Apartment buildings are increasingly being designed around how people actually live day to day, not just how they want a building to look.

For buyers, that shift is showing up in practical inclusions that respond to changing habits. Work-from-home spaces, EV charging, wellness amenities, secure bike storage and parcel management are becoming part of the broader apartment conversation, reflecting a move toward buildings that reduce friction in everyday life.

Online shopping has become one of the clearest examples of that change.

Australians spent a record $82.6 billion online in 2025, with nearly one in four retail dollars now spent online. That has made parcel delivery a regular part of apartment living, rather than an occasional inconvenience.

For apartment residents, however, the delivery process can be less straightforward than it is for detached homes. Parcels may be left in lobbies, redirected to Post Offices, missed entirely, or placed under the responsibility of building managers and concierge teams.

That is why secure parcel infrastructure is increasingly being considered alongside more familiar apartment amenities.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/-VjjLwoViX0?si=A3k7ws9NX35Uac7_" title="YouTube video player" width="560"></iframe>

Australia Post Parcel Lockers offer one way to address the issue. When a parcel arrives, residents receive a notification through the AusPost app or SMS, then collect it using a QR code or one-time PIN. The parcel is kept secure, accessible and removed from common areas.

The broader Parcel Locker network now includes more than 1,500 locations across Australia, positioned at Post Offices, shopping centres, supermarkets, transport hubs and other accessible locations.

For new apartment projects, the relevance is clear. A building’s amenity offering is no longer only about lifestyle spaces, but also about convenience, security and functionality.

As buyer expectations evolve, secure parcel delivery is becoming part of the same design conversation as flexible working, sustainable transport and resident wellbeing.

It is one less thing for residents to worry about, and another example of apartment design adapting to the way Australians now live.

Joel Robinson

Apartment design is adapting to the way Australians shop

While school holidays and trips to Europe tend to define the winter property market, there's been no cold snap at <a href="https://www.apartments.com.au/new-apartments/the-walden-north-sydney-177-walker-street-north-sydney-nsw-2060">The Walden</a> in North Sydney.

Developer-builder&nbsp;<a href="https://www.apartments.com.au/developers/aland">ALAND</a> sold more than $35 million worth of apartments throughout June, including a $6.8 million apartment that now ranks among the highest apartment sales ever recorded in North Sydney.

SRM Residential agent Ben Stewart said buyer demand throughout June reflected a mix of improving market confidence and longer-term thinking from owner-occupiers.

"We're seeing strong demand from owner-occupiers who are taking a longer-term view," Stewart said.

"Many recognise the opportunity to secure an apartment in an iconic building and premium location while values remain attractive. They may initially lease the property, but the intention is to eventually move in themselves, rather than purchasing purely as an investment."

[smartcode_project:default project_id=134323 project_image_fid=367129]

Located at 177 Walker Street, The Walden will deliver 161 one, two, three and four-bedroom residences across a 30-storey tower designed by Rothelowman. Every apartment occupies a corner position, maximising natural light, cross ventilation and views across Sydney Harbour, the Opera House, Sydney Heads and the northern districts.

Rather than a traditional balcony, the residences feature winter gardens that seamlessly extend the open plan living areas, creating versatile spaces for relaxing or entertaining throughout the year. Floor-to-ceiling glazing draws in natural light while showcasing sweeping views from the building's elevated Walker Street position.

Every apartment features high-end Calacatta marble, bespoke joinery, and fully integrated appliances.

The larger residences have been planned with distinct entertaining and private zones, with many master suites positioned on corners to capture natural light and harbour views. Walk-in dressing rooms, freestanding baths and refined stone finishes reinforce the house-like feel that has resonated with downsizers and owner-occupiers.

[smartcode_project:default project_id=134323 project_image_fid=6393]

Rothelowman Principal Ben Pomroy said the project was designed to make the most of its unique position overlooking the harbour.

"The Walden is a celebration of all things beautiful, curated for those who expect nothing less than exceptional," Pomroy says.

"Meticulously designed entertaining spaces and light-filled living areas that capitalise on capturing the natural beauty of Sydney's iconic harbour."

Residents will also have exclusive access to The Pavilion, a dedicated amenity building featuring a rooftop pool, wellness studio, gymnasium, sauna, concierge service, residents' lounge, private dining spaces and work-from-home facilities.

[smartcode_project:default project_id=134323 project_image_fid=6402]

The project marks ALAND's first major luxury apartment development in Sydney's inner-city market after more than two decades delivering residential communities across Greater Sydney.

Founder and CEO Andrew Hrsto previously said the rarity of the Walker Street site made it an opportunity the company could not overlook.

"This is a rare opportunity to bring a truly exceptional project to life in one of Sydney's most iconic locations, and to showcase our craftsmanship and design expertise at a world-class level," Hrsto said.

[smartcode_project:default project_id=134323 project_image_fid=6383]

The Walden has been introduced to the market at a time when demand for living in North Sydney is at an all-time high. Billions of dollars have been invested in infrastructure, including the recently opened Victoria Cross Metro station, located just 300 metres from The Walden, providing residents with direct access to the Sydney CBD in just minutes.

Private investment has also transformed the area through the arrival of new retail and dining destinations, elevating the lifestyle offering in what was once considered primarily a commercial precinct rather than an aspirational residential address.

The Walden is currently under construction and is scheduled for completion in 2028.

[smartcode_project_cta:default project_id=134323]

ALAND records $35 million in sales in North Sydney as The Walden bucks quiet winter selling season

The long-awaited redevelopment of the former Eastlakes Shopping Centre site has reached a major milestone, with Conquest's plans for a new mixed-use precinct officially placed on public exhibition.

The State Significant Development Application would transform the 1.7-hectare site at <a href="https://www.apartments.com.au/new-apartments/19a-evans-avenue-eastlakes-nsw-2018">19A Evans Avenue</a> into one of Sydney's largest urban renewal projects, delivering 736 apartments above a new shopping centre anchored by Woolworths, alongside specialty retail, dining, commercial space and new public open spaces.

The public exhibition marks the next chapter for the project after <a href="https://www.apartments.com.au/developers/conquest">Conquest</a> acquired the stalled Stage Two development from Crown Group, who completed the first stage across the road prior to their voluntary liquidation.

<img alt="First look: Conquest unveils plans for 736-home Eastlakes Shopping Centre redevelopment" data-entity-type="file" data-entity-uuid="5fca22c5-d1ed-4e2c-8801-03f7df1eafc8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/eastland%20podium.png?VersionId=uomwr41nF8CmLUZRDcu3mHQechlbxucS" />

&nbsp;

Designed by DKO Architecture, the proposal comprises four residential buildings ranging from 14 to 18 storeys above a two-level retail podium. The development would deliver 736 apartments, including 74 affordable homes, 215 Build-to-Rent apartments and 521 market residences. Provision has also been made for dual-key apartments, which could increase the total number of dwellings to 877.

At ground level, the shopping centre has been designed as the suburb's new meeting place, anchored by a full-line Woolworths and complemented by a curated mix of fresh food retailers, cafés, restaurants, health services and everyday convenience shopping. Generous pedestrian links and landscaped public spaces will connect the retail precinct through to Jack Mundey Reserve, creating a more walkable and connected neighbourhood.

Conquest CEO Michael Akkawi said the redevelopment was about far more than replacing a shopping centre.

"Eastlakes has been overlooked for too long, and this is the community’s moment. We are building a shopping centre and homes, a genuine heart for the suburb, and we genuinely want locals to help shape it."

"We enrich communities through the creation of homes, places, and experiences designed for life, built to last, and owner for generations. That starts with listening, so we warmly encourage everyone with a connection to Eastlakes to view the plans and share their thoughts."

<img alt="First look: Conquest unveils plans for 736-home Eastlakes Shopping Centre redevelopment" data-entity-type="file" data-entity-uuid="22f6fb20-54fb-4bd7-8a92-48fafdd00608" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/eastland.png?VersionId=cugp7s9hrMHGJJdYzkeAkrFoQgnF4GXf" />

DKO said the design had been shaped by the site's landscape setting and surrounding open space.

"Our vision for the site embraces its unique Bidjigal identity by blending the residential living with generous landscaping and a material palette inspired by the Bidjigal locality, and celebrating the panoramic views to Botany Bay and the wetlands reserves."

"Taking cues from Country, we seek to harmonise built form with the landscape and lightly touch the earth. By reconnecting, retaining and regenerating existing ecology, and weaving in natural elements, we can deepen our connection to Country."

The landscape strategy extends across the podium and rooftops, incorporating communal gardens, children's play areas, lawns, community gardens, family gathering spaces and extensive tree planting. New landscaped links will also strengthen the connection between the precinct and Jack Mundey Reserve, while publicly accessible open spaces have been integrated throughout the development.

The proposal builds on Conquest's broader placemaking strategy for the site. Through an ongoing partnership, local artist Joe Rashbrook has been appointed Urban Art Curator, working alongside young residents to transform the project's site hoardings into a public art gallery that allows the community to engage with the redevelopment before construction is complete.

Conquest has rapidly expanded its development pipeline since acquiring the Eastlakes site, with more than $6 billion worth of mixed-use projects now in planning across Sydney, including Stanmore, Castlecrag and Waterloo.

Conquest CEO Michael Akkawi said the redevelopment was about far more than replacing a shopping centre.

First look: ‘Far more than replacing a shopping centre’ as Conquest unveils 736-home Eastlakes redevelopment

Abadeen has lodged a State Significant Development Application (SSDA) for one of Mosman's largest apartment developments in recent years, seeking approval to transform the former Honeysuckle Garden and Midas site on Military Road into a 100-apartment mixed-use development.

The SSDA, lodged with investment partner Phoenix Property Investors, proposes around $230 million worth of new housing on the prominent <a href="https://www.apartments.com.au/new-apartments/494-516-military-road-mosman-nsw-2088">494-516 Military Road</a> site.

The proposal comes as Mosman Council continues to progress its recently endorsed Masterplan, which identifies the precinct for increased housing density while maintaining the suburb's established character.

Designed by DKO Architecture, the development would comprise 100 apartments above ground-floor retail, with a rooftop wellness precinct including a gym, sauna, entertaining areas and landscaped communal spaces.

Rather than pushing to the full 12-storey height identified in Council's Masterplan, the proposal ranges between five and nine storeys, stepping down towards Hale Road. A tenth level would accommodate resident amenities rather than additional apartments.

The project has been designed to appeal to a broad range of buyers, from first home buyers and young professionals through to families and local downsizers looking to remain on the Lower North Shore.

<img alt="Mosman" data-entity-type="file" data-entity-uuid="5dada03f-5b4c-43ba-ba62-2868add31440" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-27%20at%209.57.55%E2%80%AFAM.png?VersionId=7LBy0B.Jo8_iWAFJsClcV7Q3UnXrv49r" />

Abadeen Executive Chairman Justin Brown said the apartments had been designed as genuine long-term homes rather than investor-focused stock.

"The apartments have been designed as genuine long-term homes, with efficient floorplans that maximise usable living areas, generous storage, natural light and strong connections between indoor and outdoor spaces," Brown says."

"We've focused on creating homes for a broad range of buyers, from first home buyers and growing families through to downsizers who want to remain in Mosman."

The rooftop wellness offering forms a key part of the proposal, with residents set to have access to a gym, sauna, outdoor entertaining spaces, communal dining areas, landscaped gardens and a multi-use recreation court overlooking Sydney Harbour.

<img alt="Mosman" data-entity-type="file" data-entity-uuid="d37c2d6b-583a-4a0f-b7a9-9f46b893d2f4" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-27%20at%209.58.06%E2%80%AFAM.png?VersionId=FPoa5FCm2RtzjhAh2w5FTWJbV6GHfY8D" />

DKO drew heavily on the site's natural and cultural history, undertaking a Connecting with Country process with local Aboriginal Elders to inform the architectural and landscape design.

Senior Associate Matthew Ritchard said the design sought to create a building that responded to both the site's landscape and its cultural significance.

"The architectural language of the project is a deep expression of Connecting with Country, where the materiality and colour palette serve as a bridge between the site's geological history and its future as a residential sanctuary."

The proposal also retains the site's established blue gum tree as the centrepiece of the communal landscaped gardens, while introducing activated retail fronting Military Road to strengthen the connection between Mosman and Cremorne villages.

If approved, the project would deliver 100 new homes within walking distance of shops, public transport, schools and local amenities, adding to the limited pipeline of new apartments on the Lower North Shore.

<h2>Project Snapshot</h2>

Project: Honeysuckle Garden Redevelopment

Address: 494-516 Military Road, Mosman

Developer: Abadeen and Phoenix Property Investors

Architect: DKO Architecture

Lead Architect: Matthew Ritchard

Value: $230 million

Residences: 100 apartments

Key features:

<ul>
	<li>
	Ground-floor retail
	</li>
	<li>
	Rooftop wellness precinct
	</li>
	<li>
	Gym and sauna
	</li>
	<li>
	Outdoor entertaining and BBQ areas
	</li>
	<li>
	Landscaped communal gardens
	</li>
	<li>
	Multi-use recreation court
	</li>
	<li>
	Retained mature blue gum tree
	</li>
	<li>
	Connecting with Country design process
	</li>
	<li>
	Harbour, CBD and Balmoral views from upper-level apartments
	</li>
</ul>

Abadeen Executive Chairman Justin Brown said the apartments had been designed as genuine long-term homes rather than investor-focused stock

First look: Abadeen plans 100 apartments on former Honeysuckle Garden site in Mosman

The wave of apartment proposals sweeping through Mosman shows no signs of slowing, with another major residential development lodged through the NSW Government's State Significant Development pathway.

Developer First Quadrant Properties, which recently completed Willoughby Grounds and has several projects in planning across the North Shore, has unveiled plans for <a href="https://www.apartments.com.au/new-apartments/cove-on-ourimbah-40-56-ourimbah-road-mosman-nsw-2088">Cove on Ourimbah</a>, a 63-apartment development on Ourimbah Road, adding to the growing pipeline of projects reshaping one of Sydney's most tightly held harbour suburbs.

The proposal would consolidate nine properties at 40-56 Ourimbah Road into a part eight, part nine-storey apartment building, continuing the momentum created by the NSW Government's accelerated planning pathways that have seen several significant developments emerge across Mosman over the past 12 months.

Designed by Doroch Architects, the project would deliver 63 apartments, resident wellness facilities including a gym, pool and sauna, landscaped communal spaces and basement parking, while using recessed upper levels, generous setbacks and extensive planting to reduce the perceived scale of the building.

<img alt="First look: First Quadrant Properties eyes nine-storey Mosman apartment project under State Significant pathway" data-entity-type="file" data-entity-uuid="32ee68e4-141e-4a10-8f83-48e961a5e71e" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Ourimbah%20Road%2C%20Mosman%20a.png?VersionId=CUeILFc6APlwXPc.iplElbxHvREKwjig" />

Doroch Architects said the building had been designed to reinforce Mosman's established character.

"The building's aesthetic is grounded in the existing residential character of Ourimbah Road and the broader Mosman context," the architect noted in the planning documents submitted to the NSW Government.

The design adopts a contemporary material palette of natural stone, textured concrete and brown concave metal cladding, complemented by integrated planters and deep balconies. The podium incorporates softened curved concrete forms, while increased setbacks have been provided adjacent to the heritage-listed property at 60 Ourimbah Road to create a more sympathetic transition.

The site sits around 330 metres from Mosman Town Centre, placing it within the NSW Government's Low and Mid-Rise Housing policy area, where increased residential density is being encouraged close to shops, transport and services.

The proposal follows a string of major apartment projects lodged or declared State Significant in Mosman in recent months, including Abadeen's 100-apartment Honeysuckle Garden redevelopment on Military Road and several other developments across Awaba Street, Redan Street and Muston Street from the likes of Time &amp; Place, HELM and Prosker Property.

&nbsp;

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/time-place-to-take-on-mosman-apartment-market">Time &amp; Place to take on Mosman apartment market</a>

Read more:&nbsp;<a href="https://www.apartments.com.au/news/qld/first-look-abadeen-plans-100-apartments-on-former-honeysuckle-garden-site-in-mosman">First look: Abadeen plans 100 apartments on former Honeysuckle Garden site in Mosman</a>

&nbsp;

First look: Another major apartment proposal signals Mosman's development boom

cash rate

Almost three-quarters of variable borrowers who asked for a rate cut, got one, a new survey has found.&nbsp;

In a RateCity.com.au survey of over 1,000 mortgage holders, of those on a variable rate, 52 per cent haggled with their bank for a lower rate. Over 73 per cent of these people were successful in getting at least one rate cut.

A rate reduction of 0.25 per cent could save the average mortgage holder $1,241 in interest after one year and $3,656 after three years. This is based on a $500,000 loan balance with 25 years remaining.

While the majority of changes to fixed rates in the last two months have been hikes, the opposite is happening in the variable rate market.&nbsp;

[smartcode_project:default project_id=29048 project_image_fid=151675]

RateCity.com.au home loan database analysis:

<ul>
	<li>49 lenders have cut at least one variable rate in the past two months.</li>
	<li>10 lenders have hiked variable rates in that time.</li>
	<li>The vast majority of variable rate cuts are reserved for new customers, not existing ones.</li>
</ul>

RateCity research director, Sally Tindall, said while the RBA is not expected to move the cash rate tomorrow, one phone call could potentially save the average variable rate mortgage holder thousands.

&ldquo;Variable rates are at record lows, however, most of these deals are reserved for new customers, not existing ones, unless you specifically ask,&rdquo; she said.

&ldquo;A lot of people think a handful of basis points won&rsquo;t make much of a difference, but if the discount is permanent, then the savings can potentially run into the thousands in just a few years.&quot;

While the majority of changes to fixed rates in the last two months have been hikes, the opposite is happening in the variable rate market

jordan_55689

Three out of four mortgage holders who asked for a rate cut, got one: RateCity 

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The RBA kept the official cash rate on hold, but that hasn’t stopped banks from moving home loan rates. 
  
While lenders have made a flurry of cuts to 2- and 3-year fixed rates in the last month, there has been an increase in the number of lenders hiking 4-year fixed rates. 
  
Analysis of the RateCity.com.au database shows 11 lenders have raised 4-year fixed rates, including CBA, Bendigo Bank and Aussie Home Loans, while only two have cut them. 
  
So why are 2-year fixed rates still dropping and 4-year rates rising?

[smartcode_project:default project_id=2772] 
  
The RBA is helping facilitate the ultra-low fixed rates, in part, via its term funding facility, which allows banks to borrow money at a three-year fixed rate of 0.10 per cent. 
  
Over the last month, the majority of one- to three-year fixed rate changes have been cuts, not hikes, as lenders make the most of the low-cost funding available. 
  
However, in the last month the majority of four-year fixed rates changes were in the opposite direction as some banks start to factor in a likely rise to the cash rate in 2024 and the end of the RBA’s term funding facility on 30 June this year. 
  
The big question is whether Westpac will hike its four-year rate. Australia’s second largest bank currently has the lowest four-year fixed rate in the market. Hiking this rate could lose the bank its competitive edge in this category.

[smartcode_project:default project_id=26730] 
  
Watching these four-year rates come off the table has some people panicked they will miss the bottom. Just because these rates could be soon rise, doesn’t mean you should rush out and fix for the next four years. 
  
If you are looking to refinance, work out what type of mortgage suits your finances. 

Then shop around for a competitive rate, not the other way around.

Sally Tindall is RateCity.com.au research director
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Work out what type of mortgage suits your finances, then shop around for a competitive rate, not the other way around

Why are 2-year fixed rates still dropping and 4-year rates rising? Sally Tindall

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EXPERT INSIGHT

After years of repeatedly <a href="https://theconversation.com/vital-signs-yet-another-year-of-steady-rates-whats-the-point-of-the-rba-inflation-target-110574">missing its inflation target</a> through too timid monetary policy, in the past week the Reserve Bank has decided to get tough.

Not only did it hold its closely watched <a href="https://rba.gov.au/statistics/cash-rate/">cash rate</a> target steady at 0.10% at Tuesday’s board meeting, it ramped up its efforts to defend its separate 0.10% target for the three-year government bond rate in the face of a mini-revolt by bond traders.

A few weeks back, some of the traders in Australia and elsewhere got it into their heads that big borrowing by governments would force up bond rates - a relationship that was once thought to be clear cut but hasn’t held for some time.

The traders sold government bonds issued by Australia and other nations, which in the case of the bond market, <a href="https://www.investopedia.com/articles/bonds/07/price_yield.asp">forces up the bond interest rate</a>.

Then other traders piled on, partly because economic outlooks are improving and they thought governments might soon be issuing fewer bonds, and partly because they thought other traders might agree with the traders.

That’s right: “thought other traders might agree with the traders”.

<h2>Beauty contests can make markets mad</h2>

In financial markets you don’t make money by correctly guessing what will happen, you make it by correctly guessing what other traders think will happen.

One of the founders of modern economics, John Maynard Keynes, described it as a beauty contest in which judges are rewarded not for picking the most beautiful face, but for picking the face <a href="https://www.zeninvestor.org/keynesian-beauty-contest/">other judges</a> will think is the most beautiful.

It’s like the rules in <a href="https://www.liveabout.com/family-feud-brief-overview-1396911">Family Feud</a>.

The yield on Australian Commonwealth 10-year bonds climbed from 0.98% at the start of the year to 1.11% a month later, to an extraordinary 1.87% a month after that - a near-doubling in a matter of weeks.

Even the yield on three-year bonds, which the Reserve Bank has pledged to keep at <a href="https://theconversation.com/5-ways-the-reserve-bank-is-going-to-bat-for-australia-like-never-before-149311">0.10%</a> crept up to 0.13%.

Last Friday, the Reserve Bank fought back.

It bought extra bonds a day after completing its usual purchases on Thursday.

This Tuesday, in its statement after its monthly board meeting, it added nine words to its usual acknowledgement that “<a href="https://www.rba.gov.au/media-releases/2021/mr-21-01">wage and price pressures remain subdued</a>”.

Those words were: “<a href="https://www.rba.gov.au/media-releases/2021/mr-21-03">and are expected to remain so for some years</a>”.

And then it released a <a href="https://www.rba.gov.au/mkt-operations/announcements/rba-purchases-of-government-securities-2021-03">separate statement</a> reiterating that when its A$100 billion program of buying $5 billion of government bonds each week expires in May it will launch another $100 billion program, taking the scheduled bond buying through to November.

Since the program began last November, the bank has bought $74 billion of bonds. Its message was that if traders thought it was within $26 billion of running out of ammunition, it had another $100 billion. It doubled <a href="https://www.youtube.com/watch?v=X-M8e1YYiQg">the size of its knife</a>.

The bank can’t afford to lose

Keeping control of rates is a fight the Reserve Bank has to win. When it announces a change in an interest rate, usually the <a href="https://rba.gov.au/statistics/cash-rate/">cash rate</a>, it uses words along the lines of “<a href="https://www.rba.gov.au/media-releases/2020/mr-20-06">the board decided to lower the cash rate</a>,” implying that it can.

The more accurate words it <a href="https://www.rba.gov.au/media-releases/2001/mr-01-17">used to use</a> were “the bank will be operating in the money market this morning to reduce the cash rate,” an admission that it could only try to move the cash rate, by trading in financial instruments.

So effective have its pronouncements become that in recent years it hasn’t needed to do much trading to move the cash rate - it has just announced the move knowing that traders will fall into line because it could buy or sell financial instruments if it wanted to.

If it loses a battle with traders over rates, what it says will have much less force.

It has the resources it needs to win

The bank will win whatever battle it chooses to fight because it has unlimited resources. Unlike traders, it can <a href="https://www.rba.gov.au/education/resources/explainers/unconventional-monetary-policy">create</a> as many Australian dollars as it needs in order to buy as many bonds as it needs.

So far it has chosen to defend its ground on the cash rate and the three-year bond rate. It wants both at 0.1%.

It said on Tuesday it would “not increase the cash rate until actual inflation is sustainably within the 2 to 3% target range”.

It added that for that to occur, wage growth will have to be “materially higher”, which would require significant gains in employment and a return to a tight labour market.

And then the killer sentence, <a href="https://www.rba.gov.au/media-releases/2021/mr-21-03">the last</a>, aimed directly at the traders: “The Board does not expect these conditions to be met until 2024 at the earliest.”

Although it released the statement one day before Wednesday’s <a href="https://theconversation.com/gdp-is-v-shaped-but-not-yet-good-these-three-graphs-tell-the-story-156372">national accounts</a> that showed the economic recovery continuing, it would have been aware of what they were likely to show.

It remains resolute.<img alt="The Conversation" height="1" src="https://counter.theconversation.com/content/156410/count.gif?distributor=republish-lightbox-basic" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important" t1tcsswdv="" width="1">

<a href="https://theconversation.com/profiles/richard-holden-118107">Richard Holden</a>, Professor of Economics, <a href="https://theconversation.com/institutions/unsw-1414">UNSW</a>

This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/vital-signs-in-the-battle-over-interest-rates-itd-be-unwise-to-bet-against-the-rba-156410">original article</a>.
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In the battle over interest rates, it'd be unwise to bet against the RBA: Richard Holden

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Experts and economists are united in their view that the RBA will hold the cash rate this month, with only one prediction for any movements at all in 2021, according to the latest survey from Finder.com.au.

Tony Makin of Griffith University, believes the rate will increase this year due to the economic effects of the COVID-19 vaccination rollout.

“Global economic activity will pick up as countries are vaccinated. Given the expansion in money supplies, other things equal this will put upward pressure on inflation. Otherwise, macroeconomics textbooks need to be rewritten. 

“At the same time, record-breaking levels of public debt worldwide will continue to exert upward pressure on bond yields," Makin said.

Shane Oliver from AMP Capital said that while the economy has recovered faster than expected, the RBA is still a long way away from meeting its inflation and employment goals. 

“A rate hike is still a long way away. 

“That said, the faster than expected recovery will likely see the first hike occur earlier than the RBA's expectation of ‘no increase before 2024’. It could come late next year or early 2023," Oliver said.

Positive sentiment around both housing affordability (3%) and cost of living (3%) reached the lowest level ever recorded since the Finder survey began in 2018.

Employment continued to be the highest indicator measured with 55% expressing positive sentiment, down from its record-high of 73% last month.

Positive sentiment around employment plummeted to 0% in April when the lockdowns first began, but the nation’s stronger-than-expected economic recovery has resulted in a rosier outlook for the job market. 
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Experts and economists are united in their view that the RBA will hold the cash rate this month, with only one prediction for any movements at all in 2021

Experts and economists forecast a cash rate lockdown until 2022

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EXPERT OBSERVER

The Reserve Bank (RBA) has left the target rates for both the cash rate and 3-year government bond yield at 0.10 per cent. The RBA will purchase an additional $100 billion of bonds issued by the Australian Government and states and territories when the current bond purchase program is completed in mid-April. 
 

<h2>What has changed since the last RBA Board meeting on December 1?</h2>

• Joe Biden was sworn in as the 46th US President.

• ANZ job advertisements rose by 2.3 per cent in January to 161,582 available positions. Ads have lifted for eight successive months to be up 5.3 per cent from a year ago.

• Employment rose by 50,000 in December after increasing by 90,000 jobs in November. Full-time jobs rose by 35,700 and part-time jobs rose by 14,300. The unemployment rate fell from 6.8 per cent to 6.6 per cent in December.

• Preliminary retail trade fell 4.2 per cent in December (9.4 per cent annual) after rising 7.1 per cent in November.

• The weekly ANZ-Roy Morgan consumer confidence rating rose to a 15-month high.

• The NAB business confidence index fell from a 31-month high of +12.7 points to +4.5 points in December. But the business conditions index lifted from +7.0 points to 28-month highs of +14.2 points.

• The International Monetary Fund expects the global economy to expand by 5.5 per cent in 2021, which is 0.3 percentage points higher than the October 2020 forecast.

• The Consumer Price Index rose by 0.9 per cent in the December quarter to be up by 0.9 per cent on the year. The trimmed mean (underlying) measure rose 0.4 per cent in the quarter to be up 1.2 per cent on the year.

• Private sector credit (effectively outstanding loans) rose by 0.3 per cent in December to be up 1.8 per cent over the year.

• In the full twelve months to December the underlying Commonwealth Government cash balance was $186,120 million (9.5 per cent of GDP). The budget deficit for the six months to December was $9.5 billion lower than the ‘profile’ deficit.

• A retail trading frenzy for highly shorted stocks led to volatility on global sharemarkets and spilled over into the silver market.

• The Aussie dollar has lifted from US73-74 cents to US75-77 cents.

<h2>The Assessment</h2>

The Reserve Bank Board is not expecting to increase the cash rate until 2024 “at the earliest”. The first Tuesday in the month will never be the same.

<img alt="" height="436" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/screen_shot_2021-02-02_at_3.16.43_pm.png" width="620">

<h2>Perspectives on interest rates</h2>

The Reserve Bank left the cash rate at 0.10 per cent after cutting the rate from 0.25 per cent on November 3. The RBA previously cut the cash rate on March 3 and March 19, 2020, each by 25 basis points. The target rate for 3-year bond yields was left at 0.10 per cent.

On November 3 the RBA cut the 3-year bond target from 0.25 per cent to 0.10 per cent. The RBA implemented the 0.25 per cent target rate for 3-year bond yields on March 19, 2020. There have been 18 cash rate cuts since November 2011 with the cash rate cut from 4.75 per cent. Previously cash rates rose seven times from October 2009 to November 2010 from 3.00 per cent to 4.75 per cent.

<h2>What are the implications of RBA's decision?</h2>

• The Reserve Bank used the word, “strong”, five times in the statement. The economic recovery, employment and retail spending were all described as “strong”.

• The Reserve Bank Governor will go into more depth about the economic recovery in a speech tomorrow. Further, Governor Lowe gives testimony to the House of Representatives Economics Committee on Friday. On the same day the RBA issues the quarterly Statement on Monetary Policy that includes the latest forecasts. We received some inkling of the forecasts today: “In underlying terms, inflation is expected to be 11⁄4 per cent over 2021 and 11⁄2 per cent over 2022.”; “the central scenario is for unemployment to be around 6 per cent at the end of this year and 51⁄2 per cent at the end of 2022.”; the central scenario being for GDP to grow by 31⁄2 per cent over both 2021 and 2022.

• The Reserve Bank Board’s central scenario requires significant job gains and a return to a tight labour market to stoke inflation. And that is not expected until 2024 at the earliest.
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The RBA has left the target rates for both the cash rate and 3-year government bond yield at 0.10 per cent, with an increase not expected until 2024 "at the earliest"

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RBA interest rates - Set the watch for 2024: CommSec's Craig James

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EXPERT OBSERVER
<div>A double-shot Friday, with speeches from both Reserve Bank Governor Lowe and Assistant Governor Luci Ellis.</div>
<div> </div>
<div>Lowe's speech effectively confirmed that the inflation target is asymmetric.</div>
<div> </div>
<div>Although 'committed' to the 2 to 3 per cent inflation target, the next move in interest rates will be up, he noted, even though inflation is yet again set to fall below the target. As energy and fuel price pressures ease the rate of inflation will likely drop over the second half of the year. That's good to the extent that it eases pressure on household budgets, of course. But, in the spirit of Mr. Micawber, it is hoped that eventually inflation will pick up again. Amazon might have something to say about that as retail price deflation again rears its head. Rates on hold
</div>
<div> </div>
<div>Whether you agree or otherwise, at least it's been made clear: the cash rate is going to be set at 1.5 per cent for a long time! Probably a very long time.</div>
<div> </div>
<div>Lowe also delivered an interesting interpretation of housing credit dynamics, noting that the slowing of the housing market had reduced demand for credit by investors, in doing so citing low mortgage rates as evidence that the reduced supply of credit has not been the main story.</div>
<div> </div>
<div>The plural of anecdote is not data, but that's not quite the feedback we've been getting from mortgage brokers. </div>
<div> </div>
<div>Semantics, maybe, given the reflexive nature of such things.</div>
<div> </div>
<div>Luci on lags</div>
<div> </div>
<div>Assistant Governor Ellis also presented an interesting speech on lags, showing how the unemployment rate has been improving (if not very much for the long term unemployed).</div>
<div> </div>
<div>No arguments there, although building permits are now falling away outside Melbourne (OK, and Hobart), while money growth is now at the lowest level in more than a quarter of a century. </div>
<div> </div>
<div>If those weak leading indicators persist, then eventually the economy will start to slow too...yes, it's those pesky lags again!</div>
<div> </div>
<div>Maybe that's already happening, according to the timeliest business surveys.</div>
<div> </div>
<div>The labour force figures released this week also showed that the growth in hours worked is already on the way down. </div>
 
<div><a href="https://3.bp.blogspot.com/-kDmz34Ipxs0/W3dJwWlfd7I/AAAAAAAArlU/3SWaE5U_PZwsGrTrZ21uEB5LO6qLF99oACLcBGAs/s1600/a1.jpg"><img src="https://3.bp.blogspot.com/-kDmz34Ipxs0/W3dJwWlfd7I/AAAAAAAArlU/3SWaE5U_PZwsGrTrZ21uEB5LO6qLF99oACLcBGAs/s640/a1.jpg" width="640" height="378" data-original-height="795" data-original-width="1342"></a></div>
Long story short, inflation is low because the economy remains well below its full capacity.
<div>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</div>
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The cash rate is going to be locked at 1.5 per cent for a very long time: Pete Wargent

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EXPERT OBSERVATION
As widely expected, at its May meeting the RBA made no further changes to monetary policy having undertaken a substantial easing in March via a cut in the cash rate to 0.25%, targeting the three year bond yield at 0.25% to be supported by quantitative easing and providing funding to the banks for three years at just 0.25%.
So right now and given the expected and still unfolding hit to the global and Australian economies from coronavirus related shutdowns the RBA is basically in a wait and see mode.
The Bank reiterated that it has scaled back the size of its bond purchases as the 3 year bond yield is around its target of 0.25% and as the functioning of the bond market has improved.
So far it has purchased around $50 billion of bonds but has indicated that it's prepared to scale them up again to do “whatever is necessary” to ensure functional bond markets and achieve the 3 year yield target.
It also announced a slight broadening in the range of corporate debt that it is prepared to accept as collateral as part of its open market operations.
RBA Governor Lowe restated the base case Australian economic forecasts that he first ran through in his 21stApril speech.
These basically see a 10% hit to growth in the first half of the year with around a 6% decline in GDP for 2020 as a whole, followed by 6% growth next year, unemployment to peak at around 10% in coming months and still be above 7% by end 2021, and inflation going negative in the current quarter and remaining below 2% over the next few years.
These are fairly similar to our own forecasts and assume some easing in the lockdown in the months ahead. 
The RBA repeated its commitment to do “what it can” to support jobs, incomes and businesses and affirmed that it will “not increase the cash rate until progress is made towards full employment and it is confident that inflation will be sustainably within the 2-3% target band.”
For those focussed on the RBA’s cash rate, the next few years are likely to be pretty boring.
The cash rate is at the RBA’s long stated lower bound and there is no value in taking it negative, so it won’t be cut any further.
And in the meantime, we are yet to see the full extent of the hit to the economy from the coronavirus related shutdowns and it will take several years to fully recover so a rate hike is years away.
We expect the cash rate to be stuck at 0.25% for at least the next three years.
The extraordinary monetary and fiscal policy response seen from March won’t stop the hit to the economy from the shutdowns and a sharp rise in unemployment, but they should help minimise the fall out in terms of jobs, incomes and businesses such that we can recover more quickly once the virus is better controlled.
Shane Oliver is the Head of Investment Strategy and Chief Economist at AMP Capital
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Cash rate to stay at 0.25% until at least 2023: Shane Oliver

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EXPERT OBSERVER
With the unemployment rate unlikely to fall below 6% and central banks unconvinced about any urgent need to be pre-emptive the cash rate target is likely to hold at 0.25% at least until end of 2023. However the RBA can remain an effective force in the Policy debate through its management of the three year bond yield target.
On Tuesday the Reserve Bank Governor Lowe made a major speech where he outlined the Bank’s key economic forecasts.
These forecasts are based on the Bank’s central outlook for the policy response to the Covid Crisis whereby domestic shutdowns are gradually eased through the June and September quarters and “mostly removed by late in the year”.
Westpac released forecasts on March 31 where the central outlook for the Crisis was similar to the Bank’s central view.
We are encouraged that our forecasts are broadly in line with the forecasts the Governor released in his speech. Westpac forecast that the economy would contract by around 9.5% in the first half of 2020 (RBA minus 10%); the economy would contract by 5% over 2020 (RBA minus 6%); the unemployment rate would lift to 9% by end June (RBA 10%); implying that growth would bounce back by 4–5% in the second half of 2020, (RBA similar).
We do however differ with the RBA’s forecast for growth in 2021 with the RBA forecasting 6–7% and Westpac at 4%.
It appears that, next year, we are heading for a repeat of the last few years when RBA growth forecasts were consistently significantly above our own forecasts. That bullish view is despite the observation that “the twin health and economic emergencies that we are experiencing now will cast a shadow over our economy for some time to come”.
The other key observation was around the outlook for interest rates. The Governor indicated that he expected the three year bond target to remain in place for a “number of years”.
He also reiterated that the cash rate target would not be lifted before the three year bond yield target was lifted.
The choice of the three year bond target rate as the same as the cash rate target is strategic since it sends a clear message that if the Bank is prepared to purchase three year bonds at the overnight cash rate it is reasonable to expect that it is comfortable with the cash rate holding at 0.25% for the full three years.
This does not mean that it cannot lift the rate for the bond yield target. A higher target rate would imply that the Bank now expects the cash rate to be lifted within the three year window therefore signalling an appropriately tighter monetary policy.
A lift in the target rate would see the market’s timing for the cash rate increase brought forward and the arbitrage between swap markets and the bond rate would pin point that expected timing.
BILL EVANS is the <a href="https://westpaciq.westpac.com.au/Article/42804/16785/" target="_blank">Chief Economist at Westpac</a>
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RBA likely to hold cash rate at 0.25% till 2023: Bill Evans

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Economists are highly divided on whether the Reserve Bank of Australia (RBA) made the right number of cuts to the cash rate last year, according to the latest Finder survey.
In this month’s Finder RBA Cash Rate Survey, when asked if the RBA was right to make 3 cuts in 2019, only half of the respondents to this question said it made the right call (50%,13/26).
Of the other half of experts who disagreed with the Reserve Bank's decisions, most (42%, 11/26) said the RBA should have cut less.
Graham Cooke, insights manager at Finder, said the RBA’s decisions will never please everybody.
“On the one hand, some experts say the cutting was 'overzealous' and is seeing house prices soar while most economic metrics have been stagnant."
“Others think the RBA hasn’t done enough to repair the economy in light of lagging employment and inflation figures."
“One thing is clear: three cuts have reignited the housing market and pumped up property prices across the country."
“With more cuts on the horizon, it remains to be seen whether cheaper credit and lower rates will be an elixir or a poison pill," he said."
RBA cash rate expected to hold
Nearly 9 in 10 experts and economists predict the RBA will hold the cash rate in February (87%, 34/39) with just 13% expecting a cut.
The experts predicting a cut cited the bushfires, weak wage growth, low inflation and high unemployment as the main issues necessitating an easing.
Besa Deda of St.George Economics said; “In the absence of wage pressures, inflation remains well below target. More stimulus is required to return growth to trend.”
Cooke noted the forecast for a rate cut in February dropped from 66% before the December meeting to just 13% this month.
Nearly 4 out of 5 who made a forward prediction (not including February) forecast a cash rate drop by May 2020 (79%, 23/29).
A quarter of experts predict a cut in March (24%, 7/29), while nearly a third predict a cut in April (31%, 9/29). Another quarter predict a cut in May (24%, 7/29).
Only 2 of the 39 experts (5%) on the panel thought the eventual move, whenever it happens, would be a rise.
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Half surveyed experts think RBA went wrong with rate cuts: Finder Survey

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GUEST OBSERVATION
Governor Phillip Lowe has laid out in very clear terms the circumstances in which the bank would resort to quantitative easing and the way in which it would implement it.
Quantitative easing is simply a change in the way it eases monetary policy when the official interest rate approaches zero.
Usually it does it by cutting the so-called <a href="https://www.rba.gov.au/education/resources/explainers/how-rba-implements-monetary-policy" target="_blank">cash rate</a>, which is the rate banks pay each other for money deposited overnight.
Eight years ago the cash rate was 4.5%. Three years ago it was 1.5%. After the most recent three cuts in June, July and October, it is just 0.75%
<hr>
<a href="https://images.theconversation.com/files/303837/original/file-20191126-112484-iegrak.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/303837/original/file-20191126-112484-iegrak.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
<a class="source" href="https://www.rba.gov.au/statistics/cash-rate/" target="_blank">Source: RBA</a>
Last night, Governor Lowe said the <a href="https://www.rba.gov.au/speeches/2019/sp-gov-2019-11-26" target="_blank">effective lower bound was 0.25%</a>. Rather than let the cash rate get any lower or negative (an option he explicitly ruled out), the bank will push down other longer-term rates by buying government bonds.
It’s the “quantitative easing” approach adopted by the US Federal Reserve between 2009 and 2014.
Government bonds are sold by governments in return for money, a means of borrowing. The buyer gets guaranteed interest payments and a guarantee that their money will be returned in full after three, five, 10 or even 20 years depending on the length of the bond.
Once issued, bonds can be traded on a market, and the price at which they change hands can be expressed as an implied interest rate, which becomes the risk-free rate against which all other interest rates are benchmarked.
How quantitative easing would work
Buying bonds from investors would push down that risk-free rate, pushing down the entire structure of long-term interest rates.
All other things being equal, this should also push down the exchange rate by reducing the return on Australian dollar denominated financial investments.
Governor Lowe indicated he might buy state government bonds as well as Commonwealth bonds.
Importantly, he argued that although the bank would be mindful of the need to ensure private banks had enough access to the bonds they needed to hold for regulatory purposes, those holdings would not be an impediment to quantitative easing.
He ruled out buying residential mortgage-backed securities and other private assets given that those markets are currently functioning well and Reserve Bank purchases could distort them.
The approach borrows heavily from the US Fed.
As in the US, Lowe says quantitative easing would be complemented by “forward guidance”, where the Reserve Bank would signal early how long-term interest rates would be kept low and the circumstances in which it expected to raise them again.
The guidance is designed to influence market expectations for future interest rates, enhancing the effectiveness of cuts in long term interest rates.
When it would happen
In addition to “how”, Governor Lowe spelled out “when” – the economic circumstances in which the bank would resort to quantitative easing.
It would do it when the cash rate was at 0.25% and inflation and unemployment were moving away from its objectives.
The bank targets 2-3% inflation on average over time and has recently identified 4.5% as the “full employment” unemployment rate.
Importantly, Lowe emphasised that the Australian economy has not yet reached the point where a cash rate as low as 0.25% would be needed and argued quantitative easing was unlikely to be needed in future.
The cash rate is at present 0.75%. Setting 0.25% as the effective lower bound gives the Governor 0.5 percentage points left to cut before implementing quantitative easing.
Implicitly, Governor Lowe is saying that those cuts of 0.5 percentage points will be enough to stabilise the economy.
A pause for a breath at 0.25%
Lowe also indicated the bank would not seamlessly transition to quantitative easing.
He implied there was an additional hurdle or threshold that would need to be crossed, suggesting he would be reluctant to make the transition.
His big problem is that neither inflation nor the unemployment rate are moving in the right direction.
The bank has undershot its inflation target since the end of 2014, giving the economy a weak starting point going into an emerging global downturn.
My <a href="https://www.ussc.edu.au/analysis/lessons-from-quantitative-easing-in-the-united-states-a-guide-for-australian-policymakers" target="_blank">research</a> on the US experience for the United States Studies Centre shows that the main problem with is quantitative easing was that it was not done soon enough or aggressively enough.
It might be better to be bold
While quantitative easing was effective, it could have been made more so had what was going to happen been made clearer.
The Fed went out of its way to limit the transmission of quantitative easing to the rest of the economy, fearful it would be too potent and lead to excessive inflation.
Those concerns proved misplaced. By pulling its punches, the Fed ended up being less effective and having to pursue quantitative easing for longer than if it had used it more aggressively.
Governor Lowe’s very obvious reluctance to go down the quantitative easing route suggests the Reserve Bank is in danger of making the same mistake, but it is not too late to learn from what happened in the US.<img src="https://counter.theconversation.com/content/127697/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
Stephen Kirchner, Program Director, Trade and Investment, United States Studies Centre, University of Sydney.
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/now-we-know-the-reserve-bank-has-spelled-out-what-it-will-do-when-rates-approach-zero-127697" target="_blank">original article</a>.
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