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.

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.

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.

[smartcode_project:default project_id=7395 project_image_fid=278194]

<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.

"<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.

"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."

[smartcode_project:default project_id=7395 project_image_fid=278196]

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.

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.

"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;

"Every apartment was to feel considered, timeless, and highly functional."

[smartcode_project:default project_id=7395 project_image_fid=278195]

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.

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.

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.

"Buyers are looking for spacious, house-like apartments that allow them to downsize without feeling like they are sacrificing comfort or functionality," Hyecorp noted.

"They value large kitchens, generous living areas, ample storage, quality finishes, secure parking, lift access, and low-maintenance living."

[smartcode_project:default project_id=7395 project_image_fid=278204]

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.

Juliet is currently more than 75 per cent sold ahead of its anticipated completion in late 2026.

[smartcode_project_cta:default project_id=7395]

Joel Robinson

Juliet to sit quietly amid Roseville apartment boom

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.

<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.

The project will introduce a new retail and dining precinct at ground level, beneath 286 apartments.

[smartcode_project:default project_id=150017 project_image_fid=370959]

“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.

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.

[smartcode_project:default project_id=150017 project_image_fid=370964]

“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.

“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.”

[smartcode_project:default project_id=150017 project_image_fid=371430]

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.

Flourish Soleira will also feature the most extensive rooftop amenity offering ever delivered in Palm Beach.

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.

LPS Group is expected to start construction later this year.

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.

[smartcode_project_cta:default project_id=150017]

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

Are mortgage holders set to get a reprieve from the RBA in 2026?

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.

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.

“The next move in the cash rate is likely to be down, but the timing is uncertain," Dr Auld said.

"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.

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.

“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.”

Dr Auld said inflation risks and labour market outcomes would be important to watch.

“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.”

She said tighter financial conditions are expected to weigh on housing and activity.

“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.”

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

A local downsizer has splashed $6.5 million on a penthouse in Perifa's Alex &amp; Willow development in Crows Nest. 
&nbsp; 
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>. 
&nbsp; 
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. 
&nbsp; 
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.

[smartcode_project:default project_id=6680 project_image_fid=371325] 
&nbsp; 
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. 
&nbsp; 
“This is an exceptional outcome and a clear reflection of sustained buyer demand for premium, well-located downsizer product,” Mansour said.

“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.” 
&nbsp; 
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. 
&nbsp;&nbsp; 
Fabrizio Perilli, Managing Director of Perifa and Versatile Group, said the sale marks a defining moment for the project. 
&nbsp; 
“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; 
&nbsp; 
“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;

[smartcode_project:default project_id=6680 project_image_fid=338516] 
&nbsp; 
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;

Completion is slated for early 2027.

[smartcode_project_cta:default project_id=6680]

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

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.

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.

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.

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.

<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" />

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.

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.

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."

"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.

"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.

"The design proposal responds to its specific site conditions, acknowledging the vegetation, climate, wind conditions and solar access of the site."

The architecture responds directly to the site's position between Wollongong's urban core and its natural landscape setting.

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.

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.

<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" />

Urban Property Group secured the 11,000 sqm Smith Street site in 2022 and has since progressed plans for the broader Keira Place precinct.

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.

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.

"Today's groundbreaking is about turning approvals into homes and moving quickly to deliver much-needed housing in Wollongong's city centre," Elias said.

"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."

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>

&nbsp;

&nbsp;

&nbsp;

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

cash rate

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The RBA has released its February chart pack which contributed to their decision to leave cash rates on hold again at 1.5 percent.
The full pack can be <a href="http://www.rba.gov.au/chart-pack/pdf/chart-pack.pdf?v=2018-02-08-08-16-04" target="_blank">found here.</a> 
Household debt is still outstripping household prices.
Click here <a href="https://www.propertyobserver.com.au/images/2018/2/8/prices%20and%20debt.jpg" target="_blank">to enlarge.</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/8/prices%20and%20debt.jpg" alt="">
 
The CPI was lower than anticipated when the ABS released its inflation data last week.
Click here <a href="https://www.propertyobserver.com.au/images/2018/2/8/CPI.jpg" target="_blank">to enlarge.</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/8/CPI.jpg" alt="">
The gap between disposable income and household consumption isn't getting any closer.
Click here <a href="https://www.propertyobserver.com.au/images/2018/2/8/consumption.jpg" target="_blank">to enlarge.</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/8/consumption.jpg" alt="">
 
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j.ballantyne1990-6AQqhLzZaK

Three charts that guided the RBA to leave the cash rate unchanged

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The RBA considered these four charts to help in its determination of keeping the cash rate on hold at 1.5 percent earlier this week.
Household debt is at its peak, while interest being paid on households has begun a sharp decline.
Click here <a href="https://www.propertyobserver.com.au/images/2017/12/8/debt1.jpg" target="_blank">to enlarge.</a>
 
 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/12/8/debt1.jpg" alt="" style="font-size: 12.16px;">
 
Housing loan approvals are also near their peak, with the gap between owner occupiers and investors widening.
Click here <a href="https://www.propertyobserver.com.au/images/2017/12/8/approvals1.jpg" target="_blank">to enlarge.</a>
 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/12/8/approvals1.jpg" alt="">
Household net wealth is peaking, which will have made the RBA contemplate a rate raise.
Click here <a href="https://www.propertyobserver.com.au/images/2017/12/8/wealth2.jpg" target="_blank">to enlarge.</a>
 
 
 
 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/12/8/wealth2.jpg" alt="">
 
Housing prices are set to end the year in a downturn.
Click here <a href="https://www.propertyobserver.com.au/images/2017/12/8/prices1.jpg" target="_blank">to enlarge.</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/12/8/prices1.jpg" alt="">
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jrobinson-rf4aSBido9

Four housing charts that helped the RBA decide to hold rates

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GUEST OBSERVER
Slowly and calmly the RBA appears to be setting the scene for the possibility of cash rate rises.
There is clearly no urgency, but the central bank will want to keep its options open. Keep in mind, unlike many other central banks, the RBA does not give explicit forward guidance (that is, it does not indicate cash rate movements ahead of time). Instead, the commentary will just gradually shift to greater optimism about growth and inflation before the first hike is delivered.
Two speeches by RBA officials this month both suggested a mild shift in tone. Assistant Governor, Luci Ellis, gave a speech making it clear that global growth is picking up and that the recovery was expected to persist.
A day later, Governor Phil Lowe, gave a speech entitled, ‘The Next Chapter’, in which he explained that the mining cycle, which has dominated the local growth story in recent years, is almost done. Although Dr. Lowe was cautious, he was generally positive about the outlook, with Australia set to benefit from rising Asian middle class incomes.
At the same time, the timely local growth indicators remain strong. Surveyed business conditions are around decade highs and job creation has accelerated to its fastest pace since 2000 over the past six months. The fast pace of job creation is expected to continue, given the marked improvement in job advertisements, job vacancies, and surveyed employment intentions.
Exports are also set to be strong in H2, partly reflecting a bounce-back in coal shipments after weather-related disruptions in H1. In addition, infrastructure investment is ramping up. We are sticking by our call that GDP growth will pick-up to 3.3% y-o-y by the Q3 print, which is due in early December.
The challenge remains as to whether this lift in growth and employment will deliver a pick-up in wages growth and inflation. The next CPI print, which is due to be published on 25 October, will be the next key number on this front. We expect the RBA to be firmly on hold next week as it awaits the next inflation print.
On fixed income strategy, the risk that the RBA hikes sooner argues for elevated money market risk premium but curves should flatten, especially beyond 10 years. 
Rising activity and strong jobs growth 
Growth is picking up pace, driven by a collection of factors. First, the sharp decline in mining investment is coming to its end: less drag from this source is net positive for growth. Second, growth in services exports remains solid, LNG exports are ramping up, as new capacity comes on-line and coal exports are bouncing back after weather-related disruptions in H1.
Third, infrastructure investment is ramping up, led by urban road and rail projects, mainly in the south- eastern states. Finally, corporate profitability has improved, partly due to higher commodity prices, which is supporting a lift in surveyed business investment intentions.
The pick-up in growth is being reflected in strong surveyed business conditions, which have been around decade-highs in recent months (Chart 1). The lift in growth is also driving a strong pick-up in hiring, with job creation running at its fastest pace in 17 years over the past six months. Most of the jobs that have been created have also been full-time positions (Chart 2).
<a href="https://www.propertyobserver.com.au/images/2017/09/29/Screen%20Shot%202017-09-29%20at%2011.03.44%20AM.png" target="_blank">Click to enlarge</a>
 <img src="https://www.urban.com.au/images/2017/09/29/Screen%20Shot%202017-09-29%20at%2011.03.44%20AM.png" alt="">
The timely indicators, such as job advertisements and employment intentions, suggest jobs growth should continue in the coming months.
Wages growth is subdued, but for how long?
The challenge has been that, as yet, the improvement in the labour market has not driven a rise in wages growth (Chart 3). However, the wage price index has started to stabilise. Part of the explanation for weak wages growth may be factors that are also affecting other economies, such as: the changing nature of work due to technology; the continued effect of globalisation and offshoring; increased casualization of the workforce, and decreased unionisation (for more on these factors see Global Economics Quarterly: The Wage Conundrum, 22 June 2017). Much like in other countries, Australia’s Phillips curve – which suggests an inverse relationship between wages and unemployment – appears to have flattened (Chart 4).
<a href="https://www.propertyobserver.com.au/images/2017/09/29/Screen%20Shot%202017-09-29%20at%2011.04.52%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/29/Screen%20Shot%202017-09-29%20at%2011.04.52%20AM.png" alt="">
However, in Australia’s case there may also be some idiosyncratic factors at play. In particular, the large fall in commodity prices from 2011 to 2016 weighed on national incomes, which, in turn, flowed through to weak growth in unit labour costs (Chart 5). If this explains even some part of the slowdown in wages growth then the recent lift in commodity prices and boost to mining sector profitability should flow through to some lift in wages growth. The rise in profitability has also moved beyond the mining industry, which should also imply a pick-up in wages growth over time (see Downunder Digest; Show me the money, 20 April 2017).
<a href="https://www.propertyobserver.com.au/images/2017/09/29/Screen%20Shot%202017-09-29%20at%2011.08.07%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/29/Screen%20Shot%202017-09-29%20at%2011.08.07%20AM.png" alt="">
Next focus will be on the quarterly CPI print, as always
As is often the case, the October board meeting is expected to be rather dull, as it is only three weeks until we receive the all-important quarterly CPI print. The RBA is likely to flag that it is awaiting more information of prices to help firm up its view on how the economy is travelling.
The key will be the underlying measures of inflation – the trimmed mean and weighted median. These have already been showing a modest lift from the very low levels reached in mid-2016, when the RBA was forced to cut the cash rate to its current record low (Charts 7 and 8). Even a repeat of a modest print for the trimmed mean, of 0.5% q-o-q, would see underlying inflation back in the RBA’s 2-3% target band on a y-o-y basis. 
<a href="https://www.propertyobserver.com.au/images/2017/09/29/Screen%20Shot%202017-09-29%20at%2011.09.31%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/29/Screen%20Shot%202017-09-29%20at%2011.09.31%20AM.png" alt="">
RBA speeches and commentary 
As we reported last month, Governor Phil Lowe explicitly stated at a parliamentary testimony in August that it would be reasonable to assume that the ‘next rate move will be up rather than down’. This month brought another mild shift in tone from the RBA. Assistant Governor Luci Ellis gave a speech making it clear that the RBA expects the current recovery in global growth to continue. Governor Lowe then gave a speech suggest that Australia’s growth story is moving on to its ‘next chapter’, most of which was upbeat about Australia’s growth prospects while still acknowledging risks, such as Australia’s high household debt levels.
Governor Lowe has also been cautious about giving any indications on timing of any cash rate rise. He has noted repeatedly that it will be ‘some time’ before rates rise. We see this as typical RBA style. The RBA does not give explicit forward guidance. Instead it shifts the tone of its discussion about the outlook for growth and inflation and leaves it to the market to determine what it might mean for the cash rate setting.
Fixed income strategy: Earlier hikes equal flatter curves
We hold on to our flattening bias. Recent upbeat communication from the RBA implies a bold reaction function. As a result, and assuming the data holds up as our economists expect, investors should consider February and May meetings as ‘live’ (currently just 6bp and 16bp of cumulative hikes priced, respectively). The sticky pricing of a risk premium into the money market should keep 3yr government bond yields elevated with the potential to re-test the top of the 1.92-2.22% Q3 range (Chart 9).
<a href="https://www.propertyobserver.com.au/images/2017/09/29/Screen%20Shot%202017-09-29%20at%2011.11.17%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/29/Screen%20Shot%202017-09-29%20at%2011.11.17%20AM.png" alt="">
Yet, we are less concerned about a breakout at the long-end. In our view, 10yr yields close to the recent high of c.2.9% present a bullish signal given that level is consistent with 5yr5yr peaking around 3.5%, equal to neutral rate estimates. Also, the historic tendency for the curve to flatten sharply as the RBA hikes should be expected to repeat, especially given the rise in household’s leverage (see Little to fear for the long-end, 30 August). The potential for the curve to flatten is greatest beyond 10 years, where supply is supportive and the curve is steep, particularly vs. those markets that have already hiked rates (Chart 10). 
<a href="https://www.about.hsbc.com.au/hsbc-in-australia/management-team" target="_blank">PAUL BLOXHAM</a> IS CHIEF ECONOMIST (AUSTRALIA AND NEW ZEALAND) FOR HSBC.
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jchancellor-FAypfDUnLy

RBA on hold this month, waiting for Q3 CPI: Paul Bloxham

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The Reserve Bank of Australia says it estimates the neutral nominal cash rate would be around 200 basis points above its current level.
The comments were contained in minutes of the RBA’s July 4 policy meeting.
The RBA’s estimate suggests the cash rate target will need to rise from 1.50 per cent currently to 3.5 per cent over an unspecified time.
The neutral rate would be consistent with the economy operating at full capacity with inflation stable.
Capital Economics’ chief economist Paul Dales said the discussion of “neutral” rates “could be interpreted as a sign that the bank is starting to think” about raising interest rates from the current record low of 1.5 per cent.
It's going to be an interesting journey for home owners and investors.
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RBA board signals cash rate rise to 3.5pc

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GUEST OBSERVER
As expected, the Reserve Bank Board decided to leave the cash rate unchanged at 1.5 percent.
The minutes of the April Board meeting noted that “the Board judged that developments in the labour and housing market warranted careful monitoring over coming months”. It was therefore a little surprising that the Governor did not repeat that same sentiment in his statement.
Instead, the statement finished in the usual way “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”.
Possibly explaining this approach is a more confident assessment of the labour market. This comes in response to the March employment report which showed that full-time jobs increased by 74.5k and total jobs rose by 60.9k.
This one month report seems to have calmed concerns at the Bank. For example, in April the Governor commented that “indicators of conditions in the labour market have softened recently… the unemployment rate has moved a little higher and employment growth is modest”. In this statement, he notes that “the unemployment rate is expected to decline gradually over time” and employment growth has been a little stronger.
It is unlikely that we will be able to discern an improved outlook for the labour market in the Bank’s forecasts, which will be updated for the May Statement on Monetary Policy, to be released on September 5.
That is because the unemployment rate forecast is a rather timid “5-6 percent". As we predicted in the preview of the SoMP, it now seems likely that the key growth and inflation forecasts will remain unchanged from the February SoMP.
In the Governor’s statement today, he foreshadows that “growth is expected to increase gradually over the next couple of years to a little above 3 percent”. Note that the growth forecasts for the February SoMP are 2.5-3.5 percent for 2017 and 2.75-3.75 percent for 2018 (mid-points of 3 percent and 3.25%).
Similar comments can be made about the inflation forecasts. The Statement refers to underlying inflation running at “around 1.75 percent” and gradually increasing. The forecasts for underlying inflation in the February SoMP are 1.5-2.5 percent in both 2017 and 2018 (or 2 percent mid-point).
While the Governor clearly responded to the better than expected employment report, there is no change in the assessment of the housing market despite recent reports that house price growth in April was the weakest for sixteen months. He still worries that growth in household debt is outpacing household incomes and notes that “prices have been rising briskly in some markets”. As in April, he points out that recently announced supervisory measures should help address housing risks.
Commentary on other aspects of the domestic economy remains downbeat. Indeed, whereas in April, he referred to “non-mining business investment has risen over the past year”, he now talks about non-mining investment” remaining low as a share of GDP“.
Finally, commentary on the global economy is more confident than in April. He talks about a “broad based pick up in the global economy” whilst recognising that commodity prices have recently reversed.
Conclusion
Westpac has been forecasting that the official cash rate will remain on hold throughout 2017 and 2018. With our view that growth is likely to slow in 2018 under the weight of a contraction in the residential construction cycle and falling terms of trade, the case for raising rates in that year will prove to be fragile.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/">Westpac</a>. 
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Reserve Bank more confident about labour market: Bill Evans

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GUEST OBSERVER
While many media outlets paint a rather bleak and uncertain future for the world economy, long-term bond yields in Australia finished 2016 higher than at any other point throughout the year.
This is even more impressive considering that the cash rate (which has a strong correlation with bond yields) was cut twice for a total of 50 basis points over 2016. Figure 1 shows how much long-term rates increased towards the end of last year and into 2017. Yields on 10-year Australian government bonds have increased by 74 basis points since September and nearly 100 points since the last interest rate cut in August. 
Table 1 shows the difference between yields on 10-year government bonds and 90-day treasury bills in basis points (1 point = 0.01 percent). 
This tells a similar story to the graph in Figure 1; a widening between short-term and long-term rates. The important point is that this widening from August until December last year is driven by an increase in long-term yields rather than a cut in short-term rates, as it was from July to August.
 
<a href="https://www.propertyobserver.com.au/images/2017/02/16/Screen%20Shot%202017-02-16%20at%2012.31.05%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/02/16/Screen%20Shot%202017-02-16%20at%2012.31.05%20PM.png" alt="">
Often if the yield curve becomes too inverted, the RBA is forced to cut short term rates to improve liquidity by incentivising banks and other institutions to lend out money. 
An increase in long-term yields is a dream scenario for the Reserve Bank, as this is a signal of higher investor confidence and a better outlook for the Australian economy. 
December was also the first month since September 2014 that the entire yield curve was positive (long term rates above medium, and medium term rates above short term). This is a sign that investors expect improving economic condition in the long run. It also shows investors’ belief that the economy will do well over the next few years.
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The ASX Cash Rate Futures market pegs the chances of a decrease in official cash rates at the next meeting (7th March) at 5 percent. While this may seem appropriately low, it does highlight that even with a rising yield curve, investors still believe an interest rate cut is more likely than a hike in 2017. 
For more information from Secret Agent, <a href="https://secretagent.com.au/" target="_blank">click here</a>.
 
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Rate cut more likely than hike in 2017: Secret Agent

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GUEST OBSERVER
As expected the Reserve Bank Board decided to leave the cash rate unchanged at 1.50 percent.
With tomorrow’s prospect of a negative print for GDP growth in the September quarter, we were interested in whether that issue would be addressed in the Governor’s statement. To his credit he has done that by referring to “some slowing in the year ended growth rate is likely” but notes that growth is expected to pick up again in 2017.
In November the Bank released its forecasts that the economy would grow at close to potential in 2017 (forecast growth midpoint of 3 percent). It does not appear to have revised that view in this statement.
Indeed whereas in November the Governor’s statement recognised that commodity prices had risen, in December that increase is now assessed to “provide a boost to national income”.
The key policy sensitive areas of the labour market and housing are given the usual relatively extensive attention.
Overall, the assessment of the labour market appears to be a little less comfortable – the fall in the unemployment rate since December is qualified by “some measures of labour underutilisation are little changed.” Labour market indicators are still described as mixed with employment growth slowing but forward-looking indicators pointing to expansion in employment.
On the other hand, the commentary around housing is more upbeat. Conditions in the housing market are assessed to have strengthened with prices rising briskly in some markets. However, the statement does note that conditions vary considerably with prices falling in other markets.
Internationally, there is a hint of more confidence with “the outlook for inflation is more balanced than it has been for some time.” Most importantly, whereas the near term performance of China is better than expected a few months ago (our assessment), “medium-term risks to growth remain.”
Not surprisingly, the closing paragraph signals the ongoing neutral bias with: “the Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.”
Conclusion
Following the rate cut in May this year Westpac forecast that there would be a follow up cut in August and then rates would remain on hold throughout the remainder of 2016 and all of 2017. That was despite market pricing favouring more than one follow up cut in 2017.
Today’s statement further supports our long held view and given ongoing difficulties in the labour market the prospect of rate hikes in 2017, despite some developments in market pricing, seems remote.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>
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Uncertainty remains around the labour, housing markets: Westpac's Bill Evans

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The official cash rate is likely to fall to 1 percent or lower as a lack of fiscal policy from the government places the onus on lifting demand on a weaker currency and the RBA, Macquarie says. 
In a bearish note, the investment bank's head of economic research James McIntyre says that without government policy support – backed by a global fiscal boost, or substantive structural reforms in key trading partners such as China – the RBA will be forced to cut rates further as it fights disinflatio n.
"With weak income growth a demand boost is needed. A weaker currency or fiscal policy boost are the two available options," Mr McIntyre said.
"The recent budget projected continued fiscal consolidation and only forecast a modest contribution to growth from public demand."
Wage growth hit an 18-year low<a href="https://www.afr.com/markets/wage-growth-hits-new-18year-low-20160518-goxpit"> </a>in the March quarter, Australian Bureau of Statistics data showed this week.
Government support appears unlikely, and the currency is unlikely to fall on its own because global investors are drawn to the Australian dollar for its relatively high returns, given the ultra-low interest rates worldwide. 
The RBA will therefore be forced to slash the cash rate to 1 percent – a 75 basis-point fall from its current record low of 1.75 percent – or lower to keep a lid on the currency. It may have to cut even further to push the Aussie low enough to lift domestic demand, Mr McIntyre said. 
"The decline in the Australian dollar has helped to improve Australia's competitiveness whilst sustaining nominal price levels in the economy – although wages are adjusting lower," he said.
Bearish banks
But a further fall in the local currency to around US65¢ is necessary to assist the economy's adjustment beyond trade services, he said. The dollar is currently buying around US72¢.
The assessment is the most bearish among Australia's major banks. Commonwealth Bank of Australia, ANZ Banking Group and Westpac Banking Corporation all forecast a cut to 1.5 percent by the second quarter of 2017, according to a Bloomberg survey on May 6. But National Australia Bank has the rate remaining at 1.75 percent. 
Lower for longer interest rates would drive government bond yields lower, and Macquarie expects the 10-year bond yield to fall below 2 percent in the 2017 financial year.
On Monday<a href="https://www.afr.com/markets/australian-10year-bond-yield-at-lowest-ever-20160516-govw3q"> </a>the yield fell to 2.2 percent, its lowest level in more than a century, down from 2.55 percent ahead of the RBA's latest policy meeting, where the cash rate was cut to 1.75 percent.  
But the economy is still tipped to grow, and avoid a recession, Mr McIntyre said. 
Gross domestic product will grow at a rate of 2 to 2.5 percent, or "muddle through", helped by Australia's strong population growth and a one-off lift in resource export volumes that will generate 75 to 125 basis points of growth over the next three years. Outside of this boost, the economy will flatline. 
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RBA will be forced to cut interest rate to 1 percent or lower, Macquarie says

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Macquarie Securities, in a note to clients, has lowered its cash rate expectation to 1 percent, and its nominal 10-year bond yield forecast to below 2 percent.
Macquarie also downgraded its “year-end target on the ASX200 from 5900 to 5700” on the back of disappointing earnings expectations for 2016.
It believes the local currency will round off the year at around US67c.
Macquarie Group analysts believe the Reserve Bank will be forced to cut the cash rate three more times before the current easing cycle ends.
The group revealed its new outlook in a note yesterday saying its former risk case for a record low of 1 percent had now become its “base case” owing to more extreme inflation weakness than expected.
“We think that the RBA will have to cut the cash rate further, to at least 1 per cent, and have further delayed the timing of expected policy normalisation,” the note read.
“With little to differentiate Australia from other advanced economies, the risk lies with a slow and persistent grind to even lower rates.”
The group foresees just one more rate cut this year, likely in August, but expects a further two in 2017 in May and August.
A similar call came from JPMorgan last week, with its 1 percent forecast at the low end of the range among all other analysts.
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Macquarie sees interest rates at below 1 percent in 2017

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A majority of economists and experts say abolishing negative gearing would affect housing affordability in the future, according to a recent survey by leading comparison website finder.com.au.
The survey, released in the wake of Reserve Bank of Australia's recent decision to keep cash rates on hold at 2 percent, also revealed that the central bank's decision was expected. 
The cash rate has been on pause for almost a year with the last change – a cut – occurring in May 2015.
On the topic of negative gearing, 65 percent of respondents said there was a chance that eliminating negative gearing would result in a drop in property prices, with 23 percent predicting a "significant" drop of over 5 percent.
However, when looking at the effect of removing negative gearing on the market overall, a total of 30 percent thought that this had a some chance or a slight chance of increasing the likelihood of a significant market contraction, or triggering the collapse of a "housing bubble". The remaining 70% of economists said it would not trigger a market contraction. A third (33 percent) said there was no housing bubble in the Australian market.
On the brighter side, a softening of property prices combined with record low interest rates could encourage more first home buyers into the market, according to Bessie Hassan, money expert at finder.com.au.
In addition, the size of Australian mortgages continues to fall, hitting a low of $372,400 in January, dropping from an all-time high of $386,300 in November 2015, indicating uncertainty in the market – which could play out in first home buyers' favour. The average loan size for first time buyers has fallen from $355,500 in October 2015 to $338,800 in January.
"For those first home buyers who have been priced out of the property market to date, now may be their chance to get their foot on the ladder," Hassan said.
"A decline in average national mortgage size shows that borrowers are feeling less comfortable within the low rate environment than they were months ago, and are therefore borrowing less money to buy.
"All borrowers need to remember that these record low interest rate are not here to stay. If and when rates rise, this will lead to higher repayments – approximately $50 per month more for a $300,000 loan size, and thousands of dollars more over the life of your loan.
"Before jumping into the property market, do your research and factor in a buffer of 2-3 percent to accommodate for future rate rises, so you're not stung with a nasty shock months into becoming a homeowner."
The survey, the biggest of its kind, according to finder.com.au, revealed that 34 of 35 leading economists and experts (97 percent) had predicted that RBA would hold rates.
Hassan added that the majority of experts believed the economy was still tracking well and there would be no movement for the rest of the year.
"60 percent (21 experts) forecast the cash rate will hold at 2 percent for the rest of the year, while 20 experts are predicting a rate rise – but not until 2017 at earliest."
Just three experts (9 percent) expect a fall beyond 2016.
Of the economists (31) who weighed in on how low the cash rate would drop this cycle, 52% (16) said it would drop no lower than its current value. Twenty-nine percent (9 experts) predicted a low of 1.75 percent, and 19 percent (6) forecast the rate to drop to 1.50 percent or lower.
 
<a href="/images/2016/04/28/Screen%20Shot%202016-04-28%20at%202.33.27%20PM.png" target="_blank">Click to enlarge</a>
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