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]

Joel Robinson

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

Central Element is seeking approval for a significant residential redevelopment in Lavender Bay, lodging plans for a dual-tower apartment project that would deliver 163 new homes on a prominent site at the northern gateway to Milsons Point.

The Sydney-based builder-developer has lodged a concurrent rezoning proposal and State Significant Development Application for <a href="https://www.apartments.com.au/new-apartments/64-66-lavender-street-lavender-bay-nsw-2060">64-66 Lavender Street and 3-7 Middlemiss Street</a>, a 2,305 sqm amalgamated site currently occupied by a collection of ageing residential flat buildings.

Designed by SJB, the proposal would replace the existing 32 apartments with two residential towers rising 23 and 32 storeys, comprising 163 apartments including affordable housing managed by a community housing provider. The project forms part of the NSW Government's Housing Delivery Authority program and has been progressing through a fast-tracked state planning pathway since being endorsed for further assessment in 2025.

The proposal is one of the most significant redevelopment opportunities currently under consideration on Sydney's lower north shore, sitting between the high-density towers of Milsons Point and the lower-scale heritage fabric of Lavender Bay.

<img alt="Lavender Bay" data-entity-type="file" data-entity-uuid="93ecf0ee-487d-4292-afc4-0bc9579475d6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-10%20at%209.30.48%E2%80%AFAM.png?VersionId=PunU2ipMaTxiJcJ8NdMyUlWA7d98eNUb" />

The planning proposal seeks a substantial uplift from the current 12 metre height limit, which would only allow for a four-storey building, however the submission argues a scheme within these limits would not be&nbsp;economically feasible given the complexity of site amalgamation and would fail to maximise housing delivery on land located within walking distance of major transport infrastructure.

SJB said the design evolved significantly following discussions with the Department of Planning, Housing and Infrastructure and independent design review processes.&nbsp;Rather than pursuing a single larger tower, the architects adopted a two-tower approach aimed at reducing perceived bulk, preserving view corridors and creating greater permeability at ground level.

The northern tower would rise 23 storeys and contain 81 apartments, while the southern tower would reach 32 storeys and accommodate 82 apartments. Five basement levels would provide 174 car spaces, 181 bicycle spaces and 10 motorcycle spaces.

"The proposal for 3–7 Middlemiss Street and 64–66 Lavender Street is driven by a clear ambition to complete the Middlemiss Peninsula, delivering the final piece of a carefully evolving urban precinct," SJB noted in its design report.

"Positioned at the threshold between Lavender Bay and the North Sydney CBD, the development is envisioned as a unifying element—one that completes the skyline composition while providing a considered and harmonious transition between the peninsula’s established character and the intensity of the CBD beyond.

"Collectively, the development aspires to create a landmark that is generous, inclusive, and deeply connected to its setting, one that enhances the skyline, strengthens the public realm, and contributes to a more equitable and sustainable urban future."

Communal spaces would be distributed across multiple levels, including landscaped podium gardens, swimming pool facilities, barbecue areas and rooftop-style retreat spaces designed for residents. The proposal delivers more than 1,500 sqm of communal open space and nearly 400 sqm of indoor communal facilities.

<img alt="Central Element" data-entity-type="file" data-entity-uuid="0671c276-6dd8-4cfc-97b0-134a45d2c8cf" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-10%20at%209.30.17%E2%80%AFAM.png?VersionId=90D7lRaCTMTsFx92tIBrHlZcuaV_a4cw" />

A major focus of the planning assessment has been the project's relationship with surrounding public open spaces.

Clark Park, Bradfield Park and Wendy Whiteley's Secret Garden are among the lower north shore's most valued public landscapes, and overshadowing impacts have been closely examined through the design process. Central Element is proposing to also create a new public plaza and pocket park as part of the development.

Central Element has been developing across Sydney since 2010.

They have recently completed their Chatswood tower, Ethos Chatswood, as well as their luxury redevelopment of Coogee's landmark Ballamac House. They are currently selling Pearl Bondi, just seven high-end homes, while future plans include a tower on Hyde Park, and a boutique project in Neutral Bay.

First look: Central Element reveals Lavender Bay apartment plans

cash rate

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Leading experts and economists are unanimous in expecting the cash rate will remain on hold at 2%, according to the comparison website, finder.com.au monthly survey.
All 33 commentators in the <a href="https://www.finder.com.au/rba-cash-rate" target="_blank">finder.com.au Reserve Bank Survey</a>, the biggest of its kind in Australia, believe there will be no change to the cash rate, with most of the panel citing an improving economy as the likely factor behind the RBA’s decision to keep the cash rate on hold.
However five of 33 are predicting a rate drop in February, the first Reserve Bank meeting of 2016 – Shane Oliver, AMP Capital; Richard Robinson, BIS Shrapnel; Paul Bloxham, HSBC; Matthew Peter QIC; and Noel Whittaker, QUT.
Around three in five experts surveyed (58%) are believing the cash rate will not rise for at least the next 12 months.
Experts were divided when it came to the future behaviour of house prices; while almost three in five experts (58 percent) are predicting property prices to rise in 2016, 29 percent believe prices will drop next year.
Some 38% of experts predict a decrease in demand for residential property in 2016, while 34% predict an increase in demand. Almost half of these experts (45%) are also expecting rents to rise next year, while 42% say rents will remain the same and 13% think the rental market could lose steam with rents to fall.
“This indicates that, regardless of demand, property prices as well as rent are expected to rise in value in 2016, which is great news for property owners but less so for those looking to break into the ever-competitive market,” Bessie Hassan at finder.com.au suggested.
“The message here is, it’s not expected to get any easier, which is why it’s more important than ever to make sure you do your homework when it comes to researching home loans. Jump online and compare interest rates and product offerings, and get a pre-approval to put yourself in the best position to become a property owner in 2016.”
What the experts had to say in the <a href="https://finder.com.au/" target="_blank">finder.com.au</a> Monthly Reserve Bank Survey:
Melissa Browne, A+TA: "I don't believe there's a case to cut rates at present and certainly no reason to move them upwards."
Shane Oliver, AMP Capital: "Reserve Bank has continued to express comfort with current levels in view of the rebalancing of the economy. Strong October jobs data have likely reinforced this.", "While I checked "house prices may keep rising" in question 6, I expect their rate of increase to slow significantly."
Garry Shilson-Josling, Australian Associated Press: "There is enough evidence that the long-awaited 'rebalancing' is under way for the RBA to sit back and wait.", "The RBA will be looking closely at the employment figures (released November 12). Most likely it will conclude that the labour market really is strengthening, and that while the big rise in employment in October rise incorporated some 'catch-up' from a suspiciously weak September figure, jobs growth may be trending now around 25,000 a month, up from about 16,000 a month over the year to June and 5,000 a month over the previous 12 months."
Peter Munckton, Bank of Queensland: "The RBA is comfortable with the current level of interest rates"
Steven Pambris, Bank Of Sydney: "Will need to refrain at this point as unemployment figures are showing signs of improvement, so will need to hold."
Richard Robinson, BIS Shrapnel: "Strong employment data in Oct and consumer confidence in Nov means they can wait."
Chris Caton, BTFG: "No reason to change."
Michael Blythe, CBA: "Economy does not need any additional stimulus."
Savanth Sebastian, Commsec: "Comfortable about how the economy is evolving. Lower inflation forecasts opens the door for a further rate cut but RBA in wait and see mode."
Dr Andrew Wilson, <a href="https://domain.com.au/" target="_blank">Domain.com.au</a>: "Better unemployment data, better stockmarket, waiting for US decision on interest rates."
Mark Brimble, Griffith University: "Bias remains to the downward movement, however insufficient support for a move at this stage. The equity markets are recovering, property remains buoyant, employment is holding... essentially it is a bit of a wait and see as the economy is delicately balanced."
Paul Williams, Heritage Bank: "Reserve Bank seems comfortable to adopt a wait and see approach to interest rates for the time being."
Shane Garrett, HIA: "Stronger employment numbers and modest inflation."
Paul Bloxham, HSBC: “We’re seeing rates hold at 2% [in December].”
Michael Witts, ING Bank: "The economy is heading in the right direction in terms of what the Reserve Bank is expecting. The recent labour force data means that the Reserve Bank will be on the sidelines for an extended period."
Stephen Koukoulas, Market Economics: "Earlier rate cuts and the low Aussie dollar is filtering into a pickup in economic activity. Further rate cuts are simply not needed.", "The economy is ending 2015 on a more positive note and while conditions globally are fragile, the prospects for the Australian economy to register 3% real GDP growth seem strong."
Peter Jones, Master Builders: "There is sufficient stimulus."
John Caelli, ME: "The Reserve Bank will keep the powder dry until they see very clear signs of the need to stimulate the economy. Stronger than expected employment data mean there is no compelling reason to cut rates in December."
Mark Crosby, Melbourne Business School: "No pressure to raise and with Fed likely to raise no reason to cut either.", "Property market pressures are likely to be localised. still strength in Sydney but weakness in Melbourne high rise."
Katrina Ell, Moody's Analytics: "The Reserve Bank seems comfortable on the sidelines with domestic demand gradually on the mend and the lower Australian dollar starting to do the heavy lifting getting the economy back on track."
Jessica Darnbrough, Mortgage Choice: "Consumer sentiment is currently sitting at it highest level since January 2014. Similarly, business conditions remain relatively robust, giving the Reserve Bank no immediate reason to change the current monetary policy setting."
Chris Schade, MyState Bank: "Conditions in the economy do not presently warrant a rate cut and indeed we've seen some promising signs of improvement recently. Whilst there are some risks to the downside in CY 2016, particularly in the back half, our read is the most likely scenario is that we have reached the bottom and the cash hold will remain on hold for most if not all of CY 2016."
Saul Eslake, independent economist : "Data released since the last meeting has further reduced the perceived need for providing further monetary policy stimulus to domestic demand."
Alan Oster, NAB: "Economy improving."
Peter Boehm, <a href="https://onthehouse.com.au/" target="_blank">onthehouse.com.au</a>: "There does not appear to be a pressing need to drop rates further. A steady as she goes approach would appear to be the prudent way to go to close out 2015. The housing market, inflation, unemployment, the Australian dollar’s exchange rate and the economic and business outlook all seem reasonably positive and a further rate reduction would be unlikely to yield much benefit and leave the Reserve Bank very little room to move if, in the unlikely event, it was deemed necessary to reduce rates further next year."
Linda Phillips, Propell Ltd A JLL Company: "The Reserve Bank must be comfortable with the exchange rate around US$0.71. House price rises in Sydney are slowing, which will be regarded as welcome, but growth is accelerating in Melbourne. While the global outlook is uncertain, it is expected that the Fed will soon start increasing US rates, which will limit the capacity for the Reserve Bank to move on the downside. Some domestic indicators such as unemployment are improving, and the Reserve Bank is reporting a somewhat better outlook. While the markets would like to see rates fall 25bp to offset the mortgage price hikes by the banks last month, on the whole it is likely that the Reserve Bank will be comfortable in waiting until February before making any decision to change rates… The level of volatility in global markets, problems of debt management in developing countries, the threat of expansion of the wars against IS, and uncertainty within the Euro-zone, the latest concern being Portugal, have the potential to upset the base case outlook of a slow but steady improvement in the economy. The risk of "black swan events" is rising, and volatility is likely to remain high."
Jonathan Chancellor, Property Observer: "It is timely to wait and see."
Matthew Peter, QIC: "Having not moved in November, the Reserve Bank will sit and wait for global and domestic developments. A February rate cut is still an option if global conditions deteriorate (especially if the Fed delays lift off)."
Noel Whittaker, QUT: "Mixed economic indicators. With mixed signals in the economy, I think the Reserve Bank is likely to sit pat."
Janu Chan, St.George Bank: "The Reserve Bank is encouraged by signs that the economy will continue to improve so it sees little need at this point to lower rates any further. "Housing market is still likely to face mixed conditions across the country."
Scott Haslem, UBS: "We recently (briefly) flirted with the notion the Reserve Bank could ease again, largely to offset regulatory-driven out-of-cycle hikes by banks. While Reserve Bank's Stevens recently assessed those moves to be worth about half a 25bp hike, it seems given recent better domestic data, including business/consumer confidence and solid jobs trends, the Reserve Bank sees the economy as able to 'cope' with that half-a-hike."
Nicki Hutley, Urbis: "On balance, monetary policy is sufficiently easy to continue to stimulate growth."
Bill Evans, Westpac: "Commentary on the labour market remains positive. Lead indicators such as job vacancies and advertisements continue to point to a lift in employment while there has been a “noticeable increase in the participation rate”. However these offsetting factors mean that the unemployment rate will not fall “for more than a year” before declining gradually."
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jchancellor-FAypfDUnLy

No December RBA rate cut: finder.com.au survey

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Moves by the Big Four banks to lift standard variable mortgage rates across owner occupier and investor mortgages may give the Reserve Bank enough reach to cut official interest rates in the near future, according to CoreLogic RP Data.
CoreLogic RP Data's latest Property Pulse said the latest CPI data also provides the RBA with the scope to cut official interest rates if they feel that it is necessary. 
"The ASX cash rate futures market is currently pricing in a 31% chance of an interest rate cut in November with an expectation that the cash rate will fall by 25 basis points by February next year," the report noted.
"Moves (by the Big Four banks) will act as a further disincentive to buyer demand across the housing market and will provide the RBA with scope to cut official interest rates further if required over the coming months."
"The RBA also likes to look at underlying inflation which strips out some of the more volatile items. The two measures of underlying inflation, the trimmed mean and weighted median, were both recorded at 0.3% over the quarter. Over the past year, the trimmed mean was recorded at 2.1% and the weighted median at 2.2% both of which are at the lower end of the RBA’s target range for inflation. Given this the latest CPI data provides the RBA with the scope to cut official interest rates if they feel that it is necessary."
 
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mick.cee-iDmgDDAmu8

Big Four moves may spur interest rate cut: CoreLogic RP Data

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GUEST OBSERVER
The September quarter CPI came in less than expected.
Headline inflation was 0.5% quarter on quarter resulting in annual inflation of just 1.5% year on year. This compared to a market consensus expectation for 0.7%qoq/1.7%yoy.
The statistical underlying measures of inflation (trimmed mean and median) rose just 0.3%qoq (compared to the market consensus of 0.5%qoq) with an average 2.15%yoy, which is at the low end of the RBA’s target range. 
Market goods and services excluding volatile items also just rose 0.4%qoq and just 1.7%yoy.
<a href="/images/2015/10/28/Screen%20Shot%202015-10-28%20at%2012.48.01%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/28/Screen%20Shot%202015-10-28%20at%2012.48.01%20PM.png" alt="">
While the impact of the fall in the $A is evident in some areas, eg international travel costs up 4.6%qoq, its very muted with tradeable prices up just 0.3%qoq and actually down 0.3%yoy or being offset by weakness elsewhere with non-tradeable inflation up just 0.4%qoq and 2.6%yoy.
In fact, what is particularly noticeable is general price weakness with, eg, weak food prices (+0.2%yoy) as supermarket competition continues, falling clothing prices (-1%yoy), very modest increases in rents (just +1.5%yoy), weak growth in household equipment (+1.8%yoy) and ongoing weakness or falls in prices for communication and electronic goods. The bottom line is that pricing power remains very weak reflecting constrained growth in retail sales and cautious consumer confidence.
The fact that inflation is lower than expected and below target despite a 20% plus fall in the value of the $A over the last year adds to the case for the RBA to cut the cash rate again in order to offset the potential negative impact on the economy of big bank mortgage rate hikes. I continue to expect the RBA to cut the cash rate by 0.25% when it meets next week or if not then, then sometime in the next few months.
 
<a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author" target="_blank">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home" target="_blank">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
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soliver-smf6LQXgW9

September quarter CPI came in less than expected: AMP Capital's Shane Oliver

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Consumer confidence rose 4% in October. This followed a similar bounce in the NAB business survey’s measure of confidence (from +1 to +5).
While the change in Prime Minister has provided a boost to confidence it has been pretty modest, leaving overall confidence pretty subdued. 
<a href="/images/2015/10/14/CRPNVnHUkAAvSgw.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/14/CRPNVnHUkAAvSgw.png" alt="">
The move by a major bank to increase its mortgage rates next month by 0.2% - for both owner occupiers and investors – is not particularly surprising as it flows from the rise in the cost of funding that will flow from higher capital requirements being imposed on the banks. Other banks may follow.
With growth stuck around 2% and the mining investment downturn only about half way through, the last thing the economy needs now is a rate hike for the 30-40% of households who have a mortgage given the threat it will pose to consumer spending.
The best way to avoid this is for the RBA to cut the official cash rate in order to offset the higher funding costs the banks now face. This may mean that there is only around a 0.05% pass through to mortgage holders from the banks (depending on what other banks choose to do) but it’s still better than a rate hike.
The case for the RBA to cut rates further was already in place – growth at 2% is well below trend, the contribution to growth from housing looks like topping out next year at a time when we are still only half way through the mining investment downturn, housing investor lending looks to be slowing as is the Sydney property market, inflation is benign and the $A is still too high. The bank move to raise mortgage rates for all borrowers only adds to it.
A November (Melbourne Cup Day) rate cut is looking more likely. If not then, then early next year.
<a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author" target="_blank">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home" target="_blank">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
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Australian confidence up - but only a bit: AMP Capital's Shane Oliver

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 The thinking behind yesterday's RBA cash rate is illustrated by today's RBA chart pack. Here's five that Property Observer suggests are helpful.
 
Chart 1 - <a href="/images/2015/07/08/cashrate1.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/07/08/cashrate1.jpg" alt="">
 
 
<a href="/images/2015/07/08/policy.jpg" target="_blank">Chart 2 - Click to enlarge</a>
<img src="/images/2015/07/08/policy.jpg" alt="">
 
Chart 3 - <a href="/images/2015/07/08/policyinterestrates.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/07/08/policyinterestrates.jpg" alt="">
 
<a href="/images/2015/07/08/fixedinterest.jpg" target="_blank">Chart 4 - Click to enlarge</a>
<img src="/images/2015/07/08/fixedinterest.jpg" alt="">
 
<a href="/images/2015/07/08/smallbusiness.jpg" target="_blank">Chart 5 - Click to enlarge</a>
<img src="/images/2015/07/08/smallbusiness.jpg" alt="">
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July 2015 RBA chart pack gives interest rate insights

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The RBA's cash rate was left unchanged at 2.00%, as expected. The post-meeting statement repeated much of the mantra of recent months, noting that a lower AUD was both 'likely and necessary' and that there are on-going concerns about Sydney's strong dwelling price rises. China and Greece barely rated a mention.
 The tone of the description of the local economy was slightly more positive, as they noted that the unemployment rate remained 'little changed recently'. There was no explicit guidance about the future path of monetary policy, with the RBA seemingly content to wait and watch and hope for a lower AUD. We expect the cash rate to be on hold in coming quarters.
Facts 
- The cash rate was held steady at 2.00% (as expected by all 27 economists in the Bloomberg survey). The market was pricing a 10% chance of cut just prior to the announcement. 
Implications 
The RBA announcement and statement had few surprises with the statement providing no explicit guidance about the future path of monetary policy. The central bank was content to, once again, end its comments by stating the obvious, that: 'information on economic and financial conditions to be received over the period ahead will inform the Board's assessment of the outlook and hence whether the current stance of policy'. 
Developments in Greece and the Chinese stock market barely rated a mention. Although the board is likely to have received a full briefing on both, the significant uncertainty about how the situations will play out and what they might mean for the macro-economy mean they are still part of the RBA's distribution of risks rather than part of any central forecast. 
Having delivered 50bp of cuts in the first half, we expect the RBA to be quite patient as they wait and watch to see the impact of these cuts on the economy. It is also clear that the RBA is hoping that the AUD will fall further and that this will be mechanism which loosens financial conditions, rather than them needing to cut rates and potentially push Sydney housing prices even higher. 
Recent falls in the AUD will no doubt be welcome, although today's statement suggests more falls are desired. Our own assessment is that the RBA would be more comfortable with the AUD around 68-70 US cents (currently 75 US cents). 
Paul Bloxham is chief economist Australia and New Zealand for HSBC. 
 
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On hold, waiting for the AUD to fall more: HSBC's Paul Bloxham

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As widely expected the Reserve Bank of Australia (RBA) decided again to leave the cash rate in a holding pattern for the seventh straight meeting although somewhat surprising the rhetoric was considerably different this time around.
Sydney is the elephant in the room with house prices jumping 15.6% in the last year according to RP Data, although I would add that this is a lazy way of explaining and defining the property markets across Sydney given they are all performing differently – some are hot and some are not.
Back to the RBA where in an extraordinary week we heard both Glenn Stevens and treasury secretary Martin Parkinson publicly declaring that Australia needs to be closely looking at and discussing taxes and government spending. Well not before time. We are fast drawing the conclusion that the elected ones in Canberra have absolutely no idea how to run a business – they appear to be the only ones who don’t believe that the rate of GST needs to be increased.
Reading between the lines there was a clear concern about what will be brought down in the May budget with a clear indication together with framed criticism by Glenn Stevens: “Put simply, there are things that we want to do as a society, and have voted for, that are not fully funded by taxes over the medium term, as is starting to become clear in the lead up to the May budget.”
<blockquote>
As strange as it might sound, I’m looking forward to seeing the cash rate increases.
</blockquote>
Personally I think it is fabulous when the likes of Messrs Parkinson and Stevens have the fortitude to publicly speak their minds by firing shots at the government on the eve of the budget. Let’s fill in a few gaps – NDIS and paid parental leave are the main culprits to which they were referring.
A perfect case in hand that should be at the forefront of the Abbott government's mind is that $16.2 billion Building and Education Revolution, the master class of the Rudd and Gillard terms which has now been condemned as an international case study of legislative and bureaucratic failure. Reading between the lines again, it would appear that Messrs Stevens and Parkinson are politely pointing out that the Australian economy can ill afford repeats of policy failures.
When you’ve been selling real estate for nearly 30 years, interest rates scare the living daylights out of you! And, as strange as it might sound, I’m looking forward to seeing the cash rate increases. Many economists are suggesting that this will happen in 2015 although I am of the opinion we will start seeing increases sooner rather than later with small increment increases.
<img src="/images/2014/04/07/simeon-april-7-one.jpg" alt="">
<img src="/images/2014/04/07/simeon-april-7-two.jpg" alt="">
<a href="https://www.smh.com.au/business/the-economy/housing-bubble-fears-property-prices-could-fall-10-to-20-per-cent-20140331-35sg7" target="_blank" title="Housing bubble fears: property prices could fall 10 to 20 per cent">Housing bubble fears: property prices could fall 10 to 20%</a> was an interesting piece by Christopher Joye although it lacks market definition. Yes, certain parts of the Australian real estate market are over inflated, those being the new suburbs crashing through the $1,000,000 mark for the very first time which will, as history has shown, be the hardest and fastest hit. By comparison the traditional markets such as Paddington, Mosman, Pymble and Bondi, for example, are tracking upwards although at nowhere near the pace of the hotspot suburbs.
I can see the cash rate moving from its current rate of 2.50% to 3.50% next year which will in time place a number of households under increasing financial pressure, although we have seen this happen time and time again. Most notably in the early 2000s the cash rate fell from 6.25% in <a href="https://www.rba.gov.au/statistics/cash-rate/cash-rate-1997-2001" target="_blank" title="September 2000 to 4.25 per cent in December 2001">September 2000 to 4.25% in December 2001</a>. We then witnessed dramatic market corrections in south-west Sydney as the cash rate started climbing to <a href="https://www.rba.gov.au/statistics/cash-rate/cash-rate-2008-2014" target="_blank" title="7.25 per cent in March 2008">7.25% in March 2008</a> where it then started being eased to where we find it today at 2.50%.
So what amazes me more is that currently we are seeing record numbers of investors entering the market, which can be best described as panic buying – investors now make up 40% of value of total housing loan approvals in NSW and Victoria. So when and where we do see property market corrections this is when we see the astute investors entering the market – the experienced ones are certainly keeping their powder dry.
What this does clearly identify is that politicians and investors pay very little attention to history where more often than not they become part of history.
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When it comes to interest rates investors should learn a bit from history

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The Reserve Bank has kept rates on hold today, at a record low 2.5%. While debate rages over what might happen next, it appears many are predicting a rise in the last quarter of the year.
RP Data's Tim Lawless noted that the housing market statistics are likely to be the factor causing the Reserve Bank some additional deliberation.
"Dwelling values were up 2.3% in March taking the cumulative increase in dwelling values to 15.8% over the current growth cycle which commenced in June 2012," he said.
"While the headline growth rate is very high, it is really Australia’s two largest cities, Sydney and Melbourne, which are responsible for driving such high capital gains.  Dwelling values are up 22% and 17% across these two cities since June 2012."
He noted that it's not just these capital gains that will be a concern, but the amount of investment in the market, with investors comprising 38% of all new housing finance commitments. The last time investor numbers were this strong was before the housing boom in 2003.
"Clearly the rate of value appreciation across the Australian housing market has been unsustainably strong over the short-term, however the national economy is seeing a great deal of benefit from the increased level of both developer and buyer confidence which the RBA is likely to see as a positive outcome from the currently exuberant housing market conditions," he said, pointing to a potential increase in the future if value growth continues along its current mark.
"If value growth continues along the current trajectory through I think the Reserve Bank will be forced to take action to quell the level of exuberance via higher interest rates," he said.
This ties in with Property Observer's previously reporting an <a href="/expert-insights/finance/borrowers-warned-of-interest-rate-hikes-by-late-2014">increasing number of economists pointing to a late-2014 increase</a>.
Meanwhile, L Janusz Hooker, deputy chairman of LJ Hooker, said that leaving the cash rate at 2.5% should assist prices stabilising following a year of growth. Hooker also siad that the rate easing cycle is over.
"We have been seeing the benefits of those cuts every weekend at open inspections, people are still out house hunting or looking for investment properties," said Hooker.
"Buyers know it is likely rates will be on the increase some time in the next year and are factoring it into their budget."
Michelle Hutchison, money expert for Finder.com.au said that it's cheaper than ever to switch home loans at present, making the RBA's decision to keep rates on hold good news for consumers.
"More lenders are waiving application fees now than they were three years ago, and coupled with the banning of early exit fees on variable home loans in 2011, it's now cheaper to refinance than what borrowers may think," said Hutchison.
"The average cost to switch now out of variable loans that charge these fees is $719 compared to almost $900 in 2011," she said, noting that borrowers shouldn't wait for any further cuts from the Reserve Bank before seeking out a better deal.
The lack of change today was <a href="/expert-insights/finance/paul-bloxham-expects-rba-to-keep-rates-on-hold-next-week">also predicted by HSBC's Paul Bloxham last week</a>.
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Reserve bank holds interest rates, but property prices make an increase likely

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Glenn Stevens' April statement:
At its meeting today, the Board decided to leave the cash rate unchanged at 2.5 per cent.
Growth in the global economy was a bit below trend in 2013, but there are reasonable prospects of a pick-up this year. The United States economy, while affected by adverse weather, continues its expansion and the euro area has begun a recovery from recession, albeit a fragile one. Japan has recorded a significant pick-up in growth. China's growth remains generally in line with policymakers' objectives, though it may have slowed a little in early 2014. Commodity prices have declined from their peaks but in historical terms remain high.
Financial conditions overall remain very accommodative. Long-term interest rates and most risk spreads remain low. Equity and credit markets are well placed to provide adequate funding, though for some emerging market countries conditions are considerably more challenging than they were a year ago.
In Australia, the economy grew at a below trend pace in 2013. Recent information suggests slightly firmer consumer demand over the summer and foreshadows a solid expansion in housing construction. Some indicators of business conditions and confidence have improved from a year ago and exports are rising. But at the same time, resources sector investment spending is set to decline significantly and, at this stage, signs of improvement in investment intentions in other sectors are only tentative, as firms wait for more evidence of improved conditions before committing to expansion plans. Public spending is scheduled to be subdued.
The demand for labour has remained weak and, as a result, the rate of unemployment has continued to edge higher. It will probably rise a little further in the near term. Growth in wages has declined noticeably. If domestic costs remain contained, some moderation in the growth of prices for non-traded goods could be expected over time, which should keep inflation consistent with the target, even with lower levels of the exchange rate.
<blockquote>
Credit growth is slowly picking up. Dwelling prices have increased significantly over the past year.
</blockquote>
Monetary policy remains accommodative. Interest rates are very low and savers continue to look for higher returns in response to low rates on safe instruments. Credit growth is slowly picking up. Dwelling prices have increased significantly over the past year. The decline in the exchange rate from its highs a year ago will assist in achieving balanced growth in the economy, but less so than previously as a result of the rise over the past few months. The exchange rate remains high by historical standards.
Looking ahead, continued accommodative monetary policy should provide support to demand, and help growth to strengthen over time. Inflation is expected to be consistent with the 2–3 per cent target over the next two years.
In the Board's judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates.
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Dwelling prices have increased significantly: RBA Governor Glenn Stevens

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The official cash rate set by the Reserve Bank of Australia has been at a historic low of 2.5% since August 2013. In line with that low rate, borrowers are paying less for home mortgages now than they have in over 15 years.
 <img src="/images/2014/03/28/zoe-march-28-one.jpg" alt="" style="line-height: 1.3em;"> 
Source: RBA
Lenders typically cut and lift mortgage interest rates roughly in line with the RBA’s movements, charging a margin over the official cash rates. Since late 2007, the extra amount of interest that consumers pay on a variable rate home loan above the official cash has been increasing.
Finder.com.au money expert Michelle Hutchison says lenders have been moving their rates out of cycle with the RBA and failing to pass on rate cuts in full, so the gap between the official cash rate and home loan rates available to borrowers has widened.
RBA data shows that the difference between the official cash rate and the mortgage managers’ basic variable rate – which approximates the average of interest rate actually available to borrowers – was fairly stable at just below 1 percentage point from September 1998 to September 2007. If that relationship still held true, home mortgages with variable interest rates of 3.5% and lower would be common in the market now.
In fact, RBA data shows that the mortgage managers’ basic variable rate was 5% in February 2014, a full 2.5 percentage points more than the official cash rate. Hutchison says the cheapest basic variable rate loan available is 4.49% for a $150,000 mortgage over 30 years from Loans.com.au.
 <img src="/images/2014/03/28/zoe-march-28-two.jpg" alt="">
Source: Reserve Bank of Australia
So, why aren’t headline lending rates lower?
Hutchison says one reason is that borrowers are letting lenders get away with charging more by not shopping around.
“If borrowers are not taking action and doing something about it by comparing home loans and switching to a better, cheaper deal, [lenders are] not going to do anything about it,” she says.
“There are hundreds of home loans on the market and the range of home loan prices is from 4.49% to over 9%. The best thing people can do is keep track of [interest rates]. Don’t sign up to a home loan and forget about it. Review your financial situation every year or two.” 
UBS interest rate strategist Matthew Johnson says few people pay the headline interest rates advertised by lenders. Advertised rates are higher in relation to the cash rate, but lenders have realised that people feel good about getting a discount. Those who are prepared to negotiate can get lower rates than the advertised rate.
Another key reason for the widening gap between the official cash rate and mortgage rates on offer to consumers is that the cost of funding and running a bank has gone up, Johnson says.
Two main sources of funding are available to lenders: financial markets and domestic deposits.
During the financial crisis, lenders found it very difficult and costly to borrow on financial markets as investors lost their appetite for risk. The banks were instead forced to tap local deposits to fund lending, using elevated interest rates on term deposits to lure consumers to save their cash.
As the chart below shows, the amount lenders had to offer on deposits over the cash rate increased dramatically from around 2007. Term deposit interest rates have fallen since mid-2012, but they are still high by historical comparisons. At-call savings account interest rates have remained above average.
<img src="/images/2014/04/01/zoe-april-1-one.jpg" alt="">
“Banks have shifted their funding base away from financial markets to domestic deposits. Banks have passed on a part of their increased funding costs to borrowers,” Johnson says.
Banks also consider credit risk associated with loans and the liquidity risk of funding long-term assets with short-term liabilities when setting interest rates, according to <a href="https://www.rba.gov.au/publications/bulletin/2014/mar/pdf/bu-0314-8.pdf" target="_blank">a report by the RBA</a>.
“Banks’ growth strategies, competitive pressures and the desire to provide a return to equity holders also affect banks’ lending rates,” the report noted.
“An important element in determining the overall cost of banks’ funding is the level of the cash rate, which acts as an anchor for the broader interest rate structure of the domestic financial system. Nevertheless, changes in the level of compensation demanded by investors to hold bank debt, competitive pressures and non-price factors can exert significant influences on banks’ funding costs.”
Johnson says the trend for lenders to charge a large premium over the cash rate will reverse as financial markets stabilise further and investors in financial instruments regain their appetite for risk.
House prices are rising and banks are well capitalised, easing investor concerns. Fund managers face a shortage of yield-producing assets. Under these conditions, and amid stabilising financial markets, demand will increase for yield-producing assets such as residential mortgage-backed securities (RMBS).
“That will again make securitisation [through RMBS] a viable funding strategy for the mortgage lenders,” Johnson says.
Non-bank lenders that lack the deposit-base of the big banks will be better able to compete as financial market funding costs fall, putting pressure on the banks to reduce their margins over the cash rate. 
But Johnson warns that might not lead to lower interest rates for consumers.
He says the wide margin between the RBA cash rate and mortgage rates is a big part of the story of why official interest rates are as low as they are now. The RBA has been compensating for the lenders’ higher costs, he says.
“If that [gap] goes back to 1%, then the official cash rate could rise,” Johnson says.
The RBA estimates in its report that even though funding costs have reduced over the past year, they are likely to remain close to 130 percentage points higher than they were before the global financial crisis.
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