Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

Mortgages

<html><body>
All 30 panelists in the monthly Finder.com.au survey of the RBA rate decision suggested the central bank will hold at the November 2017 meeting.
There reasons are below:
Jordan​ ​Eliseo,​ ​ABC​ ​Bullion:​ ​(Hold)​ "Despite​ ​concerns​ ​about​ ​a​ ​slowdown​ ​in​ ​retail​ ​sales​ ​growth over​ ​the​ ​last​ ​few​ ​months​ ​-​ ​the​ ​RBA​ ​still​ ​appear​ ​confident​ ​in​ ​the​ ​outlook​ ​for​ ​the​ ​Australian economy,​ ​though​ ​their​ ​rhetoric​ ​around​ ​tightening​ ​policy​ ​has​ ​changed​ ​appropriately.​ ​We​ ​still see​ ​the​ ​next​ ​move​ ​as​ ​down,​ ​but​ ​it​ ​will​ ​not​ ​come​ ​until​ ​Q1​ ​2018​ ​at​ ​the​ ​earliest." 
Tim​ ​Nelson,​ ​AGL​ ​Energy:​ ​(Hold)​ "Little​ ​change​ ​in​ ​conditions." 
Shane​ ​Oliver,​ ​AMP​ ​Capital:​ ​(Hold)​ "RBA​ ​expectations​ ​for​ ​stronger​ ​growth​ ​ahead,​ ​high​ ​levels of​ ​business​ ​confidence​ ​and​ ​strong​ ​employment​ ​growth​ ​all​ ​argue​ ​against​ ​a​ ​rate​ ​cut.​ ​But​ ​a slowdown​ ​in​ ​the​ ​housing​ ​cycle,​ ​risks​ ​around​ ​consumer​ ​spending,​ ​weak​ ​wages​ ​growth​ ​and inflation​ ​and​ ​the​ ​too​ ​high​ ​Australian​ ​dollar​ ​argue​ ​against​ ​a​ ​rate​ ​hike.​ ​So​ ​the​ ​most​ ​likely outcome​ ​is​ ​rates​ ​remaining​ ​on​ ​hold​ ​-​ ​out​ ​to​ ​late​ ​2017​ ​at​ ​least." 
Paul​ ​Dales,​ ​Capital​ ​Economics:​ ​(Hold)​ "The​ ​economy​ ​and​ ​inflation​ ​are​ ​not​ ​strong​ ​enough​ ​to warrant​ ​higher​ ​interest​ ​rates,​ ​but​ ​nor​ ​are​ ​they​ ​weak​ ​enough​ ​to​ ​justify​ ​lower​ ​interest​ ​rates.​ ​" 
Michael​ ​Blythe,​ ​CBA:​ ​(Hold)​ "Low​ ​inflation​ ​means​ ​[there​ ​is]​ ​no​ ​rush​ ​to​ ​act." 
Peter​ ​Gilmore,​ ​Gateway​ ​Credit​ ​Union:​ ​(Hold)​ "Looks​ ​like​ ​we​ ​are​ ​in​ ​an​ ​inflation​ ​trap." 
Scott​ ​Morgan,​ ​Greater​ ​Bank:​ ​(Hold)​ "Domestic​ ​economic​ ​data​ ​is​ ​mixed​ ​and​ ​does​ ​not​ ​yet support​ ​a​ ​move." 
Mark​ ​Brimble,​ ​Griffith​ ​Uni:​ ​(Hold)​ "Economy​ ​is​ ​still​ ​struggling​ ​to​ ​gather​ ​any​ ​meaningful moment." 
Shane​ ​Garrett,​ ​Housing​ ​Industry​ ​Association:​ ​(Hold)​ ​"No​ ​need​ ​to​ ​increase​ ​rates​ ​at​ ​this​ ​time: economic​ ​growth​ ​has​ ​to​ ​have​ ​enough​ ​space​ ​to​ ​recover​ ​to​ ​its​ ​trend​ ​rate​ ​and​ ​inflationary pressures​ ​are​ ​weaker​ ​than​ ​expected." 
Paul​ ​Bloxham,​ ​HSBC:​ ​(Hold)​ "Inflation​ ​is​ ​still​ ​below​ ​target." 
Alex​ ​Joiner,​ ​IFM​ ​Investors:​ ​(Hold)​ "Economic​ ​signals​ ​are​ ​mixed,​ ​especially​ ​outside​ ​the​ ​labour market.​ ​Added​ ​to​ ​this​ ​inflationary​ ​pressures​ ​are​ ​subdued​ ​and​ ​wages​ ​growth​ ​are​ ​anticipated​ ​to remain​ ​soft." 
Michael​ ​Witts,​ ​ING​ ​Bank:​ ​(Hold)​ "The​ ​RBA​ ​is​ ​comfortable​ ​with​ ​the​ ​current​ ​setting​ ​of​ ​rates​ ​and does​ ​not​ ​appear​ ​to​ ​be​ ​in​ ​a​ ​rush​ ​to​ ​change​ ​the​ ​policy​ ​settings.​ ​the​ ​low​ ​CPI​ ​print​ ​supports​ ​a further​ ​extension​ ​of​ ​stable​ ​rates." 
Leanne​ ​Pilkington,​ ​Laing+Simmons:​ ​(Hold)​ "Recent​ ​data​ ​pointing​ ​to​ ​flat​ ​price​ ​growth​ ​and subdued​ ​clearance​ ​rates​ ​reinforce​ ​the​ ​case​ ​for​ ​a​ ​hold​ ​decision.​ ​Of​ ​course,​ ​the​ ​housing​ ​market is​ ​more​ ​complicated​ ​than​ ​this,​ ​with​ ​different​ ​suburban​ ​markets​ ​performing​ ​according​ ​to​ ​their own​ ​fundamentals." 
Matthew​ ​Tiller,​ ​LJ​ ​Hooker:​ ​(Hold)​ "Despite​ ​strong​ ​employment​ ​numbers,​ ​inflation​ ​and​ ​wage growth​ ​remain​ ​soft.​ ​Property​ ​price​ ​growth​ ​has​ ​moderated,​ ​relieving​ ​pressure​ ​on​ ​the​ ​RBA​ ​to shift​ ​rated." 
Stephen​ ​Koukoulas,​ ​Market​ ​Economics:​ ​(Hold)​ "RBA​ ​will​ ​continue​ ​to​ ​ignore​ ​weak​ ​inflation and​ ​wage​ ​results​ ​and​ ​instead​ ​create​ ​a​ ​perception​ ​of​ ​concerns​ ​about​ ​financial​ ​stability.​ ​A​ ​rate cut​ ​is​ ​long​ ​overdue.” 
John​ ​Caelli,​ ​ME:​ ​(Hold)​ "The​ ​RBA​ ​has​ ​signalled​ ​the​ ​next​ ​move​ ​will​ ​be​ ​up." 
Michael​ ​Yardney,​ ​Metropole​ ​Property​ ​Strategists:​ ​(Hold)​ "Our​ ​housing​ ​markets​ ​have​ ​slowed down,​ ​so​ ​there​ ​is​ ​no​ ​need​ ​for​ ​the​ ​RBA​ ​to​ ​raise​ ​rates,​ ​and​ ​even​ ​though​ ​inflation​ ​is​ ​below​ ​target and​ ​the​ ​economy​ ​is​ ​flat,​ ​they​ ​dare​ ​not​ ​lower​ ​rates​ ​in​ ​fear​ ​of​ ​fuelling​ ​the​ ​property​ ​markets." 
Mark​ ​Crosby,​ ​Monash​ ​University:​ ​(Hold)​ "Pressures​ ​to​ ​cut​ ​rates​ ​have​ ​diminished​ ​to​ ​near zero,​ ​so​ ​the​ ​question​ ​now​ ​is​ ​on​ ​the​ ​timing​ ​of​ ​rate​ ​increases​ ​-​ ​which​ ​should​ ​hinge​ ​on international​ ​developments." 
Jessica​ ​Darnbrough,​ ​Mortgage​ ​Choice:​ ​(Hold)​ "The​ ​domestic​ ​and​ ​international​ ​economies are​ ​starting​ ​to​ ​show​ ​signs​ ​of​ ​improvement,​ ​which​ ​could​ ​encourage​ ​the​ ​Reserve​ ​Bank​ ​to​ ​lift the​ ​cash​ ​rate​ ​at​ ​some​ ​point​ ​over​ ​the​ ​coming​ ​months.​ ​That​ ​said,​ ​for​ ​right​ ​now,​ ​inflation​ ​remains below​ ​target,​ ​which​ ​will​ ​no​ ​doubt​ ​lead​ ​the​ ​Board​ ​to​ ​leave​ ​the​ ​official​ ​cash​ ​rate​ ​on​ ​hold.​ ​" 
Chris​ ​Schade,​ ​MyState​ ​Bank:​ ​(Hold)​ "The​ ​economy​ ​is​ ​showing​ ​some​ ​promising​ ​signs, including​ ​the​ ​drag​ ​on​ ​growth​ ​from​ ​the​ ​unwinding​ ​of​ ​the​ ​mining​ ​investment​ ​boom​ ​being​ ​near its​ ​end,​ ​business​ ​confidence​ ​and​ ​conditions​ ​solid,​ ​strong​ ​levels​ ​of​ ​public​ ​infrastructure​ ​work, dwelling​ ​construction​ ​plateauing​ ​as​ ​opposed​ ​to​ ​declining,​ ​and​ ​quite​ ​high​ ​levels​ ​of​ ​job creation.​ ​There​ ​remain​ ​some​ ​weak​ ​spots​ ​however​ ​(e.g.​ ​wage​ ​growth,​ ​consumer​ ​confidence​ ​in their​ ​personal​ ​finances),​ ​and​ ​some​ ​areas​ ​of​ ​the​ ​economy​ ​that​ ​are​ ​in​ ​transition​ ​(e.g.​ ​housing market​ ​following​ ​numerous​ ​regulatory​ ​changes​ ​-​ ​albeit​ ​localised​ ​conditions​ ​vary​ ​widely). 
Overall,​ ​while​ ​it​ ​appears​ ​the​ ​economy​ ​is​ ​on​ ​the​ ​right​ ​track,​ ​the​ ​RBA​ ​will​ ​likely​ ​continue​ ​to​ ​hold the​ ​cash​ ​rate​ ​at​ ​1.5%​ ​and​ ​allow​ ​the​ ​economy​ ​some​ ​more​ ​time​ ​to​ ​develop.​ ​On​ ​current information,​ ​it​ ​would​ ​seem​ ​probable​ ​the​ ​RBA​ ​will​ ​hike​ ​in​ ​2018,​ ​most​ ​like​ ​the​ ​second​ ​half." 
Saul​ ​Eslake:​ ​(Hold)​ "The​ ​RBA's​ ​made​ ​it​ ​clear​ ​that​ ​it​ ​has​ ​no​ ​desire​ ​to​ ​cut​ ​rates​ ​further​ ​in​ ​the absence​ ​of​ ​any​ ​currently​ ​unforeseen​ ​negative​ ​shocks;​ ​while​ ​the​ ​data​ ​flow​ ​since​ ​the​ ​last meeting​ ​won't​ ​have​ ​done​ ​anything​ ​to​ ​prompt​ ​the​ ​RBA​ ​to​ ​bring​ ​forward​ ​any​ ​thoughts​ ​about tightening.​ ​In​ ​particular,​ ​the​ ​slightly​ ​lower-than-expected​ ​inflation​ ​outcomes​ ​for​ ​Q3​ ​have​ ​left 'underlying'​ ​inflation​ ​still​ ​below​ ​the​ ​RBA's​ ​target​ ​range." 
Jonathan​ ​Chancellor,​ ​Property​ ​Observer:​ ​(Hold)​ "The​ ​recent​ ​decisions​ ​of​ ​central​ ​bank​ ​board and​ ​other​ ​regulatory​ ​authorities​ ​may​ ​have​ ​faded​ ​in​ ​time,​ ​but​ ​are​ ​still​ ​working​ ​their​ ​way through​ ​the​ ​economy,​ ​so​ ​no​ ​need​ ​just​ ​yet​ ​for​ ​any​ ​fresh​ ​adjustment." 
Matthew​ ​Peter,​ ​QIC:​ ​(Hold)​ "The​ ​lack​ ​of​ ​inflation​ ​pressure​ ​takes​ ​out-of-play​ ​any​ ​chance​ ​of rate​ ​hikes​ ​over​ ​coming​ ​months.​ ​Rate​ ​cuts​ ​are​ ​off​ ​the​ ​table​ ​unless​ ​the​ ​labour​ ​market​ ​slumps and​ ​the​ ​housing​ ​market​ ​has​ ​showed​ ​sustains​ ​signs​ ​of​ ​cooling." 
Noel​ ​Whittaker,​ ​QUT:​ ​(Hold)​ ​"The​ ​housing​ ​boom​ ​is​ ​tapering​ ​off​ ​–​ ​there​ ​is​ ​no​ ​reason​ ​to​ ​raise rates​ ​to​ ​stifle​ ​demand." 
Nerida​ ​Conisbee,​ ​REA​ ​Group:​ ​(Hold)​ ​"Economy​ ​still​ ​not​ ​strong​ ​enough​ ​to​ ​increase​ ​and housing​ ​too​ ​volatile​ ​to​ ​cut." 
Janu​ ​Chan,​ ​St.George​ ​Bank:​ ​(Hold)​ ​"RBA​ ​is​ ​becoming​ ​increasingly​ ​optimistic​ ​in​ ​regards​ ​to the​ ​labour​ ​market​ ​and​ ​a​ ​recovery​ ​in​ ​non-mining​ ​investment.​ ​However,​ ​low​ ​inflation,​ ​slow wage​ ​growth,​ ​spare​ ​capacity​ ​still​ ​evident​ ​within​ ​the​ ​labour​ ​market​ ​suggests​ ​the​ ​RBA​ ​is​ ​still​ ​a way​ ​from​ ​raising​ ​rates." 
Brian​ ​Parker,​ ​Sunsuper:​ ​(Hold)​ "Not​ ​enough​ ​has​ ​changed​ ​in​ ​the​ ​last​ ​month​ ​for​ ​them​ ​to change​ ​course​ ​at​ ​this​ ​point." 
John​ ​Hewson,​ ​UNSW:​ ​(Hold)​ ​"Economic​ ​signs​ ​point​ ​to​ ​the​ ​cash​ ​rate​ ​staying​ ​where​ ​it​ ​is​ ​for quite​ ​a​ ​while,​ ​perhaps​ ​even​ ​for​ ​the​ ​next​ ​twelve​ ​months​ ​or​ ​more." 
Clement​ ​Tisdell,​ ​UQ-School​ ​of​ ​Economics:​ ​(Hold)​ ​"An​ ​increase​ ​may​ ​have​ ​a​ ​negative​ ​impact on​ ​economic​ ​sentiment​ ​at​ ​a​ ​time​ ​when​ ​the​ ​housing​ ​market​ ​effects​ ​have​ ​to​ ​be​ ​carefully managed." 
Other​ ​participants: 
Bill​ ​Evans,​ ​Westpac:​ ​(Hold) 
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j.ballantyne1990-6AQqhLzZaK

RBA tipped to hold at 2017 Cup Day rate meeting

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<a href="https://theconversation.com/profiles/justin-malbon-110917" target="_blank">Justin Malbon, Monash University</a>
The <a href="https://sjm.ministers.treasury.gov.au/media-release/110-2017/" target="_blank">federal government will be forcing banks</a> to hand over half their credit data ready for reporting by mid-2018 (with the remainder available in 2019).
It seems rather quaint in the age of big data that the big four banks have been able to hold onto their treasure troves of loan data for so long. This data reveals how reliable we are at repaying our loans. This information is gold to a lender.
For the government’s proposed legislation to work well, it would need to ensure effective regulatory systems are in place to protect our data and avoid more mortgage stress. To achieve this, lessons need to be learned from the US experience.
The new legislation on credit data promises to open up the consumer credit market to increased competition. This may in turn lead to cheaper loans.
Nimble competitors using new technologies could offer consumers innovative loan products at competitive interest rates. Non-traditional lenders could aggressively expand their market share at the expense of the banks. Consumers would seem to be the beneficiaries.
<h2>Lessons from the global financial crisis</h2>
Australia has long maintained one of the most restrictive <a href="https://books.google.com.au/books?hl=en&amp;lr=&amp;id=if2xjLv74HYC&amp;oi=fnd&amp;pg=PA273&amp;dq=J+Barron+and+M+Staten+%E2%80%98The+Value+of+Comprehensive+Credit+Report:+Lessons+from+the+US+Experience%E2%80%99+in+Credit+Reporting+Systems+and+the+International+Economy+(MIT+Press,+Cambridge+Mass,+2003)+&amp;ots=uD2_nMsTmX&amp;sig=NcDHHieq7GRoeLAbY_lYdMrYmcI#v=onepage&amp;q&amp;f=false" target="_blank">credit reporting systems amongst OECD countries</a>. Australia’s reporting system had only allowed credit reporting agencies such as Equifax and Dun and Bradstreet to report on consumers’ bad credit histories. These histories include things such as bankruptcies, and late loan and rental repayments.
The US system already has required reporting of the positive aspects of a consumer’s credit behaviour, including their timely loan repayments. This has enabled companies to develop statistical scoring models to estimate a consumer’s loan default risk with remarkable accuracy. Credit scoring became the cornerstone for underwriting <a href="https://books.google.com.au/books?hl=en&amp;lr=&amp;id=if2xjLv74HYC&amp;oi=fnd&amp;pg=PA273&amp;dq=J+Barron+and+M+Staten+%E2%80%98The+Value+of+Comprehensive+Credit+Report:+Lessons+from+the+US+Experience%E2%80%99+in+Credit+Reporting+Systems+and+the+International+Economy+(MIT+Press,+Cambridge+Mass,+2003)+&amp;ots=uD2_nMsTmX&amp;sig=NcDHHieq7GRoeLAbY_lYdMrYmcI#v=onepage&amp;q&amp;f=false" target="_blank">decisions for consumer loans</a>.
Unsurprisingly, this led to intense competition. With more accurate data, lenders no longer had to assume that low income consumers represented a higher risk of defaulting on their loans.
With customer loan histories being made available to competitors, low income consumers with a history of being reliable repayers were offered loans. As competition intensified, an ever-expanding <a href="https://www.emeraldinsight.com/doi/abs/10.1108/S0733-558X%282010%29000030A008" target="_blank">sub-prime loan mortgage market developed</a>. Shoddy loan practices became rife, setting the stage for the 2008 global financial crisis.
Australian households overall are <a href="https://www.imf.org/en/Publications/GFSR/Issues/2017/09/27/global-financial-stability-report-october-2017" target="_blank">already heavily in debt</a>. Intense competition resulting from the proposed new legislation risks pushing households deeper into debt. Low income consumers risk becoming more vulnerable to falling into debt traps.
Partly in response to the global financial crisis, Australia introduced responsible lending obligations on lenders, which are designed to stop loans to consumers who lack the capacity to repay them. However, the US subprime experience showed that lenders became adept at dodging the rules, and regulators <a href="https://global.oup.com/academic/product/the-subprime-virus-9780195388824?cc=au&amp;lang=en&amp;" target="_blank">appeared to lack the will to enforce them</a>. The regulators will need to be particularly vigilant to avoid this occurring in Australia.
Compelling the big banks to release loan histories to third parties, such as credit reporting agencies, raises further risks that need to be closely attended to. Lenders will either create their own credit scoring models from the data provided by the banks, or rely on the scores produced by credit reporting agencies.
A bad or inaccurate score will have serious implications for a consumer. They may either be refused loans, or only be offered interest rates that are higher than if their score had been accurate.
There needs to be effective systems in place to ensure consumers have ready access to their score, and that they be able to challenge any inaccuracies. Informational transparency should apply for the benefit of both lenders and consumers.
Yet another risk is that our personal loan information will be stolen by criminals. Earlier this year, credit rating agency Equifax was subjected to a cyber attack affecting <a href="https://www.theguardian.com/technology/2017/oct/11/personal-details-of-almost-700000-britons-hacked-in-cyber-attack" target="_blank">over 143 million Americans and over 600,000 Brits</a>. Australia’s largest credit reporting agency, Equifax Pty Ltd, is a wholly owned subsidiary of Equifax Inc.
The data breach is subjecting US and UK consumers to increased risks of identity fraud and targeted scams. Requiring the banks to release our loan data to third parties increases the risk of data breaches.
Increased competition can offer considerable benefits for consumers. However, overheated competition risks damaging the interests of individual consumers, and the economy as a whole.
<img src="https://counter.theconversation.com/content/86757/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">Consumers also face the increased likelihood of data breaches. The federal government and its regulatory agencies will need to be highly alert to these dangers, and ever vigilant.
<a href="https://theconversation.com/profiles/justin-malbon-110917" target="_blank">Justin Malbon</a>, Professor of Law, <a href="https://theconversation.com/institutions/monash-university-1065" target="_blank">Monash University</a>
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/forcing-the-banks-to-hand-over-our-credit-history-might-help-with-a-home-loan-but-it-has-risks-86757" target="_blank">original article</a>.
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Forcing the banks to hand over our credit history might help with a home loan but it has risks

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The minutes of the monetary policy meeting of the Reserve Bank Board emphasised some positive developments in the economic data but provided a strong statement around the Bank’s policy guidelines.
However in these minutes, the Board has chosen to emphasise its independence. “Members observed that moves towards higher interest rates in other economies were a welcome development but did not have mechanical implications for the setting of policy in Australia, where the timing of any changes in interest rates would be dependent, as always, on developments in domestic economic conditions. Members also noted that monetary conditions in other advanced economies had been eased significantly more than in Australia since the onset of the financial crisis”.
In that regard, the minutes noted that the Bank of Canada had increased its policy rate “in response to stronger than expected economic growth”. The Bank of England had indicated some tightening presumably in response to a lift in inflation associated with the weak sterling ( in my view a potential policy mistake). Markets also expected the ECB to begin reducing the pace of asset purchases in 2018.
Commentary around the domestic economy was generally upbeat:
“There had been a pick-up in household consumption growth in the June quarter”. That comment came before the release of the August retail sales data showing the weakest growth in retail sales since 2013.
Employment growth “had been well above that required to absorb increases in the labour force”, although the Board did note that growth in jobs had been  based in household services (particularly health care &amp; education) and construction. Our reading is that outside those areas growth has generally been modest. Indeed the outlook for jobs growth was somewhat more subdued than we have seen in the past, “slightly above average growth in employment over the remainder of 2017”.
Residential construction, which has plateaued, is expected to hold around current levels “over the subsequent year or so” – a little vague from my perspective, although presumably meaning all of 2018. Westpac has a more pessimistic view around that cycle than appears to be the Board’s thinking.
Private non-mining business investment has increased to be almost 10% higher than at the start of 2016 – the outlook remained positive and firm’s estimates of future capital spending has increased.
“Public investment was expected to continue to be supporting economic activity”.
On the other hand, subdued price pressures continue across the economy and  retail electricity prices are expected to increase significantly in the September quarter. (Westpac’s estimate is 13%) . It is of some interest that business liaison indicates that retail and manufacturing businesses were largely absorbing increases in energy costs into margins.
Every six months, the Board reviews the Bank’s Financial Stability Review. These minutes help us understand the key issues from the Review that were presented to the Board. In that regard, concerns around China financial risks “remained pronounced” with excessive growth through the less regulated channels including banks off balance sheet activities.
Domestically, attention always turns to household indebtedness. While the Board noted that indebtedness had edged higher, it also highlighted the strength of household’s balance sheets, noting in particular “household assets far exceeded debt with non-housing assets alone being over two times larger than total household debt”.
The concluding paragraphs in the minutes continue to emphasise the Bank’s key views, firstly that growth would increase gradually over the coming year; strong employment growth and increasing wage growth would boost income growth and household spending; and the importance to continue to assess the various risks in the housing markets and household balance sheets.
<h3>Conclusion </h3>
We have always argued that the policy process next year will be dependent on the strength of the domestic economy and not be dictated by any global trend to higher interest rates. It is interesting that the Board has chosen to emphasise this strategy in its minutes.
While the RBA does not release the detailed forecasts behind its general view that growth will be comfortably above trend next year, we can discern from the rhetoric that the Board, to date, has a more upbeat outlook for incomes; consumer spending; jobs growth; wages growth and the construction cycle than is our own view.
We have been encouraged by these minutes to expect that if the economy evolves in the way we anticipate, the Board will see no need to raise rates in 2018.
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bevans-rYk9SxEa4r

The RBA Board ties policy to domestic economic developments - remains generally upbeat

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The RBA October meeting noted the most recent information about conditions in the established housing market suggested that growth in housing prices had eased from the previously brisk pace in some cities, most notably Sydney, and had remained soft in some others.
Housing debt had been outpacing the slow growth in household incomes for some time, it noted.
"Recently, growth in credit to investors in housing had eased a little, although overall growth in household credit had been little changed," the October minutes suggested.
Members discussed the importance of continuing to assess the various risks in household balance sheets.
Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
The board noted there had been a pick-up in household consumption growth in the June quarter despite ongoing weakness in household disposable income growth.
Members noted that consumption growth had increased in most states, although it had remained noticeably weaker in Western Australia than in the eastern states, consistent with weaker income growth in that state.
Recent strong growth in employment across all the states was expected to support income growth, and therefore consumption growth, in the period ahead.
Members observed that residential construction appeared to have plateaued, with dwelling investment largely unchanged in the June quarter.
The pipeline of work already approved or under way was expected to continue supporting dwelling investment around current levels over the subsequent year or so; the peak of apartment completions was expected to occur during this period.
At the current level of dwelling investment, growth of the housing stock was expected to outstrip that of the population, as it had done in the preceding few years.
Established housing market conditions had continued to ease in Sydney and Melbourne, but had been broadly unchanged in other cities.
This pattern was evident in revised housing price data released by CoreLogic in September, as well as in auction clearance rates.
Housing prices had continued to decline gradually in Perth. Nationwide measures of housing prices had increased by around 9 per cent over the year to September.
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RBA housing debt outpacing the slow growth in household incomes: RBA

Perth house prices still in gradual decline: October 2017 RBA minutes

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<div>
<h1 class="page-title">Statement by Philip Lowe, Governor: Monetary Policy Decision</h1>
<div class="rss-mr-content">
At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.
Conditions in the global economy have improved. Labour markets have tightened and above-trend growth is expected in a number of advanced economies, although uncertainties remain. Growth in the Chinese economy is being supported by increased spending on infrastructure and property construction, with the high level of debt continuing to present a medium-term risk. Australia's terms of trade are expected to decline in the period ahead but remain at relatively high levels.
Wage growth remains low in most countries, as does core inflation. Headline inflation rates are generally lower than at the start of the year, largely reflecting the earlier decline in oil prices. In the United States, the Federal Reserve has indicated that it will begin the process of balance sheet normalisation in October and that it expects to increase interest rates further. In the other major economies, there is no longer an expectation of additional monetary easing. Financial markets have been functioning effectively and volatility remains low.
The Australian economy expanded by 0.8 per cent in the June quarter. This outcome and other recent data are consistent with the Bank's expectation that growth in the Australian economy will gradually pick up over the coming year.
Over recent months there have been more consistent signs that non-mining business investment is picking up. A consolidation of this trend would be a welcome development. Business conditions as reported in surveys are at a high level and capacity utilisation has risen. A large pipeline of infrastructure investment is also supporting the outlook. Against this, slow growth in real wages and high levels of household debt are likely to constrain growth in household spending.
Employment has continued to grow strongly over recent months. Employment has increased in all states and has been accompanied by a rise in labour force participation. The various forward-looking indicators point to solid growth in employment over the period ahead, although the unemployment rate is expected to decline only gradually over the next couple of years.
Wage growth remains low. This is likely to continue for a while yet, although the stronger conditions in the labour market should see some lift in wage growth over time. Inflation also remains low and is expected to pick up gradually as the economy strengthens.
The Australian dollar has appreciated since mid year, partly reflecting a lower US dollar. The higher exchange rate is expected to contribute to continued subdued price pressures in the economy. It is also weighing on the outlook for output and employment. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.
Growth in housing debt has been outpacing the slow growth in household incomes for some time. To address the medium-term risks associated with high and rising household indebtedness, APRA has introduced a number of supervisory measures. Following some tightening in credit conditions, growth in borrowing by investors has slowed a little recently. In the housing market, conditions continue to vary considerably around the country. Housing prices have been rising briskly in some markets, while in others they have been declining. In Sydney, where prices have increased significantly, there have been further signs that conditions are easing. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases remain low in most cities.
The low level of interest rates is continuing to support the Australian economy. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
Click here to read the statement <a href="https://www.rba.gov.au/media-releases/2017/mr-17-21" target="_blank">on the RBA website.</a>
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<div class="box-enquiries"> </div>
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Why rates have stayed on hold: Philip Lowe's RBA September 2017 statement

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The RBA cash rate decision came out at 2.30pm today - and rates were held again.
The bank's last move saw it go to 1.5 percent at the August 2016 meeting, so rates have been held steady for 14 meetings.
It is not the longest run of steady rates as there were 16 meetings (inclusive) between their August 2013 meeting and December 2014 where they held at 2.5 percent. There was another run of 16 meetings between July 2002 and October 2003 where rates were held at 4.75 percent.
The board noted easing Sydney house prices.
The board noted growth in housing debt has been outpacing the slow growth in household incomes for some time.
"To address the medium-term risks associated with high and rising household indebtedness, APRA has introduced a number of supervisory measures.
"Following some tightening in credit conditions, growth in borrowing by investors has slowed a little recently," the board noted.
In the housing market, conditions continue to vary considerably around the country.
Housing prices have been rising briskly in some markets, while in others they have been declining.
In Sydney, where prices have increased significantly, there have been further signs that conditions are easing.
In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years.
Rent increases remain low in most cities.
 
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jchancellor-FAypfDUnLy

Sydney housing price easing noted as RBA holds at September 2017 meeting

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Investor lending at Australian banks has dipped, according to the latest figures from the Australian Prudential Regulation Authority(APRA). APRA’s statistics show a $1.57trn total loan books of banks during August, a slight decrease of 0.1% from $1.58trn in July.
The drop was due to a decrease in investment lending with total investment loan books at the banks dropping by $3bn - around 0.5 percent from $553bn to $550bn.
Owner occupier lending rose slightly by $1.3bn (or 0.1%) from $1.022trn to $1.024trn in the same time period, Australian Broker noted.
The big four banks held $1.30bn in August which reflected 82.5% of the total market share. The owner occupier loan books of the big four sat at $830bn in August (81.0% of total market share) while investment lending sat at $472bn (85.4% of total market share). APRA’s figures for the four major banks and the largest non-major banks are as follows:
<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/2017/10/03/Table.jpg" alt="">
APRA does not re-adjust for re-classified loans. By contrast however Australian Broker also noted the Reserve Bank of Australia’s (RBA’s) monthly financial aggregates show that overall lending volumes continue to increase with total housing credit growing by 0.5% from July to August and by 6.6% year-on-year.
The RBA estimates that $58bn worth of loans was switched from investor to owner-occupier between July 2015 and August 2017.
Some $1.7bn was moved in August 2017, the website noted.
 
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Investor lending dips, as loans get switched over to cheaper owner-occupier: APRA/RBA updates

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Michele Bullock, the RBA assistant governor, says the central bank is carefully monitoring the high levels of household debt fuelled by by rising house prices and low interest rates and regulators are looking to mitigate some of that high-risk lending areas through prudent steps.
Speaking at "Where to from here?", a panel discussion hosted by Lander &amp; Rogers and Westpac, Bullock said the core focus of the RBA was financial stability.
She made her point by addressing the issue of the resilience of banks and the resilience of households.
Bullock said APRA's prudent steps such as putting a "speed limit" on lending to investors had a definite effect on prices but that the housing market had started to rise again this year and further measures had to be taken such as capping interest-only loans at 30 percent.
She spoke about the increased oversight of APRA in monitoring the risks that banks were taking on. The purpose of these measures was "to bolster the lending quality of the banks so that the assets they had in these mortgages were well secured and lending was prudent,” she said.
Earlier this year, Bullock had said that the RBA was "prepared to do more if needed,” to check any risk from the housing market to the economy.
Back in 2014, lending to property investors was rising “very sharply” and this was an environment where house prices were rising… in Sydney and Melbourne particular, prices were rising about 20 percent annually” which was viewed as a systemic risk by the regulatory bodies.
She said it was possibly exacerbating demand, particularly for new apartments, and “all banks were increasing their exposure to housing” which meant that “if the market turned down, all banks would be affected”.
She pointed out that a substantial portion of lending was interest-only loans which was “a riskier type of lending because peopler aren’t reducing their loan-to-value ratios”.
In such a scenario, regulators had to act and said that no more than 30 percent of bank loans could be IO loans.
“Investors might be introducing more risk by exacerbating cycles in house prices, so if investors are chasing capital gains, they might be spurred on by rising house prices and then if any slowdown occurred that could affect sentiment and they could do the same on the downside,” she said. 
“It’s not their home, so they’re not going to be desperate to hang on to it, so if house prices decline, they might just get rid of it.”
Bullock said the risk from a property market decline would not only affect investors, but also owner occupiers. For owner occupiers the risk was because many were sitting on high debt, if prices fell, the value of their debt would be higher than the value of their property.
“House price per se isn’t the issue, it’s rather what the house price growth might be reflecting in behaviours and introducing risks in the sorts of debt and sorts of behaviours that people are taking on," said Bullock.
She said many households may have stretched themselves to get on the property ladder, while at the same time incomes weren't rising quickly.
“So you’ve got rising debt, rising quite quickly because house prices are rising so people are having to take on more debt but their incomes aren’t rising as quickly, so the debt-to-income ratio is actually rising,” which was a source of worry for the RBA.
On the bright side, though debt servicing was being supported by low interest rates at the moment but the question was "what happens if interest rates start to rise in these circumstances?”
She said that improved lending standards introduced by APRA such as asking banks to put in interest rate buffers…"so banks are assessing serviceability not only on the current interest rate people are paying but with an interest rate with a buffer in it, so about 7 percent as opposed to about 4 percent" was a confidence-building measure in the system.
"This would mean that households would have an increased resilience to increase in interest rates."
 Bullock also said that lots of households have buffers, such as offset accounts, redraw facilities, so they’ve “got a little bit of flex over how much they’re paying”.
"Also, the fact though average debt is high, a lot of debt is held by high income households, so that also gives us a little bit of confidence," but at the same time, high levels of debt does leave households vulnerable to shocks.
Bullock said that when interest rates do rise in Australia, they’re likely to impact consumption in a different sort of way, so this is something that the RBA will have to take into account.
 
 
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Housing-fuelled household debt remains a worry, says RBA's Michele Bullock 

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ANZ has forecast that the Reserve Bank will turn hawkish and raise rates twice next year.
Earlier, another Big Four bank, NAB said the central bank could raise rates twice next year from an earlier view of no hikes.
ANZ's new forecast was based on a more positive view of the domestic economy with both growth and inflation picking up, with unemployment rate expected to fall to 5.3 per cent by the end of 2017.
"In sum our outlook for 2018 is a touch more positive than before, reflecting a stronger outlook for non-mining business investment, the strength in public sector spending [not only in the infrastructure space] and a shallower dip in residential construction than previously expected," ANZ's head of Australian economics David Plank wrote in a note to clients, according to ABC news.
According to the ANZ, the real cash rate — the rate adjusted for inflation — was already negative and if growth accelerates and inflation picks up as expected, it will become even more negative and unnecessarily stimulatory.
"[The] RBA has progressively shifted to a hawkish outlook," Plank said.
NAB had echoed the same sentiment, saying GDP expectations have been revised up, unemployment revised down and consequently inflation moves up as well.
NAB's head of global research Peter Jolly noted the most confident thing he could say about the bank's change in forecast was it would not be the last.
"The big deal here is that having been on a declining trend since 2011, for the first time, NAB is now saying we have seen a turning point for Australia's interest rate cycle," Jolly said
However, the top two — Commonwealth Bank and Westpac, are staying pat on their forecasts, with CBA predicting one rise in the fourth quarter next year while Westpac sticking to a hold right through 2018.
In fact, Westpac chief economist Bill Evans said he does not share the optimism of either the other banks or the RBA about the economy.
"I think the RBA believes it will be raising rates next year," Evans said.
"They are very optimistic on growth, they believe they will see strong income growth."
But Evans thinks the RBA is wrong.
He recently wrote that “Westpac expects that concerns with weak income growth weighing on consumer spending and eventually the jobs market will dominate the policy debate in 2018”.
“The sustained application of macro-prudential policies is likely to continue to ease conditions in housing markets precluding any need for the Bank to raise rates next year.”
ANZ's David Plank concedes household consumption will remain relatively subdued, even if income growth picks up.
The bigger risk to his two-hike theory would be the on-going appreciation of the Australian dollar.
"Likewise, evidence that core inflation or wages are slowing again would rule out a rate hike in 2018."
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