print will be weak, with the statement noting ‘some slowing in the year-ended growth rate is likely, before it picks up again’ (Bloomberg shows the current market consensus is for a -0.1 percent q-o-q fall in Q3 GDP). Of course, in many ways, the Q3 numbers will be old news, given that they largely pre-date the sharp jump in export prices and the election of Donald Trump. 
The RBA noted, in particular, that higher commodity prices are boosting national income. We expect the RBA to keep its cash rate on hold through 2017. 
Facts 
The RBA kept its cash rate steady today at 1.50 percent, as expected by all 27 economists in the Bloomberg survey. Just prior to the decision the market was pricing no chance of a cut. 
Implications 
Today’s RBA announcement delivered few surprises. The central bank kept its cash rate on hold at 1.50 percent, as expected, and the post-meeting statement maintained the RBA's neutral policy stance, again, as expected. The post-meeting statement repeated that leaving rates on hold would be ‘consistent with sustainable growth in the economy and achieving the inflation target over time’. 
The market focus now shifts to the Q3 GDP print for Australia. 
A weak q-o-q print is forecast (Bloomberg’s latest survey has a consensus of -0.1 percent q-o- q and 2.2 percent y-o-y), reflecting a weak run of partial indicators on the expenditure side of the accounts in recent days. The RBA only stated that ‘the annual rate of growth is likely to slow’, suggesting that they may still be expecting a positive q-o-q print. More importantly, they stated that they expect it to pick-up again soon. 
In many ways the Q3 GDP print is likely to be old news. Firstly, most of the partial indicators, including business surveys and retail sales suggest growth will bounce back in Q4. Secondly, the bulk of the ramp up in hard commodity prices is set to flow through in Q4, further boosting income growth in the quarter. Thirdly, the election of Donald Trump, rally in bond markets, ramp up in expectations of Fed hikes and strengthening in the USD (and conversely weaker AUD) have all arrived more recently. 
As a result of these more recent developments and the RBA’s continued neutral policy stance in today’s statement, the current market pricing suggests only a 20 percent chance of a 25bp cut by mid-2017 before a 20% chance of hike by end-2017. We expect the RBA to keep its cash rate on hold through 2017 and have hikes pencilled in for 2018. 
<a href="https://www.about.hsbc.com.au/hsbc-in-australia/management-team" target="_blank">PAUL BLOXHAM</a> IS CHIEF ECONOMIST (AUSTRALIA AND NEW ZEALAND) FOR HSBC. 
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jchancellor-FAypfDUnLy

2017 on hold, but pencil in RBA rate hikes for 2018: HSBC's Paul Bloxham

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Meriton's Harry Triguboff has commenced proceedings against the NSW government's transformation arm UrbanGrowth.
It involves grievances around UrbanGrowth excluding Meriton from the tender of two residential super lots in Sydney's north shore.
Mr Triguboff previously sued UrbanGrowth in 2015 for excluding Meriton from the tender of the 1.5-hectare properties at "Lachlan's Line", the northern end of the North Ryde Station Priority Precinct for residential development.
Now Triguboff is going to the courts to gain access to tender information and documents under the Government Information (Public Access) Act after UrbanGrowth allegedly refused access under the Act.
The Lachlan’s Line project was announced by the NSW Government in 2013 as part of the NSW Government’s North Ryde Station Precinct. The new contemporary urban village will provide approximately 2,700 homes for around 5,000 residents.
"UrbanGrowth is responsible to get the best deal for the people of NSW," Harry Triguboff said.
"I would've thought they would welcome the opportunity to show everyone what a good job they are doing," Mr Triguboff said.
The site in question, known as Lachlan’s Line in Macquarie Park, was sold by UrbanGrowth to the Chinese developer, Greenland Investment (Australia) Pty Limited.
The current proceedings come after UrbanGrowth refused to provide any documents in answer to a formal application by Meriton under the Act. 
Meriton's General Counsel, Joseph Callaghan, said the current application was not an attempt to revive the earlier Supreme Court proceedings but about "ensuring a fair and transparent tender process".
The successful bidder of the two lots, Chinese developer Greenland, has applied to join the proceedings to allegedly block Meriton's request for access.
Greenland won the tender offering $190 million. It has since commenced presales at the $800 million 800-apartment project on the combined site known as "nbh". Meriton noted no settlement funds had yet been paid by the developer for the land.
This year two further high density superlots were offered for sale as one package via an expressions of interest campaign through Colliers International.
UrbanGrowth NSW's  second stage land release at Lachlan’s Line included an affordable housing offering which must be purchased by a community housing provider, or a private developer in a joint venture or similar.
Bates Smart had prepared the concept design for around 172 apartments and the third site of 96 affordable housing apartments.
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Triguboff seeks Greenland Lachlan's Line tender documents in Urbangrowth courtcase

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The RBA cash rate decision came out at 2.30 today with the decision to hold rates at 1.5 percent.
The RBA noted conditions in the housing market have strengthened overall, although they vary considerably around the country. 
"In some markets, prices are rising briskly, while in others they are declining.
It noted housing credit has picked up a little, although turnover of established dwellings is lower than it was a year ago. 
"Supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments. 
"Considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. 
"Growth in rents is the slowest for some decades."
Tim Lawless, CoreLogic head of research said despite inflation tracking well below the target range of 2-3 percent, the RBA decided to keep the cash rate on hold at 1.5 percent.  
"On one hand the RBA was likely considering the sluggish inflation numbers, the likelihood of a low or even negative economic growth reading when GDP data is released tomorrow, record low wage growth of 1.9 percent in the year to September and the loss of approximately 50,000 full time jobs in the year to October," he said.
"In balance, there are plenty of reasons why the RBA would keep rates on hold such as the rebound in housing market strength and housing investment activity, a surge in commodity prices, and potentially a lower Australian dollar as the US looks to increase interest rates.  
"The reacceleration in housing values in some cities was likely a topic of discussion at the RBA, particularly considering the rebound in dwelling values that has been evident across some cities coincided with the two rate cuts earlier this year. 
"The May and August rate cuts were also accompanied by an aggressive rise in investment activity.
"A decision to cut the cash rate to new record lows could add further incentive to investors and owner occupiers which could push housing values even higher. The next RBA meeting isn’t until February 7th. 
"By this time the RBA will have had time to consider the performance of the housing market over the final quarter of 2016, as well as GDP figures for September and inflation numbers for the  December quarter.  Additionally there will be further clarity on the US economy where unemployment has reached a nine year low and interest rates are about to start ratcheting higher. 
"At 1.5 percent, the cash rate is still highly expansionary and, together with other factors, is likely to keep housing demand strong."
 
 
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RBA holds cash rate at December board meeting of 2016

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Reserve Bank Governor Philip Lowe December 2016 RBA statement.
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At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.
The global economy is continuing to grow, at a lower than average pace. Labour market conditions in the advanced economies have improved over the past year. Economic conditions in China have steadied, supported by growth in infrastructure and property construction, although medium-term risks to growth remain. Inflation remains below most central banks’ targets, although headline inflation rates have increased recently. Globally, the outlook for inflation is more balanced than it has been for some time.
Commodity prices have risen over the course of this year, reflecting both stronger demand and cut-backs in supply in some countries. The higher commodity prices have supported a rise in Australia’s terms of trade, although they remain much lower than they have been in recent years. The higher prices are providing a boost to national income.
Financial markets are functioning effectively. Government bond yields have risen further with the adjustment having been orderly. Funding costs for some borrowers have also risen, but remain low. Globally, monetary policy remains remarkably accommodative.
In Australia, the economy is continuing its transition following the mining investment boom. Some slowing in the year-ended growth rate is likely, before it picks up again. Further increases in exports of resources are expected as completed projects come on line. The outlook for business investment remains subdued, although measures of business sentiment remain above average.
Labour market indicators continue to be somewhat mixed. The unemployment rate has declined this year, although some measures of labour underutilisation are little changed. There continues to be considerable variation in employment outcomes across the country. Part-time employment has been growing strongly, but employment growth overall has slowed. The forward-looking indicators point to continued expansion in employment in the near term.
Inflation remains quite low. The continuing subdued growth in labour costs means that inflation is expected to remain low for some time, before returning to more normal levels.
Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 has been helping the traded sector. Financial institutions are in a position to lend for worthwhile purposes. These factors are assisting the economy to make the necessary adjustments, though an appreciating exchange rate could complicate this.
Conditions in the housing market have strengthened overall, although they vary considerably around the country. In some markets, prices are rising briskly, while in others they are declining. Housing credit has picked up a little, although turnover of established dwellings is lower than it was a year ago. Supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments. Considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in rents is the slowest for some decades.
Taking account of the available information, and having eased monetary policy earlier in the year, the Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
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po-LsXgBTHBmX

Cautious approach by lenders noted by Governor Philip Lowe December 2016 RBA statement

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<img src="https://counter.theconversation.edu.au/content/69474/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Asian currencies hit a seven year low in November, on Donald Trump’s election and the potential for his policies to spur US inflation and bond yields.
Investors who fanned out across emerging markets in recent years are now bringing their money back to America.
The steep drops, and the seeming inability of some central banks to do much about it, has led to worries of a financial crisis. Some columnistsare even drawing comparisons to the currency meltdown that preceded the 1997-1998 Asian Financial Crisis (AFC). 
The AFC’s impacts were dramatic. It led to the sudden collapse of President Suharto’s regime in Indonesia and triggered the 1998 Russian bond default. Everyday economic life was upended as the five worst hit economies saw unemployment surge, inflation balloon, and investment as a share of GDP plunge more than 10%. 
It took five years for GDP per capita to reach parity with pre-AFC levels. Austerity was imposed to pay for large financial sector bailouts, in Indonesia the net cost of rescuing the financial sector exceeded 40% of GDP.
But much has changed since 1997. China’s rise means an increasingly multipolar economic order, new regional partnerships are in place, and central bankers and policymakers are less likely to repeat some prior mistakes. Even if a crisis were to materialise, it would look quite different from that of two decades ago. 
<h2>What triggered the AFC?</h2>
The AFC began in July 1997, when Thailand gave in to speculators and devalued the Baht. Many Asian nations had long either pegged or closely tethered their currencies to the US dollar. After the baht, speculators quickly turned on the currencies of Indonesia, Malaysia, and South Korea. To fight the attacks on their exchange rates, central banks had to sell dollars (Thailand) or abruptly raise interest rates (Indonesia), but eventually caved - sometimes after depleting foreign exchange reserves - and allowed their currencies to fall. 
The exchange rate declines wreaked havoc by driving up the cost of the money private companies had borrowed from abroad. Many were already struggling, amid an economic slowdown, with large foreign exchange borrowings and poor investments in overheated sectors like property. Once currencies floated, the companies’ flight to the US Dollar put pressure on domestic banks. Financial sectors became rapidly insolvent, triggering state interventions and bailouts. 
The use of fixed or managed exchange rate regimes meant central banks assumed the risks of sudden foreign exchange movements. This perceived security further prompted capital inflows and resulted in real exchange rate appreciation and asset bubbles. Hedging, an investment tool limiting the risk of exchange rate changes damaging the price of an asset, was not widespread. 
Governance problems and “crony capitalism” exacerbated these issues. The Indonesian central bank governor, for example, was part of cabinet and had little power to resist instructions to pump liquidity into ailing banks. In the end, US$14 billion was pumped into an insolvent banking sector and state auditors later found more than 60% of the funds were misused. 
<h2>A lot has changed since the AFC</h2>
It was in the reaction to the AFC that a lot of changes were made. In return for cash infusions, these countries committed to IMF supervision and extensive programmes of economic reform and liberalisation. In addition to financial sector restructuring, the programs also included “structural reforms,” such as dismantled barriers to foreign investment and liberalised trade regimes. 
From Indonesia, the IMF demanded dismantling of the monopolies and rent-creation schemes at the heart of the regime; from South Korea, it demanded large layoffs and union-busting measures. In both cases a back and forth between leaders and the IMF played out in real time as the currencies continued to fall and financial sector insolvency accelerated.
Many of these countries have also built up huge foreign exchange reserves over the past decade. Banking supervision has also greatly improved, and countries like Indonesia have created genuinely independent banking supervisory agencies and monetary authorities. 
Regional financial integration has also deepened, with initiatives like the Chiang Mai Agreement, a framework adopted by members of ASEAN as well as China, Japan, and South Korea, for bilateral currency swaps and repurchase agreements. 
China also has expanded its role, including a web of bilateral currency swap agreements with Indonesia, Malaysia, and Thailand. These Chinese renminbi (RMB) swaps are designed to facilitate trade – the RMB is the world’s second-largest trade finance currency – but swapped RMB can be converted to USD through offshore RMB trading centres and have been used to provide emergency liquidity to countries facing currency challenges (Pakistan in 2013, Argentina in 2014).
Central banks have reacted to the dollar’s sudden strength by announcing currency interventions, discussing rate hikes, and pressuring banks to curb “speculative” trading. China has announced closer scrutiny of some outbound transactions and Malaysian authorities have asked banks to limit some investments used for offshore ringgit hedging. This has prompted fretting among financial analysts who recall that Malaysia imposed some capital controls - effectively preventing ringgit from being exchanged and transferred out of the country - during the AFC. 
<h2>Going forward</h2>
This is not to rule out a crisis (although markets may well reevaluate assumptions about Trumpnomics), as the end to years of plentiful dollars will have an impact. Debt levels are higher than pre-AFC levels, and foreign currency-denominated emerging market debts have more than doubled in the last ten years. Instead, global economic polarities are much changed because of China’s emergence, weakness in Europe, and isolationism in the US. Any crisis would play out differently than in 1997/98. 
Economic managers are far less in thrall to economic orthodoxies as they were in the 1990s to the “Washington Consensus” and are therefore likely to blaze their own trails. The IMF, which remains the global lender of last resort, has also fine tuned its approach and is far less prescriptive than after the years of heady growth during the 1990s.
Whereas Malaysia during the AFC imposed capital controls and snubbed the IMF, just across the Malacca Strait Indonesia provided free movement of capital, which allowed the mass exit of both foreign and domestic capital. Combined with efforts to provide liquidity to the banks, the absence of capital controls undermined the government’s ability to carry out monetary policy. Many countries prudently used some capital controls during the global financial crisis, and as a result, some mild to moderate capital controls are likely.
A final variable is China, which despite its own currency challenges is keen to further the end of the US’s sole leadership of the international financial order. The aforementioned currency swaps, though likely insufficient for seeing off a systemic, regional crisis, show its ambitions to position itself as emerging markets’ preferred economic partner. 
Efforts like the recent purchase of US$4 billion in assets from Malaysia’s disgraced 1MDB further shows an opportunistic approach to emerging geostrategic events. As a result, the likes of the IMF and friends, which dictated large, condition-laden bailouts in return for AFC assistance, are no longer the sole port of call for a beleaguered economy, and any post-crisis order, much shaped by these institutions after the AFC, might end up quite different.
Matthew Busch is PhD candidate at Melbourne Law School, University of Melbourne and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/matthew-busch-284580" target="_blank">here</a>.
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Don't expect a rerun of the Asian Financial Crisis

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<h2> </h2>
CAMA RBA SHADOW BOARD
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The course of the world’s largest economy has become less certain with Donald Trump unexpectedly triumphing in the US Presidential election.
<h2> </h2>
On the other side of the Atlantic, Europe is bracing itself for more trouble as it stands by watching Italy hold a referendum on a change to its constitution. Domestically, unemployment is flat, while consumer price inflation, at 1.0 percent year-on-year, remains well below the RBA’s 2-3 percent target band.
<h2> </h2>
The CAMA RBA Shadow Board continues to believe that the cash rate should remain at its current level but the probabilities for a required interest rate increase have strengthened on all horizons. The Shadow Board attaches a 56% probability to a rate hold being the appropriate policy setting. The confidence attached to a required rate cut equals 2 percent, while the confidence in a required rate hike equals 43 percent.
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There is little inflationary pressure emanating from the Australian labour market, with Australia’s unemployment rate still estimated to be 5.6 percent, according to the Australian Bureau of Statistics. Part-time and full-time employment figures continue to yoyo around on a monthly basis, making these numbers difficult to interpret. New data indicates that nominal wages grew a modest 1.9 percent, year-on-year.
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The Aussie dollar, relative to the US dollar, has depreciated since last month, temporarily trading as low as 73.1 US¢ on 21 November. Since then the dollar has rebounded and is now hovering around 74.5 US¢. Yields on Australian 10-year government bonds have continued their bounce from recent historical lows. They now equal 2.88%. Domestic share prices joined the global rally but are now consolidating, with the S&amp;P/ASX 200 stock market index trading near 5,500.
<h2> </h2>
Worldwide, more uncertainty enthrals financial markets and policy makers. After Donald Trump’s surprise win of the US Presidential election, financial markets rallied but this may be short-lived. Across the globe, people are trying to predict what a Trump Presidency will look like, whether Trump’s policies will match his campaign rhetoric and the the implications of his policies, many of which do not neatly fit into the traditional left-right spectrum.
<h2> </h2>
Europe is on edge about this Sunday’s Italian referendum to change the Italian constitution, with a banking crisis and further political turmoil looming on the horizon.
<h2> </h2>
With the US Presidential election out of the way and the US economy holding up for the time, the Federal Reserve Bank in the US may start in earnest to lift the federal funds rate. The Organization of the Petroleum Exporting Countries (OPEC) met again in Vienna to agree on production cuts, with pundits estimating that the world price for crude oil could settle around US$ 60 a barrel.
<h2> </h2>
These developments, along with recent data pointing to an uptick in global inflation, suggest slight upward pressure for global prices. Eventually, this pressure is likely to spill into the domestic economy; hence the Shadow Board’s slight revision of preferred interest rates to the upside.
<h2> </h2>
Consumer confidence, as measured by the Westpac-Melbourne Institute Consumer Sentiment Index, is virtually unchanged from the previous month. The manufacturing and services PMI, which measure the performances of the manufacturing and services sectors, have strengthened again, from 50.9 to 54.2 and from 48.9 to 50.5, respectively.
<h2> </h2>
The AIG Performance of Construction Index (PCI), after its recent blip up, fell again, from 51.4 in September to 45.9 in October. Building permits declined for the third month in a row, this time by 12.6 percent, which points to an overall weakening of the housing market.
<h2> </h2>
The Shadow Board’s preference for the optimal interest rate has shifted a little. It now attaches a 56 percent probability (64 percent last month) that “no change” is the appropriate policy, a 2 percent probability (4 percent last month) that a rate cut is appropriate and a 43 percent probability (32 percent in the previous month) that a rate rise, to 1.75 percent or higher, is appropriate.
<h2> </h2>
The probabilities at longer horizons are as follows: 6 months out, the estimated probability that the cash rate should remain at 1.50 percent equals 21 percent, three percentage points down from the previous month.
<h2> </h2>
The estimated need for an interest rate decrease has fallen to 9 percent (down from 13 percent in November), while the need for a rate increase equals 71 percent (63 percent in November).
<h2>A year out, the Shadow Board members’ confidence that the cash rate should be held steady equals 17 percent (18 percent in November), while the confidence in a required cash rate decrease fell four percentage points to 6% and the confidence in a required cash rate increase equals 77 percent (72 percent in November). </h2>
<a href="/images/2016/12/06/Screen%20Shot%202016-12-06%20at%2010.44.24%20AM.png" target="_blank">Click to enlarge</a>
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Cash rate should hold pre-Christmas: Shadow RBA Board

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GUEST OBSERVER
Here are the six standout charts over the past week covering home prices, Australian All Ordinaries Accumulation index, business investment, planned business investment, Nymex oil price and US 10-year bond yields.
<a href="/images/2016/12/05/Screen%20Shot%202016-12-05%20at%201.06.56%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/12/05/Screen%20Shot%202016-12-05%20at%201.06.56%20PM.png" alt="" width="760" height="500">
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<img src="/images/2016/12/05/Screen%20Shot%202016-12-05%20at%201.07.06%20PM.png" alt="" width="654" height="214">
Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>
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The six standout charts for this week: CommSec's Savanth Sebastian

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The past week saw Japanese and Chinese shares both gain another 0.2 percent, but US and European shares fall 1 percent and Australian shares fall 1.2 percent as they had a bit of a consolidation along with the $US (which fell 0.8 percent), after the post US election rally led to overbought positions. 
However, energy shares and the oil price (up 12 percent) got a huge boost after OPEC agreed on a production cut. Metal prices and the iron ore price slipped a bit but the $A still rose slightly as the $US fell. Bond yields were mixed – up in the US and Australia but down in Europe. 
After a “yes they will, no they won't” soap opera, OPEC agreed on an oil production cut of 1.2 million barrels a day. While stronger than talked about in September this was made necessary by a ramp up in production since then. 
The cut adds to confidence that we have seen the low in oil prices and that deflationary forces are in retreat. So good news for energy producers and central banks. But there is a danger in getting too excited. 
Around $50/barrel is where the median shale oil producer is economic and so shale production will start to ramp up again (the US rig count is already well up from its lows) and it’s questionable whether OPEC discipline will really hold...so I am sceptical that the oil price will go too high. Maybe $55 or $60 tops. Inflation is already picking up as the 2014 to early 2016 oil price plunge drops out, but so far the flow on to core inflation has proven to be muted. Don’t forget that the oil price is still less than half 2013-14 levels. 
For Australian petrol prices the OPEC cut might add 5 cents a litre at the bowser but that will be lost in normal day to day price volatility.
<a href="/images/2016/12/05/Screen%20Shot%202016-12-05%20at%2012.55.08%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/12/05/Screen%20Shot%202016-12-05%20at%2012.55.08%20PM.png" alt="">
 
 
China appears to be seeing another one of its periodic policy tightening phases with increasing measures to cool the hot property market, a crackdown on capital outflows to ease downwards pressure on the Renminbi, tighter monetary conditions and measures around shadow banking and commodity markets. The Chinese share market may be a beneficiary though to the extent capital outflows are limited and need to find a home domestically and it’s not seen as too hot. 
Major global economic events and implication 
US data remained strong with September quarter GDP growth revised up to 3.2 percent, consumer confidence rising sharply in November, the ISM manufacturing conditions index rising further in November, home prices continuing to rise, construction spending up and employment up solidly in November and unemployment down to 4.6 percent.
The Fed remains on track for a December rate hike, particularly with the fall in unemployment indicating less slack in the economy. However, a fall back in wages growth in November to 2.5 percent year on year will likely keep rate hikes on a gradual path for now until the Fed gets more clarity around Donald Trump’s stimulus plans.
Meanwhile, Trump’s picks for various cabinet positions including Treasury secretary are adding a bit to confidence in his administration such that the dial is still pointing to Trump the pragmatist as opposed to Trump the populist.
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In the Eurozone economic sentiment moved higher in November and bank lending accelerated a touch pointing to slightly stronger economic growth. Unemployment even fell to its lowest since 2009. Meanwhile CPI inflation rose as the impact of the plunge in oil prices continues to fall out but core inflation remains stuck at a low 0.8% year on year. 
Japanese data was better than expected with continuing jobs market strength, stronger than expected household spending, a continuing upswing in industrial production and gains in housing starts and construction orders. 
Chinese business conditions PMIs were better than expected and remain consistent with good growth. 
Indian September quarter GDP growth accelerated to 7.3 percent yoy from 7.1 percent. Growth may slow in the current quarter because of “demonetization”, but the November manufacturing conditions PMI suggests only a moderate impact. 
Australian economic events and implications 
Weak business investment data both for the September quarter and intentions for the current financial year along with another sharp fall in building approvals added to a sense of near term economic gloom regarding Australian economic growth. As we noted a week ago, there is a significant risk that September quarter GDP growth will be negative – thanks to weak retail sales volumes, a fall in dwelling investment, a continuing fall in business investment and weak net exports. 
While a continuing decline in mining investment is no surprise the failure to see stronger non-mining investment is disappointing. However, there is no reason to get too gloomy. Weak and possibly negative September quarter GDP growth looks like payback for stronger than expected GDP growth over the year to the June quarter of 3.3 percent. 
And looking forward the ramp up in resource export volumes has further to go, there is still a huge pipeline of housing activity yet to be completed so home building is likely to rebound in the short term, strengthening approvals for non-dwelling construction are a positive sign, the drag from mining investment is fading as it reduces in importance and its likely to be close to a bottom in the next 12-18 months (see chart), recent retail sales data have improved with three months in a row of solid growth up to October suggesting a consumer bounce back in the December quarter, another rebound in the manufacturing conditions PMI for November suggests that the September quarter growth soft patch may be over and the rebound in commodity prices tells us that the income recession in Australia is over. 
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However, recent soft data highlights that its way too early to be talking about a 2017 RBA rate hike. In fact given the downside risks to near term growth and inflation along with the $A remaining too high we remain of the view that the RBA will cut the cash rate again during the first half of 2017. 
Just finally, home price momentum remained solid in November according to CoreLogic – except in Melbourne where unit prices lost 3.2%. The apartment supply surge is starting to impact in that city and it will likely spread to others next year. 
What to watch over the next week? 
Reaction to the Italian Senate referendum on December 4 will no doubt impact investment markets early in the week ahead. While confirmation of a “No” vote (as the polls are suggesting) will add to uncertainty about the Italian government and its banks and maybe further fuel fears about a “break-up” of the Eurozone, a lot will have to occur before Italy leaves the Eurozone if at all.
 An early Italian election is unlikely to occur and even if there is the populist Five Star Movement (5SM) is unlikely to win unless it softens its anti-Euro stance. Meanwhile, if the “Yes” vote wins Italy’s economic woes will remain (and ironically it would increase the risk that 5SM could form government at some point). So the referendum is unlikely to settle anything either way. More broadly, the Eurozone is likely to continue to hang together and bouts of market turmoil driven by break-up fears should be seen as buying opportunities. 
After the Italian vote, all eyes in Europe will shift to the ECB meeting on Thursday which is expected to announce a six month extension of its quantitative easing program beyond its current expiry of March 2017 and some changes to enable it to buy a wider universe of bonds. Continuing moderate growth and sub-par inflation along with issues around Italy and Italian banks are likely to be the main drivers with the back-up in bond yields giving the ECB a bit of leeway. It may also try and inject a bit of flexibility into its QE program to allow it to speed up and slow individual country bond buying as justified. 
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In the US, expect the non-manufacturing conditions ISM index (Monday) to remain strong, the trade balance (Tuesday) to deteriorate and labour market indicators for hiring and vacancies (Wednesday) to remain solid. 
Chinese October trade data (Thursday) is expected to show continued softness in exports and imports and a further rise in both consumer and producer price inflation (Friday). 
In Australia, the RBA is expected to leave rates on hold on Tuesday. While recent data points to soft September quarter GDP growth to be released on Wednesday this is unlikely to be enough to move the RBA to cut rates given recent upbeat commentary on the economy from both Governor Lowe and Assistant Governor Kent. However, as noted above we remain of the view that the RBA will cut rates again in the first half of next year reflecting downside risk to both growth and inflation. 
On the data front in Australia, expect September quarter GDP growth (Wednesday) of just 0.2 percent qoq or 2.5 percent yoy driven by weak business investment, retail sales, housing investment and trade with a high risk of a fall in GDP. September quarter data for production, profits and inventories (Monday) and net exports and public demand (Tuesday) will help fine tune September quarter GDP forecasts. Expect the surge in coal prices to have led to a further collapse in the trade deficit (Thursday) and housing finance (Friday) to fall. 
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Outlook for markets
Sovereign bonds are now very oversold and due for a short term pullback in yield. But still low bond yields point to a poor medium term return potential from them. The abatement of deflationary pressures as commodity prices head up, the gradual using up of spare capacity and a shift in policy focus from monetary to fiscal stimulus indicates that the long term decline in yields since the early 1980s is probably over. Expect the trend in bond yields to be up.
Commercial property and infrastructure are likely to continue benefitting from the ongoing search for yieldby investors though as these two asset classes never fully adjusted to the full decline in bond yields.
Dwelling price gains are expected to slow, as the heat comes out of Sydney and Melbourne thanks to poor affordability, tougher lending standards and as apartment supply ramps up which is expected to drive 15-20 percent price falls for units in oversupplied areas into 2018.
Cash and bank deposits offer poor returns. 
<a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author" target="_blank">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home" target="_blank">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
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