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."

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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 Commonwealth Bank is the latest lender to lift interest rates for homebuyers looking to fix their home loan.
The country’s biggest lender lifted the rate of its popular 3-year fixed rate by 0.20 percentage points to 4.24 percent on Friday.
It also lifted its longer-term 5-year fixed rate by 0.60 percentage points to 4.74 percent.
CBA was the second major bank in a fortnight to lift fixed rates following Westpac.
A RateCity.com.au analysis shows that a further 20 lenders have lifted rates 268 fixed products since November 1.  
Peter Arnold, data insights director at RateCity.com.au said fixed rates are based on market expectations of future rates and "are the best indicator that we’ve got that a variable rate hike on the way.".
“Previously, banks were betting on lower rates in the future but we’re seeing those expectations change by the day.
"Shorter-term fixed rates are still sitting below variable rates, which tells us rates will stay steady when the RBA meets on Tuesday.  
“But longer-term fixed rates, such as 5 years fixed, are sitting higher than variable rates and rising by the biggest margins, which tells us that they don’t expect low rates will last forever.”
But he added it’s always a gamble when deciding whether or not to fix your home loan.
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"Our research shows that over the past 20 years, people who stuck with variable rates came out ahead 63 percent of the time,” he said.
“People often fix in panic, for instance in the lead up to the GFC fixing became progressively more popular as rates increased to the point where one quarter of new loans were fixed at over 9 percent in March 2008.
“There are now 240, 3-year fixed rates under 4 per cent and you can even lock in a rate as low as 3.8 percent until Christmas 2021.
"So if you’re someone who prefers the certainty of knowing your repayments, then now might not be the worst time to consider fixing.”
According to Canstar, in monthly repayment terms, CBA’s rate increase will mean a rise of more than $355 for a borrower with a 30-year fixed loan paying the new rate of 4.74 percent.
It was a time of growing uncertainty in the lending market, reflected last week when Australian Broker reported on the growing gap between the most expensive and the most affordable loan rates for residential property has widened to nearly 240 basis points.
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jchancellor-FAypfDUnLy

Commonwealth Bank lifts fixed rates

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<div class="column">If you just looked at the top level results, there wasn’t a lot of good news in the business investment report.</div>
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<div class="column">Spending recorded a sizable quarterly fall, expectations of future investment are down over 14 percent compared with a year ago and the weakness was across all the states and territories bar Victoria and Queensland.</div>
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<div class="column">But this is really backward looking, categorising an environment that included the lead up to the Federal Election and Brexit – hardly an environment that would see businesses lift investment plans.</div>
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 However the main good news or rather glimmer of hope was the lift in expected investment plans compared with last quarter. The fourth estimate for 2016/17 is $106.9 billion, up 1.7 per cent on the third estimate (June quarter). In addition investment plans have lifted substantially in the past six months, up by 17 percent. Encouragingly the lift in investment plans over the last couple of quarters, may be a sign of a shift in momentum by the business sector, but it is too early to tell. Certainly the lift in business conditions in recent months may be supportive of a lift in investment plans – especially in light of the surge in commodity prices and improvement in the global economy. No doubt the rebalancing across the economy is also being supported by the slide in the Australian dollar – an outcome that should garner further traction in coming quarters. But as we have seen in the past, business may plan for future investment but then mothball projects if the economic landscape doesn’t improve.
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<div class="column">Business spending looks like continuing to be a weight on Australia’s economic growth performance in the medium term. The Reserve Bank could cut rates again, but it is far from certain that this would have a measurable impact in further lifting business spending. The Reserve Bank is more forward- looking and is likely to maintain its neutral bias on a more upbeat medium term growth outlook.</div>
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<div class="column">It may be no surprise to see that home prices continue to lift across most capital cities. But what was clearly surprising was the slide in apartment prices across the nation, in particular the outsized 3.2 per cent fall in Melbourne apartment prices. Over the last year there has been a lot of discussion on the anticipated lift in housing supply, with particular concern on inner city Melbourne and Brisbane. And it may just be that this is the first sign of the lift in apartments coming on stream and curtailing price growth.</div>
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<div class="column">While the housing market is more mixed across the nation, it was encouraging to see some of the resource states seeing a decent lift in prices over November. And the lift in commodity prices may suggest that the mining towns may have come through the worst of the downturn.   Overall policymakers will keep a close eye on the housing sector the early part of 2017, and will prefer to see more balanced house price growth across the nation. And in particular a lift in regional house prices would be a positive outcome. Annual growth in home prices across regional centres was just 1.4 per cent over the past 12 months. 
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What do the figures show?
Private business investment
Overall: Business investment (spending on buildings and equipment) fell by 4 per cent in the September quarter after falling by 5.2 per cent in the June quarter. Spending on buildings fell by 5.7 per cent in the quarter while spending on equipment fell by 1.9 per cent. Investment is down 13.7 per cent over the year with buildings down by 24.3 per cent while equipment was up by 4.6 per cent.
Sectors: Mining investment fell by 7.2 per cent in the September quarter (ninth straight decline), while manufacturing spending fell by 4.9 per cent, spending by “other selected industries” fell by 1.9 per cent.
States: In seasonally adjusted terms investment fell in six of the eight states and territories in the September quarter. Investment fell the most in Western Australia (down 11.4 per cent), followed by Northern Territory (down 10 per cent), the ACT (down 8.1 per cent), South Australia (down 4.8 per cent), NSW (down 3.5 per cent), and Tasmania (down 0.1 per cent). The only rise was in Victoria (up 3.3 per cent) followed by Queensland (up 2.7 per cent).
Prices: The overall deflator for investment goods fell by 0.3 per cent in the September quarter after falling by 0.5 per cent in the June. The cost of buildings and structures rose by 0.2 per cent while the cost of equipment fell by 0.8 per cent. Over the year, the cost of investment goods fell by 0.5 per cent – the largest fall 41⁄2 years. The cost of buildings rose by 0.9 per cent while the cost of investment equipment fell by 3 per cent.
Forecasts: The fourth estimate for investment in 2015/16 is $106.9 billion, up 1.7 per cent on the third estimate but down 14.3 per cent over the year. Over the last six months, investment expectations have lifted by 17.1 percent.
Home prices
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The CoreLogic Home Value Index of capital city home prices rose by 0.2 per cent in November and was up 9.3 per cent over the year.
In regional Australia, house prices fell by 0.2 per cent in October and were just 1.4 per cent higher than a year ago. (regional prices cover just houses and data is up to the end of October).</div>
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 In capital cities, house prices rose by 0.2 per cent in November while apartment prices fell by 0.1 per cent. House prices were up 9.6 per cent on a year ago and apartments were up by 7.2 per cent.</div>
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 The average Australian capital city house price (median price based on settled sales over quarter) was $645,000 and the average unit price was $540,000.</div>
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<div class="column">Dwelling prices rose in six of the eight capital cities in November: Darwin (up 3.7 per cent), followed by Adelaide (up 2.9 per cent), Hobart (up 0.9 per cent), Sydney (up 0.8 per cent), Perth (up 0.6 per cent), and Brisbane (up 0.4 per cent). Prices fell only in Melbourne (down 1.5 per cent). Dwelling prices in Canberra were unchanged.</div>
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<div class="column">Home prices were higher than a year ago in seven of the eight capital cities. Prices rose most in Sydney (up 13.1 per cent); followed by Melbourne (up 11.3 per cent), Hobart (up 8.5 per cent); Canberra (up 8.4 per cent); Adelaide (up 4.7 per cent), Brisbane (up 3.9 per cent) and Darwin (up 1.1 per cent). Prices fell in Perth (down by 3.4 per cent). Total returns on capital city dwellings in the year to November rose by 13.1 per cent with houses up 13.3 per cent on a year earlier and units up 11.8 per cent.
Performance of Manufacturing
The Performance of Manufacturing index rose by 3.3 points to 54.2 in November. A reading above 50.0 indicates that the sector is expanding. The index had been above 50 for 13 months up until August 2016 – the longest period of expansion since September 2006. AIG notes “The expansionary conditions were broad-based, with six of the seven sub-indexes in the Australian PMI indicating expansion in November. The strong lift in new orders (59.5 points) together with solid growth in sales (53.5 points) is promising.”
What is the importance of the economic data?
“Private New Capital Expenditure and Expected Expenditure” is released quarterly by the Bureau of Statistics. The figures show both actual and expected spending by businesses on tangible assets such as new buildings, machinery and office equipment. The figures are obtained after sampling 8,000 private business units.
The CoreLogic Hedonic Australian Home Value Index is based on Australia’s biggest property database. Unlike the ABS Index, which excludes terraces, semi-detached homes and apartments, the CoreLogic Hedonic Index includes all properties. Home prices are an important driver of wealth and spending.
The Australian Industry Group compiles the Performance of Manufacturing Index (PMI) each month. The Australian PMI is the Australian equivalent of the US ISM manufacturing gauge. The PMI is one of the timeliest economic indicators released in Australia. The PMI is useful not just in showing how the manufacturing sector is performing but in providing some sense about where it is heading. The key ‘forward looking’ components are orders and employment.
What are the implications for interest rates and investors?
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<div class="column">The great unwinding of mining investment continues although the lift in commodity prices may result in more of a soft landing in coming quarters.</div>
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<div class="column">The Chinese economic data remains encouraging, showing that the transition from the industrial sector to household sector remains on track. The manufacturing sector is expanding, while the services sector is clearly the driver taking up any slack.</div>
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<div class="column">The latest Australian manufacturing data is encouraging, suggesting that the current levels of interest rates and the Australian dollar are working in favour of domestic producers.</div>
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<div class="column">The Reserve Bank has regularly noted that housing supply will lift over coming years as work is completed on the bevy of new homes – especially apartments. The Reserve Bank looks to be comfortably on the interest rate sidelines over the coming year. </div>
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<div class="column">Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a></div>
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Subdued business investment, healthy home prices: CommSec's Savanth Sebastian

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<img src="https://counter.theconversation.edu.au/content/68677/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Throughout the Presidential campaign Donald Trump repeatedly criticised the United States Federal Reserve, accusing it of creating a “big fat ugly bubble” through its monetary decisions, among many other things. Trump’s consistent attacks have created worries for the Fed’s independence.
These worries intensified after the election, as President Trump will be in a position to make big changes at the Federal Reserve over the next few years. There are two existing vacancies on the seven-member board of governors of the Fed, and the terms of both the current Chairwoman, Janet Yellen, and Vice Chairman, Stanley Fischer, expire in 2018.
But there is more to good central bank governance than independence.
<h2>Why do we care about central bank independence?</h2>
Among orthodox economists, there is a long-standing belief that central bank independence is a sacred precept for any market economy. Independence gives the central bank some freedom from the politicians who might otherwise print money for political reasons. Orthodox economists worry that politicians are susceptible to political moves that are deleterious to stable economic environments, and that their ideologies often have little economic grounding.
Politicians, by this logic, will compromise monetary stability just so they can trumpet to their electorate that they are “driving growth”. There are some merits to this theory, as a long history of bubbles fuelled by short-sighted politicians amply demonstrates.
However, the problem for these orthodox economists, in addition to failing to either predict, explain, or prevent global financial catastrophes, is that the exact faults they attribute to politicians also manifest in unaccountable central banks, most notably the United States Federal Reserve.
<h2>Good governance requires more than independence</h2>
In order for the independence of central banks to work effectively, they need to be self-critical, intellectually honest, and adaptable institutions, as the banks of Canada and New Zealand have a track-record of demonstrating. The importance of a critical approach cannot be overstated. Central banking is an art, not a science, which is why humility is also an important attitudinal factor explaining the success of some central banksas opposed to others.
There is also a cultural aspect that has fuelled the impunity of central banks – it comes from their monopolisation of prestige in economics. Take this example: the Nobel Prize in Economics is given out by the Central Bank of Sweden. Is it really so surprising that a central bank will continually bestow this prize on the guys who argue for central banks to be made all-powerful?
<h2>Central banks must be accountable</h2>
A point that was advanced by both Donald Trump and Bernie Sanders is that there must be some form of accountability for so large an institution, which has such a disproportionate impact on the well-being of people all over the world. If the Federal Reserve were like any central bank whose sphere of influence was relegated largely to domestic monetary authority, then a robust and independent Central bank would not just be desirable but crucial to prevent capture by the short-termism of politicians. However, the US central bank is the printer of the world’s reserve currency and so writes the economic destiny of much of the planet.
Given the global impact of the Fed, there must be some form of mechanism by which it is made answerable for its choices. In a time of “rabid populism,” the idea that a small group of unelected people virtually dictate the price of money (which is basically what interest rates are), is not just abhorrent but downright anathema, and that is what Trump has capitalized on (pun intended).
<h2>Lessons for other central banks</h2>
There are two other central banks that have a disproportional global impact – the European Central Bank [ECB] and the People’s Bank of China [PBOC]. They too have to cater to their domestic economic needs,but find themselves exerting enormous influence over the global economy. And like the Fed, they are also not subject to a consistent oversight mechanism.
Although the PBOC does not face substantial domestic criticism, it continually draws the ire of its international trading partners for its domestic monetary policies. Meanwhile, the ECB is now the equivalent of an economic piñata that is berated by many EU members, for a variety of reasons. The ECB has a very difficult mandate in that it must try to strike a balance between the stable Euro-countries and those that are crisis-afflicted. Its democratic accountability has also been repeatedly called into question.
<h2>What next?</h2>
So what is next for the Fed? As with many Trump “promises,” there seems to be some dithering on whether Trump would actually go after the Fed. However, if pursued, Trump’s impact on the Federal Reserve could be huge. The impact on global equity and bond markets, on the value of the US Dollar, on the money supply, and on ordinary American lives, would be tremendous. 
However, the fact remains that independence alone doesn’t ensure good policymaking. And as populist fervour takes hold, a more accountable mechanism for overseeing monetary authority might be necessary.
Usman W. Chohan is doctoral candidate, Policy Reform and Economics, UNSW Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/usman-w-chohan-182272" target="_blank">here</a>.
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There is more to good central bank governance than independence

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GUEST OBSERVER
For the past five years, the Australian economic story has been about rebalancing growth away from being driven by mining investment at the end of the commodity prices ‘super-cycle’. 
Between 2011 and early 2016 a 60 percent fall in commodity prices weighed on tax revenues, corporate profits, and wages growth. 
Mining investment also fell from 9 percent of GDP in 2013 to around 4 percent of GDP currently. 
The main factors offsetting the drag have been falling interest rates – which supported local disposable incomes and asset prices – and a lower AUD – which improved the competitiveness of the non-mining sectors, like tourism and education exports. A housing boom and rising services exports have supported growth. 
Three key factors are now changing the story. First, the mining investment decline is almost done, with only a couple more quarters to run. Second, commodity prices have lifted, in some cases significantly. Third, the election of Donald Trump and the expectation of faster US growth and inflation means that more Fed rate hikes are now expected, which has strengthened the USD, conversely weakening the AUD. 
The first two elements have been in train for some time and have helped to underpin our view that the RBA is unlikely to cut its cash rate below 1.50%. However, the stronger-than-expected lift in bulk commodity prices combined with the now faster- than-previously expected lift in US rates (HSBC’s view is now for a Fed Funds rate at 1.375% by mid-2018), mean that we now expect the RBA to lift its cash rate in 2018. 
Although local inflation is currently below the RBA’s 2-3% target and wages growth is sluggish, we expect both to gradually lift from here. Supporting this, we see the rise in commodity prices as likely to support national incomes, tax revenues and corporate profits and to flow through to wages growth. Non-mining business investment is also already showing signs of rising and, on the labour market, it is worth keeping in mind that these indicators tend to lag the cycle, rather than lead it. 
Previous concerns that any increase in the cash rate by the RBA might put upward pressure on the AUD are less of a concern if the Fed is hiking.
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Commodity prices have risen; some quite significantly 
Commodity prices appear to be past the trough, with the price of Australia’s commodity export basket having risen by 40% in USD (30% in AUD terms) since the beginning of the year (Chart 1). In particular, Chinese policy measures have supported the iron ore price and sharply lifted coal prices (Chart 2) (for more on this see Commodity Economics Comment: Watching the coal price spike, 
27 September 2016). Although we do not expect coal and iron ore prices to stay at current high levels, we do see them holding well above previous lows. For example, the Q4 coking coal export contract price was US200 a tonne, up from US92 a tonne in Q3. 
The election of Donald Trump has also supported the outlook for global infrastructure investment and lifted base metal prices. In our view, Trump’s election has also increased the risk that the Chinese authorities boost infrastructure investment in the face of downside risks to exports (see Commodity Economics Comment: Trump and hard Commodities, 16 November 2016).
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From the RBA’s perspective, the lift in commodity prices should support growth in export values, which should lift income growth (see Downunder Digest: Australia’s strong export outlook, 29 September 2016). Importantly, there is also a strong positive correlation between commodity prices and local nominal GDP growth (Chart 3). For the RBA, more income should support corporate profits and tax revenues and, if history is a good guide, some of this will feed through to wages growth. There is a strong positive correlation between commodity prices and unit labour costs (Chart 4) (for more on this see Downunder Digest: Commodity prices and inflation, 12 October 2016). 
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The drag from falling mining investment is also set to wane in the coming quarters. Mining investment has already fallen from a peak of around $25bn a quarter to its current rate of AUD10bn (Chart 5). The RBA has recently noted that the fall in mining investment is around 80% done. We expect that mining investment will stop being a drag on GDP from mid-2017. 
The expected levelling out in mining investment is expected to occur at around the same time that housing construction starts to become a drag on GDP growth (Chart 6). Importantly, the swing in mining investment is expected to be far larger than the drag from falling apartment building. In addition, although we expect that there may be a modest shake-out in the Brisbane and Melbourne apartment markets, we do not see a national housing price decline (for more on this see Downunder Digest: Australia’s many housing markets in 2017, 25 November 2016). 
Non-mining business investment is rising modestly 
Recent revisions by the statistics bureau to the annual national accounts numbers show that non-mining business investment has been on a modest upward trend for the past couple of years (Chart 7). The NAB business survey has also shown a more promising outlook for non- mining business investment recently (Chart 8). Looking into 2017 and 2018, we expect non- mining business investment to continue to lift, supported particularly by ongoing Asian demand for Australia’s services exports, including tourism and education. 
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The labour market still has spare capacity, but it also lags 
The key challenge to our view is that spare capacity in the labour market has continued to weigh on wages growth, which, in turn, is weighing on domestic inflation. Although the unemployment rate has been edging lower over the past 18 months, the recent fall has been largely due to declining labour market participation. At the same time, the ‘underemployment’ rate has not been declining recently. 
Spare capacity in the labour market has been one of the factors weighing on wages, with growth in the wage price index falling to a new record low in Q3 2016 of 1.9% y-o-y (Chart 10). Importantly, however, the slowdown in wages growth also reflects the response of the economy to the fall in commodity prices. As we showed in chart 4, unit labour costs are correlated with commodity prices. In addition, there are other measures, such as the national accounts measure of wages, which is already showing a modest lift in wages. At a more fundamental level, it is worth keeping in mind that the labour market, and particularly wages, tend to lag the cycle. In short, the recent commodity price rise is yet to have its effect on the labour market. 
Inflation should lift as the ‘rebalancing act’ ends 
Our central case is that underlying inflation is likely to lift next year and head back to the RBA’s 2-3% target band over time (Chart 11). As we see underlying inflation climbing only slowly, we doubt a cash rate rise will be needed in 2017 but now think that hikes in 2018 are likely. 
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Fed hikes mean AUD may be kept at bay 
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Another factor that has changed the story for Australia has been developments in the US. The election of Donald Trump has driven the expectation that US policymakers will deliver fiscal stimulus in 2017 and that this is likely to put upward pressure on inflation. This has shifted markets expectation for the Federal Reserve, with more hikes now priced in. Our Chief US Economist, Kevin Logan, has revised up his GDP forecasts for 2017 to 2.3% (from 2.1%) and for 2018 to 2.7% (from 2.2%) on the expectation of greater fiscal stimulus. Our Chief US Economist now expects the Federal Reserve to lift its policy rate to 1.25-1.50% by mid-2018 (see US Economic Outlook: Higher GDP forecasts; more Fed tightening, 21 November). 
The expectations of faster US growth and inflation and more Fed rate hikes than previously thought, have seen the USD strengthen recently. For Australia this has meant that the AUD has held broadly steady despite the lift in commodity prices. A stronger USD is good news for Australia as it supports the competitiveness of the traded sectors, particularly services exports, such as tourism and education. As Chart 1 showed, because the lift in USD commodity prices has not been matched by a rising AUD, the AUD value of Australia’s commodity index has risen sharply in recent months, boosting local incomes.
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RBA on hold for 2017 and may be hiking in 2018 
As we expect the transition from mining investment to non-mining led growth still has a few more quarters to run and inflation is currently below the RBA’s 2-3% target band, any upward movement in the cash rate seems unlikely any time soon. By the same token, the RBA has made it clear that it has little appetite for further rate cuts. 
Governor Phil Lowe noted in a recent speech 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’. The recent revival in investor interest in the housing market, albeit modest, is likely to also dissuade the RBA from cutting its cash rate further in the short run, even if inflation is lower than the central bank would like (Chart 12).
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For the RBA, 2018 is a long time away and there would be little (if any) discussion about likely policy settings that far out. The uncertainties are huge. Interestingly, though, given that the RBA now assumes the market path for the cash rate in its forecasts, the central bank will now also need to consider what hikes in 2018 would mean, given that the market is (just barely) pricing them in. 
<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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Commodities and Trump a game changer: HSBC's Paul Bloxham

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Fixed rate home loan deals are on the way up.
New data released by financial comparison firm Canstar has revealed 14 lenders have increased fixed-rate loan offers across dozens of products by an average 0.18 percent.
On a typical $300,000 30-year home loan, the average three-year fixed rate is 4.08 percent and monthly repayments are $1,446.
It is compared to the average SVR rate of 4.45 percent and monthly repayments are $1511.
Lenders to introduce small hikes include Westpac, ING Direct, Suncorp, ME, Bank of Queensland, Bank of Sydney and RAMS.
Canstar’s group executive of financial services Steve Mickenbecker said he expected more movement in the short term.
The rises to fixed rates have been blamed on the policies of the President-elect Donald Trump which could lead to bigger deficits and result in the US cash rate going up, experts say.
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Fixed rates rising to average 4.08 percent

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ASIC has cancelled the Australian credit licence of S &amp; S Enterprises Pty Ltd, trading as appliance rental business Rent To Own Appliances, after ASIC found it had entered into credit contracts where it charged consumers an annual interest rate higher than the 48 per cent maximum allowable under the National Credit Act.
ASIC found that Rent To Own Appliances charged consumers an effective rate of interest as high as 208 per cent.
In response to ASIC's concerns, Rent To Own Appliances has agreed to stop collecting payments on all current contracts and to allow consumers under these 'rent to buy' contracts to keep the goods being purchased under the contracts.
ASIC Deputy Chair Peter Kell said, 'Credit licensees must understand their obligations under the law and take compliance with those obligations seriously. This includes understanding the limits in the law about maximum interest rates which they can charge consumers.
“As this case demonstrates, ASIC will remove those licensees from the industry which fail to meet their obligations under the law”.
Rent To Own Appliances has agreed to maintain its membership with an external dispute resolution scheme, the Credit &amp; Investments Ombudsman (CIO), for a period of at least 12 months after its' credit licence is cancelled.
Consumers who entered into a contract with Rent To Own Appliances and have any questions should contact Rent To Own Appliances on (03) 5964 6512 or 0433 585 130 to discuss the matter. Any consumer who is not happy with Rent To Own Appliances' response should contact CIO on 1800 138 422.
Rent To Own Appliances' credit licence (credit licence number 392764) was cancelled with effect from 26 October 2016.
A 'rent to buy' contract is an arrangement where you agree to purchase an item (for example, a fridge or television) by 'renting' that item for a set period of time. You make regular payments, for example, every month, over the agreed period (say 3 years). Under the terms of the agreement, you are not actually hiring the goods but you are making a commitment to buy them. At the end of the rental period, you own the goods.
Rent to buy contracts are treated under the law as credit contracts and have a maximum allowable annual interest rate of 48 per cent. For more information, refer to the Rent to buy factsheet on ASIC's MoneySmart website.
Rent To Own Appliances entered into credit contracts with consumers for furniture and household appliances. It operated a website (www.renttoownappliances.com.au) and traded from Lilydale in Victoria.
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j.ballantyne1990-6AQqhLzZaK

ASIC cancels credit licence of Rent To Own Appliances

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Home loan providers in Australia are selling mortgage bonds at the slowest pace in four years.
Its suggested they are seeking cheaper debt that doesn’t require collateral.
Some A$14.8 billion ($11 billion) of new residential mortgage-backed securities have been issued so far in 2016 by banks and other housing lenders, 36 percent less than at this stage last year, data compiled by Bloomberg show.
Mortgage-backed bond issuance by the country’s four biggest banks has halved to A$3.58 billion from A$7.85 billion last year.
Issuance by other banks, building societies and credit unions has also declined to just A$4.12 billion from A$10.4 billion.
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Home loan mortgage bonds at slowest pace for four years

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GUEST OBSERVER
Australia has a new “two-speed” economy that comprises: (i) NSW and Victoria (driven largely by Sydney and Melbourne); and (ii) the rest of Australia.
The size and relative strength of the NSW and Victorian economies means that economic data presented at the national level is masking weakness throughout the rest of Australia.
Economic activity in NSW and Victoria, along with strong dwelling price growth in Sydney and Melbourne, is likely to see the RBA sit on the sidelines. But the rest of Australia could probably do with more policy easing. 
<a href="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.22.22%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.22.22%20AM.png" alt="">
During the mining investment boom it was fashionable to talk about Australia’s “two- speed” economy. Surging commodity prices drove a spectacular lift in activity in the resources sector that sent the WA, QLD and NT economies into full blown growth mode.
<a href="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.23.31%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.23.31%20AM.png" alt="">
Meanwhile, relatively high interest rates (compared to other advanced economies) and a strong AUD weighed heavily on the rest of Australia. As such, the term “two-speed” was coined to characterise the Australian economy. 
Fast forward some six years and Australia yet again finds itself with a “two-speed” economy. But this time it’s NSW and Victoria that are driving demand and employment growth while the rest of Australia is feeling the pinch (chart 1). In fact, it’s largely Sydney and Melbourne propping up national outcomes.
<a href="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.24.46%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.24.46%20AM.png" alt="">
Capacity utilisation is high in Australia’s two largest cities and demand growth is strong, courtesy of incredibly low interest rates. As a result, the NSW and Victorian economies have performed much better than the rest of Australia. 
The big influence that NSW and Victoria have on the national figures means that pretty soft conditions throughout the rest of Australia have flown under the radar. In fact, economic outcomes in most regions of Australia are probably weaker than the national figures are suggesting unless you’re in Sydney or Melbourne. There are some exceptions, notably the ACT, but the generalisation holds for most places. 
<a href="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.25.47%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.25.47%20AM.png" alt="">
In this note we look at how the Australian economy is faring on the new “two-speed” basis. We slice the economy into two pieces – (i) NSW &amp; Victoria (termed VicNSW); and (ii) the rest of Australia (termed ROA). For dwelling prices that are published on a capital city basis we split the data between Sydney &amp; Melbourne (SydMel) and the remaining capital cities (ROA). Basically we are trying gauge how the rest of the Australian economy is going when you strip out NSW and Victoria (or Sydney and Melbourne). Of course, it can be argued that if you exclude the strongest parts then all you are left with is the weakest bits. But that is precisely the point. We want to better understand how the rest of the Australian economy is going outside of NSW and Victoria. 
The numbers – setting the scene.
To understand what we are analysing it makes sense to briefly look at the size of our two pieces. By Gross State Product (GSP), which is effectively output, NSW is worth 32% of the national pie and Victoria 221⁄2%. So our VicNSW economy is worth 541⁄2% of the national economy which leaves the ROA comprising 451⁄2% (chart 2). By population, NSW has 32% of Australia’s residents and Victoria clocks in at 25%. This leaves 43% of people residing in the ROA. By capital city, 64% of people who live in NSW are in Sydney and 75% of Victoria’s residents are in Melbourne. For the ROA, 62% of people are in the capital cities (chart 3). So our VicNSW and ROA split 
Population growth
We kick off with population growth because it heavily influences aggregate growth rates like output and employment. The latest figures show that in the year to QI 2016, population growth in VicNSW was running at 1.6% while it was growing at 1.1% for the ROA (charts 4 and 5). This is a material difference. It largely reflects two forces (i) interstate migration, in particular from WA and SA to Victoria due to a lack of job opportunities; and (ii) a significant proportion of overseas migrants settling in either Sydney or Melbourne.
<a href="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.26.53%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.26.53%20AM.png" alt="">
We need to keep the population growth rates of VicNSW and ROA in mind when looking at the economic data because the ROA is at a “handicap” of about 0.5%pa. Put another way, if the ROA is clocking in at 0.5%pa less than VicNSW for growth rates then performance per capita is effectively the same. We consider this to be important because differing population growth rates can give a misleading impression of economic performance. And per capita measures are a better barometer for gauging changes in living standards (see here). As our analysis shows, even accounting for the 0.5%pa difference in population growth, VicNSW is performing far better than the ROA. 
State Final Demand
State Final Demand (SFD) is basically the sum of household and government expenditure and investment. It does not include exports and is therefore a better measure of demand (i.e. the total value of goods and services that are sold domestically) than GSP which includes exports.
The data shows that demand growth has been strong in VicNSW while it has been contracting throughout the ROA since mid-2014 (chart 6). The decline in SFD throughout the ROA reflects falling business investment and weak consumption growth. SFD has been hit particularly hard in the mining regions of WA, QLD and NT where investment in the resources sector has fallen sharply (chart 7). SFD growth has been tepid in SA and Tas leaving the ACT as the only bright spot. All up, demand growth in the ROA is consistent with very soft economies.
<a href="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.27.49%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.27.49%20AM.png" alt="">
Strong demand growth in VicNSW has been assisted by the positive wealth effect from rising dwelling prices. Higher asset prices have supported household consumption growth and dwelling investment in Australia’s two largest states. These two economies did not experience a downturn in mining investment and were able to benefit from both the fall in interest rates and the AUD. 
Employment growth
There is plenty of evidence of our new “two-speed” economy in the labour market data. Jobs growth has slowed nationally. But the slowdown in jobs growth for the ROA has been sharp. In fact, there has been a contraction in the level of employment for the ROA through the year to October (chart 8). The number of people working in the ROA has fallen by 40k over the past year. The reality is that jobs growth in Australia has been driven by NSW and Victoria over the past year. For the ROA, the labour market is incredibly weak. In some states, conditions in the labour market are commensurate with a recession, particularly WA (chart 9). 
<a href="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.28.56%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.28.56%20AM.png" alt="">
Unemployment rate
The national unemployment rate has been trending down over the past year thanks to a decline in participation. But when we look at the economy through our “two- speed” lens it becomes apparent that the unemployment rate for the ROA has been stuck above 6% for two years (chart 10). It has basically trended sideways since mid-2015 while the unemployment rate has been falling in VicNSW. A disappointing story for the ROA which reflects a decline in the level of employment offset by a fall in participation. 
<a href="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.30.13%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.30.13%20AM.png" alt="">
Of course new jobs have been “created” in the jurisdictions that comprise ROA. But there have also been a lot of job losses, primarily in the mining and manufacturing sectors. To be fair to our Territories, the unemployment rate is low in the ACT and NT. But it’s well above the level associated with full employment (considered to be around 5%) in QLD, SA, WA and Tasmania (chart 11).
<a href="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.31.13%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.31.13%20AM.png" alt="">
In our view, the jobless rate for the ROA is likely to sit a touch above 6.0% over the next six months. It will continue to be a different story in VicNSW and we see the unemployment rate holding at around 51⁄4%. A big lift in public investment in NSW should keep the unemployment rate anchored around 5%. 
It’s worth noting here that the unemployment rate is not proving as useful as usual to determine the amount of slack in the labour market. That’s because underemployment has bene rising while the unemployment rate has been falling due to the casualisation of the workforce (see here). As a result, wages growth has been easing.  
Business investment 
Investment in VicNSW has trended up recently because of a lift in capex in NSW. But for the ROA business investment is down 17.2% through the year to QII 2016 (chart 12). The big decline has been driven by a huge fall in spending in QLD and WA because of the downturn in mining capex. There has also been a decline in capex in SA, Tas, and NT. For the ROA, only the ACT has posted a lift in business investment. This is a pretty poor result considering the stimulus that has come through from lower interest rates and a lower AUD. It should be a concern to policymakers.
<a href="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.32.13%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.32.13%20AM.png" alt="">
We expect business investment to continue to decline in the ROA as resource related projects are completed. The pace of the downturn, however, will start to slow as the worst of the downturn in mining capex is now behind us. The outlook for the non- mining part of the economy remains mixed. Our forecasts have non-mining capex lifting a little over 2016/17 which should see VicNSW post a further modest lift in business investment. 
Dwelling Prices
National dwelling prices have risen substantially over the past 31⁄2 years. But the data shows that the lift in dwelling prices has largely been a Sydney and Melbourne story (chart 13). Demand for housing has been strong in Australia’s two largest cities, driven by a variety of factors which include: (i) interest rate cuts; (ii) a high level of investor demand; (ii) foreign investment; (iii) strong population growth; and (iv) some supply issues (particularly in Sydney).
<a href="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.33.24%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.33.24%20AM.png" alt="">
For the ROA, however, dwelling price growth has been much more modest. In fact, dwelling prices have been falling for a few years in Perth (chart 14). Price rises in most of the other capital cities have been significantly lower than those in Sydney in Melbourne.
Commentators often make the mistake of generalising about dwelling prices in Australia and assume that the housing market is homogeneous. But the data shows that there is a significant divergence between price growth across Australia’s capital cities. 
Building approvals
Strong dwelling price growth in Sydney and Melbourne has translated into a big lift in building approvals, particularly for apartments. For the ROA, however, building approvals have eased. On a rolling annual total basis dwelling approvals are down 7.1%pa for the ROA (chart 15). There is a bit of a multispeed story for approvals in the ROA. There has been a big fall in approvals in WA as vacancy rates rise and dwelling prices fall. Approvals in QLD have actually been quite strong and a big lift in apartment supply will hit the Brisbane market over the next few years. But when we look at the ROA as a collective, dwelling investment will cool. For VicNSW, however, there is still a lot of residential construction in the pipeline. The supply response is welcome given the big lift in dwelling prices. 
<a href="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.35.04%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/22/Screen%20Shot%202016-11-22%20at%2010.35.04%20AM.png" alt="">
Are there implications for monetary policy?
The RBA has recently shifted from an implied easing bias to a neutral tone. And market pricing for a rate cut has receded (chart 16). We think the RBA’s reluctance to ease policy further is generally related to the strength of the NSW and Victorian economies, in particular the exceptionally strong housing markets of Sydney and 
Melbourne, and the lift in commodity prices. But the economic data suggests that the ROA could do with more policy easing.
Last week’s wages and employment data were weak. Normally, softness in the labour market and below-target inflation would imply that policy easing is forthcoming. A lower cash rate would, among other things, push the AUD down which would boost activity in Australia’s tradables sector. But clearly the RBA has a degree of discomfort at the strength of dwelling price growth in Sydney and Melbourne that has taken a near term rate cut off the table.
The lesson here is that the new “two-speed” economy means that current monetary policy settings are likely to be suboptimal for the ROA outside of Sydney and Melbourne. If the Sydney and Melbourne property markets stall or falter then policy easing will probably come back onto the agenda because the ROA could do with more stimulus. Of course that stimulus could also come via fiscal policy as we have previously argued (see here). But that’s a conversation for another day. 
Gareth Aird is economist at Commonwealth Bank and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/gareth-aird/14/790/905" target="_blank">here</a>.
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Our new two-speed economy – how does it look? CBA's Gareth Aird

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Mortgage aggregator Finsure Finance &amp; Insurance’s continued growth has been recognised in BRW Magazine’s Fast 100 List for the first time.
It had featuring in its top 100 Fast Starters List the previous two years.
The 2016 Fast 100 List includes Australia’s fastest growing companies which started trading before July 1, 2012, and is ranked by average revenue growth.
Finsure, which placed second overall in the top 100 Fast Starters in 2015, was ranked sixth in the 2016 Fast 100 List after enjoying revenue growth of 191.2% in the 2015/16 financial year.
Finsure managing director John Kolenda said the latest acknowledgement from BRW recognises the rapid growth of the company which recently reached a major landmark by recruiting its 1,000th broker less than five years after it was founded.
He said the speed of Finsure’s growth, which includes surpassing $1 billion in settlements, had exceeded his expectations and was a tribute to the hard work of the company’s brokers and staff.
Since it was founded, Finsure has achieved numerous awards and acknowledgements.
The company was ranked second when the SmartCompany top 50 was named to celebrate Australia’s fastest growing SMEs in 2014-15.
Kolenda said the company’s achievements had been exciting since establishing Finsure in 2011.
“These have been fabulous accomplishments for Finsure to build up the business to this level in just five years and we are determined to keep growing,” he said.
“The ability of the company to increase its growth rate is a tribute to the talented and hardworking team at Finsure as well as our amazing broker partners.”
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Mortgage aggregator Finsure debuts in BRW 2016 Fast 100

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<img src="https://counter.theconversation.edu.au/content/68979/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
For the past three decades the yields on long-term bonds have been on a downward trend. This has dramatically reversed since the election of Donald Trump, with more than a trillion dollars wiped off the global bond market in the past week and a half.
But it’s not just investors that are impacted by this spectacular reversal. The bond market is a backbone of the global financial system, meaning the sell off has implications far and wide, from economic growth through to real estate prices. 
<h2>What’s happening in bond markets</h2>
Bonds are a type of long-term debt - companies and governments sell bonds to investors and these will in turn be bought and sold on the bond markets. 
The thing to look at with bonds is the market price, which is reflected in the yield quoted or price paid when a bond is bought and sold. Investors in bonds receive their returns in regular interest payments and the return of principal when the bond matures. 
As the price of the bond rises, the yield will drop. With the price of bonds steadily rising during the 30 year bull market, yields have fallen away significantly, bringing down the interest rates around the world.
<a href="/images/2016/11/21/image-20161117-19371-72i9pu.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/21/image-20161117-19371-72i9pu.png" alt="">
<h4>
US 10 Yr Treasury Yield. 
</h4>
<h2>Why we pay attention to the bond market</h2>
The price of bonds filters through into the rest of the economy. This is because government bonds are considered relatively risk free, and so act as a benchmark for pricing (relatively more risky) securities in all other markets. 
A company’s shares, for example, are expected to yield the risk-free rate (what a government bond would yield) plus an additional amount to compensate investors for their riskiness - called the “equity risk premium”. Investment in corporate bonds can be expected to yield the risk-free rate plus a premium for taking on the added default risk. 
The US bond market is especially important, as it is the largest and its prices act as a benchmark for interest rates globally. Rising bond yields in the US signal a number of things - higher expected inflation from the touted tax cuts and higher spending, and the need to borrow to fund this expansion. All of this puts further downward pressure on bond prices and upward pressure on interest rates, increasing yields. 
Overall, bond prices serve as a “barometer” of what the market is “thinking”. Especially what it thinks will happen in the future, as the relation between long term interest rates and short term interest rates has a mechanical effect on future interest rates. 
<h2>What this could mean</h2>
The sudden increase in bond yields, most notably the 10 Year US Government bond yields, has broad implications for the economy.
Mortgage rates are tied to the 10 year bond yield, for example, meaning borrowers will need to pay more for housing loans. This won’t happen overnight and we will have to wait to see the long-term effect on real estate prices.
But taking in past history, here are a range of possibilities from the end of the bull market.
First, when long-term interest rates are higher than short-term interest rates, the market expects interest rates in the future to be higher. This suggests that this market sell off isn’t an aberration, we can expect higher yields and lower bond prices in the future, and this trend will continue.
Second, long-term bond yields generally reflect an economy’s long-term real growth rate plus a premium for inflation. Inflation measures around the globe have been quite low and central banks have struggled to reach their inflation targets. Rising bond yields could mean the growth starts to tick up.
Third, there will be more uncertainty in global markets until the implications of a Trump presidency are known. Investors will expect a greater return to investment in US government bonds because of this heightened uncertainty. So yields on long-term US Treasuries are likely to stay up and even increase further in the foreseeable future. But even so interest rates are still low by historical standards.
Fourth, new borrowing for housing will be more costly. The risk of rising interest rates on existing mortgages has been mostly shifted elsewhere in the US economy. Let’s hope that the institutions or individuals holding that risk fare better than the institutions which collapsed during the savings and loans crisis in the US in the late 1980s.
Fifth, this is a permanent change in the nature of global interest rates. Rising bond yields could push up interest rates. Australia’s Reserve Bank Governor Phillip Lowe has signalled no further interest rate cuts unless inflation drops well below its current 1.5 percent level.
Christine Brown is professor and head of the Department of Banking and Finance, Monash University and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/christine-brown-316660" target="_blank">here</a>.
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