<p>Roseville is poised for a wave of new apartment development following the NSW Government's rezoning of land around Roseville Station under its Transport Oriented Development program.</p>

<p>The new planning controls have unlocked significant development potential within walking distance of the station, with a number of sites expected to be amalgamated and redeveloped in the coming years as developers seek to take advantage of the increased density allowances.</p>

<p>One of the more restrained developments in the precinct, and set among the first to be delivered having commenced well before the recent changes, is Hyecorp's Juliet. The boutique apartment project is already well under construction and remains on track to welcome residents by the end of the year, offering a markedly different proposition to many of the larger-scale developments now likely to emerge across the suburb.</p>

<p>[smartcode_project:default project_id=7395 project_image_fid=278194]</p>

<p><a href="https://www.apartments.com.au/new-apartments/juliet-roseville-64-pacific-highway-roseville-nsw-2069">Juliet</a> will comprise just&nbsp;34 one-, two-, and three-bedroom apartments opposite Roseville Station. For Hyecorp, which has delivered projects across Sydney's Lower North Shore for more than three decades, Roseville presented a rare opportunity to address a growing gap in the market.</p>

<p>"<a href="https://www.apartments.com.au/developments/roseville-nsw-2069">Roseville</a> has long been one of the North Shore's most tightly held and desirable suburbs, offering a unique combination of village charm, established greenery, excellent transport connections, and proximity to some of Sydney's best schools and lifestyle amenities," Hyecorp said.</p>

<p>"We recognised a growing demand from local homeowners seeking to downsize without leaving the community they have built their lives around. The location presented a rare opportunity to create homes that cater specifically to that buyer profile."</p>

<p>[smartcode_project:default project_id=7395 project_image_fid=278196]</p>

<p>The six-level development has been designed by <a href="https://www.apartments.com.au/architects/pbd-architects">PBD Architects</a> as a collection of residences that feel more like homes than apartments. The brief centred generous floorplans, abundant natural light, quality finishes, and strong connections to outdoor space.</p>

<p>PBD Architects drew inspiration from Roseville's established garden suburb character, creating a building that sits comfortably within its surroundings rather than dominating them. The architecture incorporates natural materials, soft forms, layered landscaping, expansive balconies, and generous setbacks to strengthen the connection between residents and the suburb's leafy environment.</p>

<p>"The focus was on designing spacious, house-like residences for discerning owner-occupiers and downsizers who wanted to remain on the North Shore without compromising on comfort, privacy, or design," PBD said.&nbsp;</p>

<p>"Every apartment was to feel considered, timeless, and highly functional."</p>

<p>[smartcode_project:default project_id=7395 project_image_fid=278195]</p>

<p>Inside, residences feature engineered timber flooring, stone kitchen benchtops and splashbacks, integrated Fisher &amp; Paykel appliances, ducted air conditioning, and large outdoor entertaining areas designed to take advantage of district and treetop views.</p>

<p>Residents will also have access to a rooftop barbecue and lounge area, alongside practical amenities including parcel lockers, EV charging capability, bicycle storage, a dog wash bay, and a basement car wash facility.</p>

<p>The majority of purchasers so far have been local owner-occupiers from Roseville, Lindfield, Chatswood, Killara, and the broader Upper North Shore, many of whom are transitioning from larger family homes.</p>

<p>"Buyers are looking for spacious, house-like apartments that allow them to downsize without feeling like they are sacrificing comfort or functionality," Hyecorp noted.</p>

<p>"They value large kitchens, generous living areas, ample storage, quality finishes, secure parking, lift access, and low-maintenance living."</p>

<p>[smartcode_project:default project_id=7395 project_image_fid=278204]</p>

<p>Juliet sits directly opposite Roseville Train Station and within walking distance of Roseville Village, while Chatswood's retail and dining precinct is only minutes away. The development is also surrounded by some of Sydney's most established schools, including Roseville College, Ravenswood, Pymble Ladies' College, and Knox Grammar, as well as nearby parklands and golf courses.</p>

<p>Juliet is currently more than 75 per cent sold ahead of its anticipated completion in late 2026.</p>

<p>[smartcode_project_cta:default project_id=7395]</p>


Joel Robinson

Juliet to sit quietly amid Roseville apartment boom

<p>Sherpa Property Group has unveiled the third instalment of its Flourish series, securing full approval for the two-tower, $500 million Flourish Soleira development in Palm Beach.</p>

<p><a href="https://www.apartments.com.au/new-apartments/flourish-soleira-1150-1154-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> will rise from a prominent site in the commercial heart of Palm Beach, the long-time home of Cash Converters and a range of local retailers.</p>

<p>The project will introduce a new retail and dining precinct at ground level, beneath 286 apartments.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=370959]</p>

<p>“We’re very committed to not only providing affordable residential offerings that are much needed in Palm Beach, but also delivering a vibrant new commercial heart that complements the extraordinary growth of the southern Gold Coast,” Sherpa Property Group founder Christie Leet said.</p>

<p>The development will sit under Sherpa's Flourish brand, which is aimed at providing a pathway into the beachside suburb for locals, first-home buyers and downsizers. In a move designed to assist first-home buyers entering the market, Sherpa has reserved all one and two-bedroom, one-bathroom apartments exclusively for eligible first-home buyers.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=370964]</p>

<p>“Our vision through Flourish is to create a vibrant retail and lifestyle focal point within the Palm Beach centre zone, delivering thriving communities underpinned by lifestyle-rich locations,” Leet said.</p>

<p>“So far, Flourish has been an incredible success, and we hope to carry this momentum as we progress the next two Flourish projects in Palm Beach.”</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=371430]</p>

<p>Located across 1150-1164 Gold Coast Highway and 3 Sixth Avenue, the development will comprise two towers. The northern tower will deliver 154 apartments, while the southern tower will add a further 132 residences, helping address ongoing demand for new apartments in the tightly held coastal suburb.</p>

<p>Flourish Soleira will also feature the most extensive rooftop amenity offering ever delivered in Palm Beach.</p>

<p>The two towers will be connected by a skybridge, with residents gaining access to a rooftop recreation deck featuring a full-width swimming pool, hot and cold plunge pools, wellness spaces, a gymnasium, private dining facilities, massage treatment rooms, barbecue areas, a basketball court, golf simulator, indoor and outdoor dining spaces, sun lounges and extensive landscaping.</p>

<p>LPS Group is expected to start construction later this year.</p>

<p>Sherpa is already well advanced on construction of its debut Flourish project, Flourish Amargo, located just around the corner from Soleira. Meanwhile, Flourish Oasis, positioned opposite Amargo, recently commenced construction and has nearly sold out its collection of 47 apartments.</p>

<p>[smartcode_project_cta:default project_id=150017]</p>


Sherpa unveils $500m mixed-use Palm Beach precinct, Flourish Soleira

<p>Are mortgage holders set to get a reprieve from the RBA in 2026?</p>

<p>Big Four bank NAB believes so. They are now expecting the next move from the RBA to be a cut, rather than a hike, which they had pencilled in for August. They are unsure of the timing of the cut however, they note in their latest&nbsp;NAB Economics RBA Watch.</p>

<p>NAB Chief Economist, Dr Sally Auld, said recent data suggests the economy has lost momentum and the outlook for rates has shifted, noting that the broader economic backdrop has changed since earlier in the year.</p>

<p>“The next move in the cash rate is likely to be down, but the timing is uncertain," Dr Auld said.</p>

<p>"In February, growth was above trend, the economy was operating above capacity and there was uncertainty over the restrictiveness of rates. None of these conditions exist today,” she outlined.</p>

<p>Dr Auld said recent data pointed to softer momentum across the economy while acknowledging that at the same time, uncertainty remains a key feature of the outlook.</p>

<p>“Both Q1 GDP data and the NAB business survey suggest momentum in the economy has slowed, meaning that growth has likely peaked for the cycle. That said, we are cognisant there is still considerable uncertainty around the outlook, both with respect to activity and inflation.”</p>

<p>Dr Auld said inflation risks and labour market outcomes would be important to watch.</p>

<p>“On the prices side, we are still forecasting above target core inflation through to mid-2027. Margins will compress and weaker labour market outcomes are a risk.”</p>

<p>She said tighter financial conditions are expected to weigh on housing and activity.</p>

<p>“Tighter financial conditions will be reflected in a slowing in house price growth and housing credit growth. In summary, we have greater conviction that the next move in rates is down, but less conviction on the timing.”</p>


Mortgage relief? NAB forecasts RBA rate cut, not hike, after softer economic conditions

<p>A local downsizer has splashed $6.5 million on a penthouse in Perifa's Alex &amp; Willow development in Crows Nest.<br />
&nbsp;<br />
The purchaser sold their long-held family home in the area before embarking on a six-month search for the right apartment. After inspecting a range of options across the Lower North Shore, the buyer returned to <a href="https://www.apartments.com.au/new-apartments/alex-willow-crows-nest-82-90-alexander-street-crows-nest-nsw-2065">Alex &amp; Willow</a>.<br />
&nbsp;<br />
The buyer profile reflects the project’s broader purchaser mix. <a>Alex &amp; Willow</a> has attracted predominantly local downsizers looking to transition from larger homes without compromising on space or quality, alongside a smaller cohort of upsizers and investors drawn to the project’s location and design credentials.<br />
&nbsp;<br />
The milestone sale comes as the project, developed by&nbsp;<a href="https://www.apartments.com.au/developers/perifa">Perifa</a>&nbsp;and delivered by <a href="https://www.apartments.com.au/builders/versatile-made-construction">Versatile Construction</a>, both part of Versatile Group, reaches 60 per cent sold.</p>

<p>[smartcode_project:default project_id=6680 project_image_fid=371325]<br />
&nbsp;<br />
Eddie Mansour, Managing Partner of <a href="https://www.apartments.com.au/project-marketer/ray-white-projects">Ray White Projects</a>, said the result demonstrates not only a headline price but also depth of demand.<br />
&nbsp;<br />
“This is an exceptional outcome and a clear reflection of sustained buyer demand for premium, well-located downsizer product,” Mansour said.</p>

<p>“We’re seeing a consistent pattern of local homeowners selling family residences and reinvesting into high-quality apartments that allow them to remain within their community. Alex &amp; Willow has resonated strongly with this group because it offers genuine scale, thoughtful design and immediate proximity to the village.”<br />
&nbsp;<br />
The sale reflects a broader and consistent trend of local downsizers actively seeking high-quality, low-maintenance residences close to established village centres. Agents report that demand for this product type has remained resilient, particularly where developments offer a rare combination of scale, design quality and walkable amenity.<br />
&nbsp;&nbsp;<br />
Fabrizio Perilli, Managing Director of Perifa and Versatile Group, said the sale marks a defining moment for the project.<br />
&nbsp;<br />
“The penthouse sale is a strong endorsement of the quality we have delivered, alongside our partners, and the clear demand from local downsizers for premium, boutique residences in this location,” Perilli said.&nbsp;<br />
&nbsp;<br />
“Most importantly, we’re proud to see the Alex &amp; Willow community beginning to take shape. As we move closer to completion, we’re looking forward to welcoming residents and seeing the project come to life.”&nbsp;</p>

<p>[smartcode_project:default project_id=6680 project_image_fid=338516]<br />
&nbsp;<br />
Designed by <a href="https://www.apartments.com.au/architects/nettletontribe">Nettleton Tribe</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/richards-stanisich">Richards Stanisich</a>, Alex &amp; Willow is a boutique collection of generously sized two- and three-bedroom residences in the heart of Crows Nest village.&nbsp;</p>

<p>Completion is slated for early 2027.</p>

<p>[smartcode_project_cta:default project_id=6680]</p>


Alex & Willow, Crows Nest penthouse sells off the plan for $6.5 million

<p>Fresh from launching the first stage of its Wollongong precinct, <a href="https://www.apartments.com.au/new-apartments/keira-place-wollongong-120-122-smith-street-wollongong-nsw-2500">Keira Place</a>, builder-developer Urban Property Group has unveiled plans for the next phase of the masterplanned community.</p>

<p>Now on public exhibition through the NSW Government's Housing Delivery Authority pathway is a State Significant Development Application for a further 657 homes on the prominent gateway site opposite Beaton Park.</p>

<p>The proposal comprises three buildings, including two build-to-sell towers rising 25 and 30 storeys, delivering 391 apartments, alongside a 12-storey co-living building with 266 residences, making it one of the largest co-living proposals currently planned in regional New South Wales.</p>

<p>Of the apartments proposed in the build-to-sell towers, the majority, 310, are two-bedroom dwellings. The balance comprises 44 one-bedroom apartments and 37 three-bedroom residences. Apartment sizes range from around 50 sqm for one-bedroom homes to approximately 90 sqm for three-bedroom apartments.</p>

<p><img alt="Smith St" data-entity-type="file" data-entity-uuid="19347059-1612-41a0-9c74-b86a657237f8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-10%20at%2010.02.18%E2%80%AFAM.png?VersionId=sWXnaCcA.cIC6N8YT1dg5pJ2e1V3Z6z7" /></p>

<p>The submission says the proposal has evolved significantly from its original Housing Delivery Authority application following extensive consultation with the State Design Review Panel and Wollongong City Council.</p>

<p>The final scheme has been designed to align with the emerging vision for the Flinders Street Precinct, an area identified by Council as a future high-density mixed-use neighbourhood capable of accommodating substantial housing growth close to transport, employment and community infrastructure.</p>

<p>According to the design report prepared by COX Architecture, the development aims to "deliver a built outcome consistent with the future character of the Wollongong CBD while responding to the site's unique constraints and opportunities."</p>

<p>"Our vision for the next phase of the site evolution in Wollongong is grounded in three design pillars that guide the design response: place, natural environment and celebration," COX said.</p>

<p>"Inspired by its surroundings and grounded in the stories of place on Wodi Wodi Country, the design proposal acknowledges the established character of its setting while creating a unique and timeless identity that sits harmoniously within it.</p>

<p>"The design proposal responds to its specific site conditions, acknowledging the vegetation, climate, wind conditions and solar access of the site."</p>

<p>The architecture responds directly to the site's position between Wollongong's urban core and its natural landscape setting.</p>

<p>COX identified views towards Mount Keira and the Illawarra Escarpment as defining features of the site, while the upper levels of the towers will also capture expansive views across the city and out to the Pacific Ocean.</p>

<p>The design team has positioned the tallest buildings closer to the rail corridor, where overshadowing impacts can be better managed while establishing a landmark built form on the northern approach into the city.</p>

<p><img alt="Smith St" data-entity-type="file" data-entity-uuid="79580d5b-500c-4ebf-9629-797146a4a694" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-10%20at%209.51.59%E2%80%AFAM.png?VersionId=WbTB1EKSG.KDfsfz0F3wp1QVa2oCMGR5" /></p>

<p>Urban Property Group secured the 11,000 sqm Smith Street site in 2022 and has since progressed plans for the broader Keira Place precinct.</p>

<p>Construction recently commenced on the first stage of Keira Place, which will deliver 150 apartments across two residential buildings, including 27 affordable housing apartments and 18 specialist disability accommodation dwellings, alongside activated ground-floor retail and commercial space.</p>

<p>Urban Co-CEO Patrick Elias said the commencement of construction marked a significant milestone for Wollongong and reflected the developer's long-term commitment to regional cities.</p>

<p>"Today's groundbreaking is about turning approvals into homes and moving quickly to deliver much-needed housing in Wollongong's city centre," Elias said.</p>

<p>"Keira Place will provide a diverse mix of homes close to jobs, transport and services, while setting a high benchmark for quality, durability and consumer protection."</p>

<p><em>Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/groundbreaking-marks-start-of-construction-at-keira-place-in-wollongong-cbd">Groundbreaking marks start of construction at Keira Place in Wollongong CBD</a></em></p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>


Urban Property Group unveils trio of towers for next stage of new Wollongong precinct, Keira Place

cash rate

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<p>Hong Kong based, Societe Generale's chief economist for Asia Pacific, Klaus Baader has joins the growing band of senior economists who foresee a rate cut in Australia in 2019.</p>
<p>He has issued a statement in light of recent economic events that a cash rate cut is more likely than a hike in Australia.</p>
<p>Klaus Baader said since the RBA's previous meeting in December, prospects for the global market have deteriorated markedly, several other central banks have shifted their guidance - some rather radically - "and Australia's economy looks notably less strong than it did then (two months ago)."</p>
<p>"The RBA's latest forecasts will illustrate this.</p>
<p>"Given this backdrop, we have ditched the view that rate normalisation would begin in May of this year."</p>
<p>"Indeed, with the US economy likely so slide into recession in 2020, we believe that the next RBA rate move is more likely to be a cut than a hike," he concluded.</p>
<p>Klaus joined Societe Generale in July 2009 and was Chief Euro Area Economist in London before moving to Hong Kong in 2012.</p>
<p>He had been Chief Europe Economist at Merrill Lynch since 2006 after working at Lehman Brothers, UBS and Deutsche Bank.</p>
<p>Klaus began his career at Salomon Brothers in 1989, after studying Economics and Political Science at the University of Cologne and the London School of Economics.</p>
<p>He received his B.Sc. in Economics from the LSE in 1988, and completed a Master course in Economics in 1989.</p>
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j.ballantyne1990-6AQqhLzZaK

Next RBA rate move more likely to be cut than hike: Klaus Baader

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<p>At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.</p>
<p>The global economic expansion is continuing and unemployment rates in most advanced economies are low. There are, however, some signs of a slowdown in global trade, partly stemming from ongoing trade tensions. Growth in China has slowed a little, with the authorities easing policy while continuing to pay close attention to the risks in the financial sector. Globally, inflation remains low, although it has increased due to the earlier lift in oil prices and faster wages growth. A further pick-up in core inflation is expected given the tight labour markets and, in the United States, the sizeable fiscal stimulus.</p>
<p>Financial conditions in the advanced economies remain expansionary but have tightened somewhat. Equity prices have declined and credit spreads have moved a little higher. There has also been a broad-based appreciation of the US dollar this year. In Australia, money-market interest rates have declined, after increasing earlier in the year. Standard variable mortgage rates are a little higher than a few months ago and the rates charged to new borrowers for housing are generally lower than for outstanding loans.</p>
<p>The Australian economy is performing well. The central scenario is for GDP growth to average around 3½ per cent over this year and next, before slowing in 2020 due to slower growth in exports of resources. Business conditions are positive and non-mining business investment is expected to increase. Higher levels of public infrastructure investment are also supporting the economy, as is growth in resource exports. One continuing source of uncertainty is the outlook for household consumption. Growth in household income remains low, debt levels are high and some asset prices have declined. The drought has led to difficult conditions in parts of the farm sector.</p>
<p>Australia's terms of trade have increased over the past couple of years and have been stronger than earlier expected. This has helped boost national income. Most commodity prices have, however, declined recently, with oil prices falling significantly. The Australian dollar remains within the range that it has been in over the past two years on a trade-weighted basis.</p>
<p>The outlook for the labour market remains positive. The unemployment rate is 5 per cent, the lowest in six years. With the economy expected to continue to grow above trend, a further reduction in the unemployment rate is likely. The vacancy rate is high and there are reports of skills shortages in some areas. The stronger labour market has led to some pick-up in wages growth, which is a welcome development. The improvement in the economy should see some further lift in wages growth over time, although this is still expected to be a gradual process.</p>
<p>Inflation remains low and stable. Over the past year, CPI inflation was 1.9 per cent and in underlying terms inflation was 1¾ per cent. Inflation is expected to pick up over the next couple of years, with the pick-up likely to be gradual. The central scenario is for inflation to be 2¼ per cent in 2019 and a bit higher in the following year.</p>
<p>Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Credit conditions for some borrowers are tighter than they have been for some time, with some lenders having a reduced appetite to lend. The demand for credit by investors in the housing market has slowed noticeably as the dynamics of the housing market have changed. Growth in credit extended to owner-occupiers has eased to an annualised pace of 5–6 per cent. Mortgage rates remain low, with competition strongest for borrowers of high credit quality.</p>
<p>The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.</p>
<p>Source <a href="https://www.rba.gov.au/media-releases/2018/mr-18-31" target="_blank">RBA</a></p>
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Dynamics of housing market have changed: RBA Governor Philip Lowe

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<p>GUEST OBSERVATION</p>
<p>The Reserve Bank of Australia (RBA) has once again made the decision to keep the nation’s official cash rate on hold at 1.50%, reaffirming its long-running stance on monetary policy.</p>
<p>However, the official cash rate does not give a clear indication of what is happening with Australian home loan rates as lenders move their rates on a regular basis, pushing up borrowing costs for new and existing customers.</p>
<p>Following lenders’ recent out of cycle rate increases, mortgage rates edged higher in September, with the average discounted rate for owner occupiers rising from 4.50% to 4.55%, according to recent data from CoreLogic.</p>
<p>“Whether lenders’ rates will lift further is dependent on a number of economic factors and at present Australian economic conditions are positive on the whole and have given the RBA no reason to change its current position on monetary policy.</p>
<p>GDP growth has been above potential levels and business conditions are positive. The pace of increase in household indebtedness has slowed and the labour market is strong. While wage growth is benign, it is expected to grow. That being said, inflation continues to underperform market expectations and national dwelling values continue to ease.<br><br>National Australia Bank’s Monthly Business Survey revealed that business conditions remained well above average and business confidence was around average levels in September. The latest Westpac Melbourne Institute Index of Consumer Sentiment revealed that consumer sentiment rose in September, however the recent leadership change in Canberra, increasing mortgage rates and declining house prices were weighing on confidence.<br><br>The most recent Labour Force Survey from the Australian Bureau of Statistics (ABS) revealed that employment growth is strong. The unemployment rate of 5.0% is the lowest in over six years, and is largely considered to be the natural rate of unemployment in Australia.<br><br>According to the most recent CoreLogic Hedonic Home Value Index, national dwelling values continue on their correction, taking the annual decline to 3.5% in October, signalling the weakest conditions since February 2012.<br><br>The Australian Bureau of Statistics’ (ABS) September quarter Consumer Price Inflation (CPI) report revealed headline and core inflation remain below the bottom of the RBA board’s target band, giving them little incentive to alter the cash rate.<br><br>In the minutes of the October monetary policy meeting, RBA board members reflected on the changes to lending standards and observed that standards could tighten further and competition for borrowers of high credit quality remained strong.</p>
<p>In a housing market where house prices are declining, home loan interest rates rising despite a stagnant official cash rate and home loan applications are being scrutinised more than ever before, it’s never been more important for prospective buyers to ensure they look good on paper and seek guidance from a qualified mortgage professional.<br><br>Increasingly, Australian consumers are responding to the tightened lending environment by seeking the guidance of a mortgage broker. According to the Mortgage and Finance Association of Australia (MFAA), the broker channel is growing, with over 55% of new residential home loans originating through brokers in the March quarter 2018.<br><br>Going forward, I would urge those looking to buy their first home or investment property, or looking to refinance an existing loan to speak to a mortgage broker first and early on in their home loan journey. </p>
<p><em><span>SUSAN MITCHELL</span> is the CEO of Mortgage Choice (pictured above).</em></p>
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Policy makers make safe bet on cash rate: Mortgage Choice

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<p>EXPERT OBSERVATION </p>
<p>As expected, the Reserve Bank Board decided to leave the cash rate unchanged at 1.5%.</p>
<p>The themes that have become familiar in previous statements were repeated in this one: continuing global expansion; China slowing a little; international trade uncertainty; positive business conditions; household consumption a source of uncertainty; labour market outlook positive; wages growth low; but a gradual lift in wages growth expected; further gradual decline in the unemployment rate expected; inflation higher in 2019 and 2020; housing conditions in Sydney and Melbourne continue to ease; progress toward full employment and target inflation will be gradual.</p>
<p>However, the growth and unemployment forecasts have been revised. These forecasts will be confirmed in the Statement on Monetary Policy that will be released on November 9. The forecast growth rates for 2018 and 2019 have been revised up from 3.25% to 3.5%, while the 2020 forecast is for a slowdown, although the current forecast of 3% may now be revised up to 3.25%. With no real change in the wording, there is no clear justification for this upward revision, particularly for the faster expected growth in 2019.</p>
<p>Westpac expects growth to slow in 2019 to 2.7% reflecting a weaker consumer; a contraction in residential construction; a softening housing market; weakening global economy and some impact on business and household sentiment from the uncertainty around the federal election.</p>
<p>Less surprisingly, the forecast unemployment rate by 2020 has been revised down to 4 ¾% from 5%. That may be significant because 4.75% is below the generally accepted full employment rate in Australia of 5%. As such, that might imply that the Bank is more confident that significant wage pressures will be building. However, overseas evidence and measures of current slack in the labour market point to a benign wage outlook, even if the unemployment rate falls to 4.75%. Westpac expects that due to the headwinds described above for 2019, the unemployment rate is likely to rise somewhat through 2019 before drifting back by the end of 2019.</p>
<p>The September quarter Inflation Report printed around the Bank’s expectations and it does not appear to have changed its inflation forecasts.</p>
<p>Since the last board meeting, evidence around house prices and auction clearance rates point to a further slowdown in the Sydney and Melbourne housing markets. Despite that, the Governor’s language around housing is all but unchanged. The slight difference is that he qualifies “credit extended to owner-occupiers” as having “eased” but remaining “robust”, compared to the  October Statement’s description as just “remains robust”.</p>
<p>The second paragraph in the Governor’s Statement which refers to the global economy is identical to the Statement in October, despite developments in equity markets and a surprise reduction in China’s growth rate.</p>
<p>In the following paragraph, which usually relates to financial conditions, the tightening we have seen is noted and equity prices are recognised to have declined. However, there appears to be no real concern about the flow through to the real economy.</p>
<p>We have been a little surprised that the Bank has not recognised the fall in the Australian dollar in recent months referring to it remaining “within the range it has been in the past two years on a trade-weighted basis”. Since the last Board meeting, the TWI actually lifted from 62.2 to 62.3 and yet the Governor has decided to expand on the usual commentary with “although it is currently in the lower part of that range”.</p>
<p><strong>Conclusion</strong></p>
<p>As discussed, we are a little surprised that the Bank has decided to lift its growth forecast in 2019 to 3.5% (0.75% above estimates of potential growth). Westpac expects growth to slow to 2.7% in 2019 (around potential). We will have to wait until the Statement on Monetary Policy on November 9 for an explanation behind this lift.</p>
<p>Clearly, the Bank is less concerned about the headwinds that we have outlined above. As always, while policy is forward looking, it responds to reality rather than long-term forecasts. We expect that through 2019, the Bank will be surprised about the slowdown in the Australian economy and adjust its outlook accordingly. As such, we remain comfortable with our forecast that the cash rate will remain on hold in 2019 and, indeed, in  2020.</p>
<p><strong><em>BILL EVANS</em></strong><em> is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.</em></p>
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bevans-rYk9SxEa4r

RBA will be surprised with slowdown in economy: Westpac's Bill Evans

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<p>EXPERT OBSERVER</p>
<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.<br><br>As energy and fuel price pressures ease the rate of inflation will likely drop over the second half of the year.<br><br>That's good to the extent that it eases pressure on household budgets, of course.<br><br>But, in the spirit of Mr. Micawber, it is hoped that eventually inflation will pick up again.<br><br>Amazon might have something to say about that as retail price deflation again rears its head.<br><br><strong>Rates on hold</strong>
</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!<br><br>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><strong>Luci on lags</strong></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>
<p> </p>
<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>
<p>Long story short, inflation is low because the economy remains well below its full capacity.</p>
<div><em>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>.</em></div>
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pwargent-M4siyDbqQY

The cash rate is going to be locked at 1.5 per cent for a very long time: Pete Wargent

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<p>EXPERT OBSERVER</p>
<p>As expected, the Reserve Bank Board decided to leave the cash rate unchanged at 1.50%.</p>
<p>This represents the twenty-second consecutive meeting (last change in August 2016) that rates have been on hold. The previous longest run of steady rates was sixteen consecutive meetings in 1995/96.</p>
<p>There were a number of changes/ additions to the statement following the July meeting. Previously, the Governor had noted the growth outlook being “a bit above 3 per cent in 2018 and 2019”.He repeated that line. But previously  he made no inference as to that impact on capacity. In today’s statement he asserts that the growth outlook “should see some further reduction in spare capacity”. This was borne out in the discussion on the labour market when he noted that the unemployment rate was likely to fall to around 5 per cent over the next couple of years.</p>
<p>Recall that in the May Statement on Monetary Policy, the Bank revised its unemployment forecast from 5 ¼ per cent (end 2018) and 5 ¼ per cent (end 2019) to 5 ½ per cent (end 2018) and 5 ¼ per cent (end 2019). The forecasts that will be updated in the August Statement on Monetary Policy which will be released on <span class="aBn" data-term="goog_135074847"><span class="aQJ">August 10</span></span> are now likely to include a forecast that the unemployment rate by end 2020 will be 5 per cent. A reasonable criticism of the Bank’s unemployment forecasts and rhetoric around increasing wages growth was that a low-point of 5 ¼ per cent was still comfortably above the generally accepted NAIRU for Australia of 5 per cent. With the unemployment rate staying above the NAIRU, it was questionable as to whether the expected lift in wages growth would occur.</p>
<p>Our view, based on offshore evidence, is that the NAIRU in this cycle is likely to be below 5 per cent, so even with this new lower unemployment forecast, it still seems a big call to expect sustained upward pressures on wages growth.</p>
<p>In July, the Bank noted the increase in short-term wholesale interest rates over recent months. However, it provided little guidance as to the implications. “It remains to be seen the extent to which these factors persist”. Fortunately, that sentence has been deleted, but, still, no real guidance is provided in the current statement. It is observed that retail deposit rates have not risen and some lenders have increased mortgage rates by small amounts. It would have been helpful for the Bank to have given its own view on the sustainability of this move and any implications from the associated tightening in financial conditions.</p>
<p>The Governor notes that “the drought has led to difficult conditions in parts of the farm sector”, but has not clarified whether these developments have any significant implications for risks and growth forecasts.</p>
<p>The August Statement has the benefit of an update on inflation developments. The June quarter inflation report was slightly below market expectations but not sufficient to alter the Bank’s views. Having said that, a literal interpretation of the sentence “the central forecast is for inflation to be higher in 2019 and 2020 than it is currently” would be that the forecasts for inflation in the August Statement on Monetary Policy are set to be lifted. The forecasts for underlying inflation in the May Statement on Monetary Policy were for underlying inflation to be 2 per cent in 2018 and 2 per cent in 2019. That outlook seems consistent with the June inflation report. We would be surprised if the forecast for underlying inflation in either 2018 or 2019 is lifted in the August SOMP.</p>
<p>One clue to this puzzle is that the Governor points out that headline inflation to the September quarter is likely to fall to 1 ¾ per cent. As such, the forecast for headline in the May SOMP of 2 ¼ per cent in 2018 and 2019 indicates a lift from the expected September reading. Such fluctuations in the headline number are unlikely to have any implications for policy.</p>
<p>In July, the Governor referred to “nation-wide measures of housing prices are little changed over the past six months”. The CoreLogic national index was actually down 1% and this index is now down by 1.2%. That sentence has not been repeated in the August Statement, although the easing in Sydney and Melbourne housing markets is confirmed. The Governor has also dropped the comment that “some further tightening of lending standards by banks is possible” and now makes the less controversial comment that lending standards are tighter than a few years ago.</p>
<p>There has been a significant change in the global commentary. In July, the Governor noted “the Chinese economy continues to grow solidly”. In this statement, that is replaced with “growth in China has slowed a little, with the authorities easing policy”.</p>
<p><strong>Conclusion</strong></p>
<p>Westpac has long held the view that the RBA cash rate will remain on hold over the course of 2018 and 2019.</p>
<p>In his statement, the Governor does not provide a convincing commentary that wage pressures can be expected to lift; the housing slowdown and the associated wealth effect will not be headwinds for the economy; any evidence that inflation pressures are likely to build; and why global developments are not pointing to some challenges for Australia. Consequently we see no reason to be persuaded to change our view that rates will remain on hold.</p>
<p><em>Bill Evans is the Chief Economist for Westpac</em></p>
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RBA remains on hold; with no apparent change in sentiment: Bill Evans

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<p>EXPERT OBSERVER</p>
<p>The minutes of the Reserve Bank Board’s July monetary policy meeting provide some significant additional colour around the Bank’s current thinking.</p>
<p>The main points of interest are: 1) a slightly more tentative tone around the outlook; 2) the reinstated line that the next cash rate move “would more likely be an increase than a decrease” but with a clearer qualification that this would not be any time soon; 3) expanded comments on the rise in bank funding costs, albeit without any strong conclusions; and 4) additional commentary about a ‘special paper’ prepared for the meeting on Australian household debt.</p>
<div>As to be expected, the main discussion was as per the Governor’s post-meeting decision statement: a little less positive on the global front, acknowledging uncertainty around trade policy abroad and rising short term wholesale interest rates locally, but assessing the Australian data flow as in line with the Bank’s above trend growth view, with a slightly firmer outlook for labour markets but key uncertainties still hanging on the outlook for the consumer.</div>
<div> </div>
<div>However, there were some notable shifts in the closing paragraphs of the ‘Considerations for Monetary Policy’ section, which sets out the decision rationale and framework for policy decisions going forward.</div>
<div> </div>
<div>Usually this just reprises the closing paragraphs from the Governor’s decision statement.</div>
<div> </div>
<div>However, the July minutes provide quite a bit more colour.</div>
<div> </div>
<div>The outlook comes across as a little more tentative – whereas the July decision statement and June minutes carried the simple line that: “Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual”, the July minutes couched this as something “Members continued to view the strengthening economy as likely to deliver”.</div>
<div> </div>
<div>The commentary provides a clearer framework for future policy as well.</div>
<div> </div>
<div>Back in April-May the minutes included a slightly surprising line that: “In the current circumstances, members agreed that it was more likely that the next move in the cash rate would be up, rather than down.” This line was dropped in the June minutes but reinstated in the July minutes.</div>
<div> </div>
<div>However, it was given an important qualifier that “since progress … was likely to be gradual, [members] also agreed there was no strong case for a near-term adjustment in monetary policy” and that “it would be appropriate to hold the cash rate steady … while this progress unfolds”.</div>
<div> </div>
<div>This brings the minutes into line with recent commentary from the RBA Governor, and in particular a speech on June 13 in which he noted that “the environment in which interest rates are increasing is also likely to be one in which people's incomes are growing more quickly than they are now”.</div>
<div> </div>
<div>The bottom line is that official rates are not moving up any time soon.</div>
<div> </div>
<div>One area of keen interest going into the minutes was how they would handle an expanded discussion of the rise in wholesale interest rates.</div>
<div> </div>
<div>The Governor’s decision statement had acknowledged that gains in recent months were due to more than just developments in the US but stopped short of describing the ‘other factors’ at work.</div>
<div> </div>
<div>The minutes go a little further, members noting the tendency for pressures to rise at the end of the quarter and that major bank funding costs had risen “a little over 2018”.</div>
<div> </div>
<div>While the Board clearly remains uncertain about how persistent these pressures will be, the phrasing and the consistent note that “the average mortgage interest rate on outstanding loans had been declining for some time” given more prominence in the minutes and Governor’s statements in recent months suggests the Bank is not overly concerned about the current situation.</div>
<div> </div>
<div>We look forward to a fuller assessment in the RBA’s August Statement on Monetary Policy.</div>
<div> </div>
<div>The July minutes included an extended discussion on Australian household debt levels, with a ‘special paper’ prepared for the meeting.</div>
<div> </div>
<div>Key points were fairly familiar although some comments were notable, in particular that “members recognised that a material share of household debt is held by lower-income households, which generally have higher debt relative to their income”.</div>
<div> </div>
<div>The same group however were seen as likely to have ‘asymmetric’ responses to interest rate moves –sensitive to increases but less likely to borrow more when rates fall.</div>
<div><strong> </strong></div>
<div><strong>Conclusion</strong></div>
<div><strong> </strong></div>
<div>There were many other points of interest in the remainder of the minutes, which were the longest in word count terms since the RBA began publishing full meeting minutes in 2006.</div>
<div> </div>
<div>Many of these were more optimistic than the comments we have singled out – household labour incomes and labour market vacancy rates for example were noted as positives domestically, as were the contributions from public sector activity, infrastructure investment, non-mining business investment more generally, a rise in the terms of trade and evidence of rising wage pressures in major economies abroad.</div>
<div> </div>
<div>Overall though the additional colour from the July meeting minutes again underscores that policy is firmly on hold. We remain of the view that the RBA will leave the cash rate unchanged throughout 2018 and 2019.</div>
<div> </div>
<div><em>Matthew Hassan is a Senior Economist at Westpac.</em></div>
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RBA's July board meeting confirms the cash rate isn't changing: Matthew Hassan

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<p>The fifth meeting of the Reserve Bank of Australia for 2018 saw no change in the official cash rate.</p>
<p>The central bank's last move saw it go to 1.5 percent at the August 2016 meeting, so rates have been held steady for 20 meetings.</p>
<p>It was 21 meetings ago that they last came down. </p>
<p>Almost every economist predicted another hold.</p>
<p>CoreLogic's head of research Tim Lawless said the weakness in the Australian economy meant the rate hold came at no surprise.</p>
<p>"The rate hold is of little surprise given some of the underlying weaknesses still prevalent in the Australian economy; a 0.4% decline in the Australian housing market in the year to May, weak wages growth (2.1%), high underemployment (8.3%) and core inflation at the lower bound of the RBA target range (2.0%)," Lawless said.</p>
<p>"Financial markets are not fully pricing in a rate hike until October 2019. That is despite the latest RBA forecasts suggesting headline inflation will reach 2.25% by the end of this year and unemployment will fall to 5.25%.  From a housing market perspective, a stable rate environment is positive. However, there is risk that mortgage rates could rise, regardless of the steady cash rate, due to higher funding costs being faced by lenders overseas. </p>
<p>'"At the end of May, standard variable mortgage rates for owner occupiers remained at their lowest level since 1965, averaging 5.2% and the average discounted rate is tracking even lower at 4.5%. The average three year fixed rate is lower yet again at 4.15%.  Even if mortgage rates do rise, they are still well below the twenty year average of 6.8%.  </p>
<p>"Despite mortgage rates being low, activity in the housing market has slowed since 2015. CoreLogic’s latest estimates indicate the number of settled residential property sales is down 7.7% year on year and transaction numbers are 15.1% lower relative to the recent 2015 peak.  Although interest rates are set to remain on hold for the time being, the availability of housing credit has tightened substantially, which is the primary driver of slower housing market activity and falling home values. </p>
<p>"The latest figures on housing credit show the monthly rate of growth, at 0.43% is the lowest since June 2013, dragged down mostly by less lending for investment purposes.  Credit policies are likely to remain tight, if not even tighter, with APRA advising lenders to focus more on reducing their exposure to high debt to income loans.</p>
<p>"As a result, we expect housing market conditions to continue their slow decline, at least from a macro perspective.  Since peaking in November last year, national dwelling values are down 1.1%. There are exceptions to this national picture, with dwelling values in Brisbane, Adelaide and Hobart at record highs.</p>
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jrobinson-rf4aSBido9

RBA keeps rates on hold for record 20th consecutive meeting

The changing nature of investment: RBA Governor Philip Lowe

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<p>The second meeting of the Reserve Bank of Australia for 2018 saw no change in the official cash rate.</p>
<p>The central bank's last move saw it go to 1.5 percent at the August 2016 meeting, so rates have been held steady for 17 meetings.</p>
<p>It was 18 meetings ago that they last came down. </p>
<p>It is the longest run of steady rates. Last rate decision was a run of were 17 meetings (inclusive) between their August 2013 meeting and December 2014 where they held at 2.5 percent. There was another run of 16 meetings between July 2002 and October 2003 where rates were held at 4.75 percent.</p>
<p>Almost every economist predicted a hold at the first meeting of the year.</p>
<p>Most don't foresee any change throughout much of 2018.</p>
<p>AMP Capital senior economist Shane Oliver said RBA will hike rates, but not yet.</p>
<p>"High levels of business confidence, strong jobs growth and the RBA’s forecasts for stronger growth and inflation point to eventual rate hikes.</p>
<p>"But against this, continuing very weak wages growth, sub-target inflation, the $A remaining too high and uncertainty around the outlook for consumer spending all argue for rates to remain on hold or even fall.</p>
<p>"So on balance it makes sense to continue to leave interest rates on hold."</p>
<p>For a full list of what the 33 experts in Finder.com.au's RBA Survey have to say on the RBA cash rate decision click here.</p>
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