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

Joel Robinson

Juliet to sit quietly amid Roseville apartment boom

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

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

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

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

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

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

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

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

Property market

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The property market in Victoria faces upside risks, amid the recent announcement by the Andrews Government of exemptions and cuts in stamp duty for first home buyers, according to NAB's latest commentary.
Sydney and Melbourne experienced strong house price growth in late 2016 and early 2017, NAB said.
"While we expect some moderation through 2017, current momentum does suggest upside risks, particularly in Victoria where the government has recently announced a stamp duty exemption or reduction for first home buyers buying a property for under $600K and a reduction for those between $600-$750K," the report stated.
Price growth for apartments is likely to be softer, and negative in Victoria and Brisbane where the supply response will be greatest. The outlook for houses and apartment prices remains negative in Perth, and subdued in Adelaide. 
The outlook for commercial property in Victoria and NSW remains solid too, according to NAB's commercial property index, while it is expected to be soft for Queensland and NT, and negative in WA, though there will be modest improvement over the next two years.
"Operating budget balances in eastern states are strong owing to strong population growth and housing market activity, while the budget position in mining states is looking a little healthier (especially in 2016-17) thanks to resurgent coal and iron ore prices (a support which is temporary in our view)," NAB said in the report. 
<a href="https://www.propertyobserver.com.au/images/2017/03/09/Screen%20Shot%202017-03-09%20at%201.57.59%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/09/Screen%20Shot%202017-03-09%20at%201.57.59%20PM.png" alt="">
 
 
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Upside risks for Victoria residential property market: NAB

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The director of economic forecaster BIS Shrapnel, Robert Mellor, said east coast property owners should not be fooled into thinking they are immune from downturns in property prices.
But he said any corrections will not be as quite so dramatic as the mining town crash.
Mellor told News Ltd that rapid property price rises could not be sustained due to the cyclic nature of the economy.
Those who have paid hundreds of thousands of dollars above the value of their property in competitive markets such as Sydney would likely see a drop in the value of their homes in the next few years, he said.
“People who have bought off the plan and those who have paid clearly inflated premiums for established homes will suffer most,” he said.
“Those who have bought 10 to 20 percent more than a property was anticipated to go for, might suffer a 10 percent loss in 12 months time.”
Mellor forecast that continued low interest rates would head off the threat of substantial mortgagee auctions in the major cities.
However, he said in the climate of heavy borrowing to meet escalating prices, there was one sector of mortgage holders who were particularly vulnerable.
“Particularly people doing interest only payments, everything for them is predicated on price growth, their investment strategy is going in for price growth,” he said.
“They may even be started to be affected by a small movement in interest rates, so they could find themselves getting into trouble.”
He said investors looking to sell in the next couple of years would likely lose money if they had not had their property long, he said.
“These abnormally buoyant conditions are not going to be sustained,” he said.
“Perth is a good example.
"Perth house prices dropped by 10 percent, thanks largely to an oversupplied market.
“Prices there are down 10 percent since December 2014, which just highlights you do not need rising interest rates to bring about a correction.
“All you need is too much supply coming on stream, which, in Perth’s case was houses."
He said a 10 percent correction by historical standards was a fairly substantial decrease.
“Even in previous recessions, it’s been rare for prices to fall more than five per cent.”
Brisbane apartment investors, and to a lesser extent their counterparts in Melbourne, are particularly at risk of heavy losses, he said, due to oversupply.
He said the Melbourne market had shown unexpected resilience, 
He expects Sydney price falls to start in late 2017 and continue into 2018.
“What you are seeing in sales activity is a market that is heavily driven by investors and that’s potentially unsustainable,” he said.
“The prices they are paying are over the top.
"A year ago I would have said the market was flattening out, and there was not a significant risk of price decline in Sydney, but if the latest data is correct, there is a risk the price correction later this year and into 2018 could be in the field of 10 percent.”
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jchancellor-FAypfDUnLy

Overpriced OTP apartment buyers will suffer most: BIS Shrapnel's Robert Mellor

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GUEST OBSERVER
Supporters and critics alike agree that Donald Trump says many contradictory things, and that's part of the problem.
Most Australian property investors are confused. They have no idea how his presidency will affect their investments.
Well, I frequently get asked about Trump, and I have some answers for you. The Chinese investors we work with ask us often about the new U.S. President — and other events in the 89 countries where we offer listings for them to purchase. 
Here, I share our three most important insights on managing real estate investments in the era of President Trump.
Buy dependable value
Trump's White House has been described by its own allies as "chaotic" and as suffering from "obvious dysfunctionality." The United States is torn between those who ferociously support him and those who are just as vociferous in their rejection of everything he stands for.
Some of this turmoil is making its way to Australia. Cory Bernardi and Pauline Hanson are among those who have announced they hope to reorient Australian politics and society in a more populist fashion. Many promise to resist.
Politics is in ferment, and politics does affect the economy. A Parliament in turmoil can't pass economic reforms, infrastructure plans or jobs bills.
In this environment, a smart property investor will look for assets with enduring value. Now is not the time to speculate on quick capital gains.
Be strategic and play it safe with a long-term investment in suburbs that have good access to transit, shopping and quality schools. If you negatively gear, try to keep your negative cash flow well within manageable territory — in case the worst happens, like losing your job or facing unexpected, large expenses.
Find opportunities amidst the confusion
We all hope President Trump doesn't start a trade war (or any other kind of war). If he does create market turmoil, however, smart investors will look for opportunities among the confusion.
Warren Buffett's famous advice applies here: be greedy when others are fearful and fearful when others are greedy.
Remember, Trump can serve as President for only four years, or eight if he is reelected. And, as we have seen with the last several Prime Ministers, even Australian politicians come and go.
The Commonwealth, on the other hand, is a prosperous country with a swelling population that is relatively enlightened, innovative and industrious. Whatever the short-term vicissitudes, it is impossible to imagine this country being poorer or smaller in 10 years.
If the current political disputes hurt confidence and undermine the market, that is your moment. Seek to find buying opportunities whose price has suffered, but which look likely to revert to trend in the medium term.
Look to Asia
Ours has been branded the China Century for a good reason. China already has the world's largest total population, the world's biggest middle class and the world's most numerous ultra-high-net-worth demographic.
Chinese are the biggest property investors in Australia, the USA, Canada, the UK, New Zealand, Thailand, Singapore, Hong Kong, Japan and many other countries.
Australia exports more to China than to any other country. China is our largest source of international students, our most valuable tourism market, a major source of foreign direct investment and our largest agricultural goods market. 
If you work in the property industry, then you need a China strategy. If you invest in property, then you need to understand how Chinese buying trends affect your investment.
These are my three tips for succeeding at property investment during this unpredictable moment in time.
Gavin Norris is head of Australia for Juwai.com, the No. 1 Chinese international property portal and can be contacted <a href="https://www.juwai.com" target="_blank">here</a>.
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What does Donald Trump mean for your property investments? Gavin Norris

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There has been a “significant fall” in investor purchase intentions in the past three weeks, marking the biggest move in the research group, Digital Finance Analytics’ 10 years of data.
DFA’s data doesn’t always align with future bank lending to investors, but analytics principal Martin North said property purchase intentions could be “on the turn”. 
“If this is the case, then auction clearances, investor lending momentum and property price rises may be impacted,” he said on <a href="https://digitalfinanceanalytics.com/" target="_blank">DFA’s blog</a>, as reported in The Australian.
He said the drop in buying intentions was driven by concerns about future prices, falling rental returns, rising investment interest rates and potential changes to “generous” tax breaks for ­investors.
Prime Minister Malcolm Turnbull last week attempted to affirm the government had no plans to alter the 50 per cent capital gains tax concession for investors who hold a property for at least 12 months after reports suggested changes were being considered. 
Confidence was also hit when measures to cool CBA’s property investment lending growth were advised so the bank was adhering to the regulator’s 10 percent annual cap on credit growth. 
CBA ceased refinancing investors from other banks via mortgage brokers and raised interest only lending rates.
North's reported noted over 1.5 million households aspire to purchase property, 85% are looking for owner occupied, 15% investment.
"At the moment 18% are actively saving, hoping to buy sometime in the future, down from 21 percent a year ago.
"The biggest barriers which are stopping them from purchasing, include that prices are too high (44 percent) and the costs of living (17 percent) although the fear of employment is down to 4 percent from 11 percent a year ago.
"Under 1 percent were expecting to transact within the next 12 months, indicating that the majority are currently disenfranchised from the property market, despite the fact that 42 percent expect house prices to rise over the same period. 
"More than 13% said they were having difficulty finding a suitable loan," the latest report noted.
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Property investor 2017 purchasing intentions wane  

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Commercial lending finance was weaker in the month of December, giving back a fair chunk of the 15 percent jump from November.
Nevertheless the trend for monthly lending finance hit it highest ever level at more than $73 billion. 
<a href="https://www.propertyobserver.com.au/images/2017/02/15/A2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/02/15/A2.jpg" alt="">
At the industry level, there are no signs of any rebound in financing for the mining sector, suggesting that the recent boom in coal and iron ore prices is unlikely to lead to any significant increase in resources investment.  
In fact, financing for the mining sector crashed by more than two-thirds over 2016, with the best performing sectors instead including construction and transport. 
<a href="https://www.propertyobserver.com.au/images/2017/02/15/A4.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/02/15/A4.jpg" alt="">
Investor loans - a mixed picture
The national rebound in investor loans in 2016 masks a huge divergence in fortunes around the traps. 
In Sydney, investors are well and truly back with $6.3 billion of investor loans in December 2016 being some 36 per cent higher than the $4.6 billion seen only a year previously. 
There was also a resurgence in investor lending in Victoria, but most other states and territories are only seeing activity levels that are lower than in the prior year. 
<a href="https://www.propertyobserver.com.au/images/2017/02/15/A1.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/02/15/A1.jpg" alt="">
In the resources-focused Northern Territory, meanwhile, the 12-month moving average for the value of investor loans has collapsed by 51 per cent from the peak.
<a href="https://www.propertyobserver.com.au/images/2017/02/15/A3.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/02/15/A3.jpg" alt="">
The wrap
Clearly a mixed picture for property investment loans, then, with the Sydney market looking set for a strong first half of 2017. 
The commercial finance picture is patchier, although the Reserve Bank's optimism appears to have been justified by a stonking NAB Business Survey.
NAB reported today that business conditions had blown off spectacularly from a December reading of +9.9 to a 9-year high of +16.2 (New South Wales the clear leader of the states with a reading of +23).
This was the strongest result since the financial crisis and miles above the long-run average reading of +5.
Business confidence also tore higher from +5.7 to +9.8 in January, while the employment index hit its highest level since 2011.
A seriously bullish survey.
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/">blogger</a>. 
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pwargent-M4siyDbqQY

Investor lending resurgent in Sydney: Pete Wargent

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A growing regional economy, driven by rising tourism numbers and major projects, has Whitsundays Airlie Beach poised as a lucrative opportunity for property investors, according to real estate group PRDnationwide.
All the key drivers of a rising property market are in place and properties are selling at the fastest pace in nine years, says PRDnationwide Whitsunday principal Christie Leet.
“Activity in the property market picked up to a good pace in the second half of 2016, pushing the Whitsundays into a balanced market and ready for another major upswing (after nine years of weak prices),” said Leet.
“The Australian dollar has stabilised at a level that entices overseas visitors and we have domestic visitors taking advantage of low airfares and increased capacity.
“Properties are selling quickly again and the excess housing and rental stock has all but vanished.”
Also, land is limited in the Whitsundays, with much of it taken up by Conway National Park and the last beachfront blocks that can be developed on the Whitsunday Coast are now under construction at Funnel Bay.
“With major construction and refurbishment projects under way or about to begin, there will be even greater demand for housing as construction workers move into the region,” he said.
The Whitsunday Coast Airport has an expansion project on the table with a $59 million masterplan, including plans for the introduction of international flights.
Redevelopments at Daydream Island Resort ($30 million) and South Molle Island ($200-$300 million), as well as a $600 million redevelopment at Lindeman Island Resort, are fuelling jobs growth on the Whitsunday Coast.
Leet said the start of construction at the Adani Carmichael Coal Project, a $16 billion investment in the Central and North Queensland economies, and the reopening of the Collinsville mine, which is in the Whitsunday Shire, would provide even greater demand on housing in the Whitsundays.
“The workforce will be fly-in-fly-out and we have seen in the past that miners like to set up a home base where the family can enjoy the best North Queensland has to offer,” he said.
“Thousands of miners and their families will also be looking for somewhere to relax and enjoy their time off without having to travel too far.”
Tiger Airways is adding 110,000 extra seats into the Whitsundays from March and Jetstar has announced they will add another 65,000 seats into the Whitsundays from April.
Census 2011 results from the Australian Bureau of Statistics indicate that the construction, transport and utilities sectors employ the most permanent residents in the region combined.
According to Queensland government estimates, the Whitsunday region had a resident population of 34,016 as at June 2013. Medium population projections suggest the region may experience average population growth of 2.1% (or 691 persons) per annum over the next two decades, with an estimated resident population of 49,700 persons by the end of 2036. Based on an average household size of 2.4 persons per residence, this level of population growth may yield demand for an additional 288 residential dwellings per annum over the same period. With the average number of new dwelling approvals for the last 5 years at 173p.a, this leaves an expected shortage of 115 dwellings per year. This shortage will push house, land and rental prices upwards as the demand increases.
“The lifestyle benefits of the Whitsundays, represented by the Great Barrier Reef, the islands, beautiful beaches (including one of the world’s best), and natural environment, are well documented and have helped the region become the number one Great Barrier Reef destination.”
But it is the underlying strength of tourism and the local economy, combined with the timing of the market, that is behind the sudden move in the property market.
“The all-important construction industry is ramping up with key projects already under construction or about to start but the low vacancy rates are creating the demand needed for more accommodation projects to come online,” Leet said.
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Whitsunday's growing economy puts property back in overdrive: PRDnationwide

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<div>After 11 years at RPData and CoreLogic, Graham Mirabito has announced that he is leaving the property data company.</div>
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<div>He will be pursuing his passion for nurturing innovative start-ups and early stage companies.</div>
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<div>The CoreLogic business includes operations in Australia, New Zealand and the United Kingdom, with more than 700 engaged staff delivering insights, analytics, solutions, services and data to more than 40,000 clients.</div>
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<div>"Graham will transition during the next few months," said the US-based CoreLogic President and CEO Anand Nallathambi.</div>
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<div>Anand went on to suggest that Graham had been helpful across the whole company on its expansionary path.</div>
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<div>"Graham has been instrumental in reaching across the entire CoreLogic enterprise to expand collaboration, ideation and synergies, which have contributed to expansion of our platforms, products and solutions across geographies."</div>
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<div>Last July Lisa Claes was announced to be CoreLogic's managing director for Australia and New Zealand taking over from Graham Mirabito, who was set to become the US-based group's international chief executive.</div>
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Graham Mirabito to depart CoreLogic RP Data 

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GUEST OBSERVER
The Reserve Bank hasn’t materially changed inflation forecasts but it has trimmed economic forecasts over the near-term. Economic growth is now seen at 1.5-2.5 percent in June 2017, around one percentage point lower than previous forecasts.
Inflation is expected to hold between 1.5-2.5 percent over the forecast period – below or at the low end of the 2-3 percent target band.
Home loans: The number of loans (commitments) for budding home owners (owner-occupiers) rose by 0.4 percent in December after rising by 1.3 percent in November. The value of loans (owner occupier and investment) rose by 0.4 percent in December after rising by 2.2 percent in November.
Owner-occupier loans rose by 1.3 percent but investment loans fell by 1 percent.
What does it all mean?
The latest Monetary Policy statement has given the Reserve Bank the opportunity to flesh out how the economy is tracking. And it seems like the Central Bank is in the glass half-full camp. Policymakers have updated economic growth and inflation forecasts and it is clear that growth remains relatively sound.
Interestingly inflation is expected to remain below or at the low end of the Reserve Bank 2-3 percent target band over the next two years. Essentially the assumption of subdued inflation is despite the potential inflationary impact of higher commodity prices - which suggests a lack of inflation across the rest of the economy.
The assumption of low inflation and stronger economic growth over time suggests that interest rates remain on hold.
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<div class="column"><a href="https://www.propertyobserver.com.au/images/2017/02/10/Screen%20Shot%202017-02-10%20at%202.01.18%20PM.png" target="_blank">Click to enlarge</a></div>
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 Importantly given that near-term growth forecasts have been downgraded and now expected to hold between 1.5- 2.5 percent, it is clear the central bank is prepared for a degree of softness across the domestic economy. Interestingly when coupled with subdued inflation it suggests policymakers will keep the door open to provide further stimulus. However it should be made clear that the central bank is essentially holding a neutral policy stance. The economy was essentially lacklustre throughput the majority of 2016 despite unemployment drifting to 3-year lows. However the anecdotal evidence across the economy suggest that activity levels are now lifting.
 In that context the latest housing finance data is encouraging. Not only did the number of overall housing finance commitments lift for the second straight month, but it was driven by owner-occupier loans rather than investment loans. Overall the Reserve Bank is correct in its view that conditions in the housing market are very mixed.
What do the figures show?
Housing finance - number
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<li>The number of loans (commitments) for budding home owners (owner-occupiers) rose by 0.4 percent in December after rising by 1.3 percent in November.</li>
<li>Excluding the refinancing of dwellings, the number of loans was up by 2.4 percent.</li>
<li>  The number of new home loans was down by 4.4 per cent on a year ago.</li>
<li>  Loans by owner-occupiers for the construction of homes fell by 0.3 per cent in December.</li>
<li>  Loans to buy newly-erected dwellings rose by 3.2 per cent.</li>
<li>  Loans for the purchase of established dwellings (excluding refinancing) rose by 0.3 per cent.</li>
<li>  The number of refinancing transactions fell by 3.5 per cent.</li>
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Lending across states/territories: NSW (+1.5 percent); Victoria (+0.8 percent); Queensland (-1.3 percent); South Australia (-1.9 percent), Western Australia (-2.7 percent); Tasmania (-2.7 percent); Northern Territory (+0.5 percent); ACT (6.3 percent).
Housing finance - value
The value of new housing commitments (owner occupier and investment) rose by 0.4 percent in December after rising by 2.2 percent in November. Owner-occupier loans rose by 1.3 percent but investment loans fell by 1 percent. The value of loans by owner-occupiers and investors to build new homes fell by 1 percent in December after rising by 5 percent in November. The value of loans to build new homes fell from $3.1 billion to $2.74 billion in December.
Housing finance – other statistics
The proportion of first-time buyers in the home loan market held steady at 13.8 percent in December (long-term average 19.4 percent).
The proportion of fixed rate loans rose from 12.5 percent to 14.6 percent in December – a seven month high. And the average home loan across Australia stood at $375,800 in December, down 0.8 percent in the month but up 0.5 percent on a year ago.
Key take-aways from the Reserve Bank report
 Below are our key “take-aways” from the Reserve Bank’s latest quarterly review.
“Inflation is expected to increase as the effects of some factors that have been weighing on domestic cost pressures dissipate”(p3)</div>
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 “Headline inflation is expected to pick up to 2 per cent in early 2017. The increase in underlying inflation is likely to be gradual. These forecasts are little changed from those published in the November Statement on Monetary Policy” (p3)</div>
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 “Wage growth is forecast to increase only gradually” (p3) “ there has been some evidence from surveys and liaison with firms suggesting that wage growth is unlikely to ease further.” (p3)
  “Overall conditions in the established housing market have strengthened further, although there is significant variation across the country.” (p2)</div>
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   “The global economy entered 2017 with more momentum than earlier expected.” (p1)</div>
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   “Global inflationary pressures are somewhat stronger than they have been for some time,” (p1)</div>
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   “ real GDP looks to have increased in the December quarter. Beyond that, the outlook for the domestic economy is little changed from three months ago and the ongoing adjustment to the end of the mining investment boom is expected to continue.” (p2)   “Real GDP declined in the September quarter, a significantly weaker outcome than was anticipated. Some of the decline can be attributed to disruptions to coal supply and bad weather affecting construction activity.” (p1) 
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<div class="column">“Although investor activity is currently quite strong, at least in Sydney and Melbourne, history shows that sentiment can turn quickly, especially if prices start to fall.” (p62)</div>
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   “The forecast for consumption growth has been adjusted lower and implies a stable saving ratio over the forecast period, rather than declining, as previously assumed.” (p61)</div>
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   “The unemployment rate is expected to edge lower over the forecast period, suggesting only a modest reduction in the degree of spare capacity in the labour market from current levels.” (p58)</div>
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   “ exports of Australian goods and services in aggregate are forecast to continue growing at a solid pace.) (p58)</div>
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   “Given the stronger tone of more recent indicators, consumption growth is expected to be a little stronger than in mid 2016 over the forecast period.” (p57)</div>
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   “GDP growth is forecast to increase to 21⁄2–31⁄2 per cent in late 2017, and to be above potential for most of the forecast period.” (p57)</div>
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   “Some of the factors weighing on reported GDP growth in the September quarter were temporary and have not materially affected the outlook for growth.” (p56)</div>
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 “While considerable uncertainty remains about the economic policies of the new US administration, reductions in personal and corporate taxes are likely.”</div>
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<div class="column">“However, there is a rising risk that more restrictive and protectionist trade and immigration policies under the new administration could harm global growth prospects.” (p55)</div>
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<div class="column">  “A significant portion of the increase in investor credit growth is also likely to reflect the extension of credit to investors settling the payment of newly completed apartments that were purchased off the plan at an earlier time.” (p46) </div>
<div class="column"> “More recently, overall debt funding costs (by major banks) are estimated to have been stable, despite a little upward pressure from the increasing share and cost of long-term debt and deposit funding.” (p43)   “Much of the apartment construction is geographically concentrated, particularly in inner-city Melbourne and Brisbane. This increases the chance that (localised) oversupply could develop, and would exacerbate the effect on local area prices if that were to occur.” (p37)
What is the importance of the economic data?
Housing Finance data is produced monthly by the Bureau of Statistics and shows commitments by lenders, such as banks, to provide finance for housing purposes. The lending figures relate to those looking to buy or build homes to live in as well as those seeking to buy or build homes for investment purposes. Generally people get their finance organised first, so the figures are regarded as a leading indicator on the housing market. The Reserve Bank releases its Statement on Monetary Policy each quarter. The Statement is the Reserve Bank’s assessment of economic and financial conditions and also contains the latest inflation views. The Statement is crucial is assessing the short-term outlook for interest rates.
What are the implications for interest rates and investors?
The rebalancing of the domestic economy away from mining investment will remain the trigger for interest rates, especially given that inflation is subdued and expected to remain at the low end of the 2-3 per cent target band. However a number of indicators make rate cuts look less likely than even six months ago – improved Chinese activity levels, a stronger terms of trade, a modest lift in domestic activity and the Reserve Bank view that inflation has bottomed.</div>
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<div class="column">The home finance market is not a driver of interest rates at present. The Reserve Bank won’t be lifting or cutting rates on the lending trends. But with borrowers now looking more carefully at the market, competition across lenders looks likely to heat up. </div>
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<div class="column">Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a></div>
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RBA tinkers with growth forecasts: Savanth Sebastian

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Australia faces the prospect of a recession in 2017, going by a forecast by economist and author Steve Keen, the lone voice against the average consensus for growth in the 2017 BusinessDay Scope survey of economists.
Professor Keen predicted GDP for the year to December at minus one percent, implying recession, while also predicting a fall in wages of 0.5 percent. It repeated his earlier forecasts.
Meanwhile, the Reserve Bank faces no pressure to adjust interest rates at its first meeting for the year on Tuesday and is likely to keep rates unchanged throughout the year — a rarity — says the survey published by The Sydney Morning Herald.
Approaching its 40th year, the BusinessDay survey is made up of forecasts from 27 economists in the diverse fields of financial markets, academia, consultancy and industry.
Over the years, its average predictions have been more accurate than those of any of its individual members.
The rare event of interest rates unchanged throughout the year was predicted accurately earlier too by the same survey, in 2014 and 2004.
A boost in commodity prices and trade surplus will help the Australian economy grow 2.4 percent in 2017, says the average of the forecasts, an increase from the most recent result of 1.8 per cent, but well below the the implied forecast of 3 percent in the treasury's mid-year budget update, the report says.
Keen is not the only pessimist.
Two others are also quite pessimistic about GDP growth too, and they are the two who came closest to getting it right last year. Stephen Anthony of Industry Super and Bill Mitchell of the University of Newcastle each predicted only 1.6 percent.
“Worldwide, the huge expansion in liquidity is pushing up asset prices instead of sparking investment,” Anthony was cited as saying in the report.
"And in Australia mining investment has further to slide.”
"That makes us a one-trick pony. We've got high-density dwelling investment driving the economy; potentially unsustainably as a result of effervescence coming in through China and our interest rate settings. That's really the only driver we've got. It will come off at some point in 2017.
"Other than that, consumption is weak, public investment is weak, public consumption is weak, and while net exports are helping, they are driven by Chinese monetary expansion, which will continue for a while before tailing off after 2017. Our growth rate will stay low, between 1 and 2 percent."
Among the others, two of the panel expect growth to exceed the treasury's 3 percent forecast: HSBC's Paul Bloxham, who expects 3.4 percent, and ANZ's Richard Yetsenga, who predicts 3.3 percent. Five agree with the treasury number.
Most of the panel (although not Anthony and the ACTU's Margaret McKenzie) expect a Trump-driven boost in US economic growth to more than 2 percent.
Three of the panel expect growth of 3 per cent. All expect China's reported growth to be close to the official target of 6.5 to 6.7 percent, in part because of revelations that at least one province has faked data in order to meet the target. Most expect global growth to chug along at around 3.1 percent.
Trade, prices, wages and jobs
Last year's jump in the price of iron ore should run out of steam. After climbing from $US40 a tonne to more than $US80 by December, the panel's central forecast is for a retreat to $US70. But six of the 27 expect further increases, two of them, Mardi Dungey of the University of Tasmania and Neville Norman of the University of Melbourne, to about $US100 a tonne.
The panel's central forecast is for Australia's terms of trade – with the nation running a substantial surplus – to close 2017 little changed, but two of the panel, Sally Auld of JP Morgan and Julie Toth of the Australian Industry Group, expect further jumps of 7 and 10 percent, while Michael Blythe of Commonwealth Bank and Paul Dales of Capital Economics expect sharp falls of 7 and 8 percent.
The panel expects inflation to recover from 2016 low range of 1 to 1.5 percent to 1.9 percent by December, which is just below the bottom of the Reserve Bank's 2 to 3 percent target band. Though two of our forecasters, economist Saul Eslake and Richard Robinson of BIS Shrapnel, expect underlying inflation to climb to anything near the middle of the band, 2.4 percent for Eslake and 2.3 percent for Robinson.
Wages should mercifully increase by more than prices, in part because of the extra money high commodity prices will give to employers, climbing 2.1 percent in 2017 after a record-low 1.9 percent in 2016. The highest wage growth forecast is 2.7 percent, from Victoria University economic modeller Janine Dixon. 
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jonathanchancellor-7SQnKwU6yx

Prof Steve Keen again says Australia in for recession in 2017; but survey expects GDP to grow 2.4 percent

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GUEST OBSERVER
Trump jitters dominated markets over the last week with his 90 day travel ban and reports of belligerent phone conversations with various country leaders (including Australia’s) and attacks on allies like Germany adding to concerns about inexperience and political and trade risk. 
So despite pretty good global economic and profit news, this saw most share markets dip and bond yields fall. Trump jitters along with a still gradual Fed also weighed on the $US which combined with news of a record trade surplus saw the $A rise. 
Worries about Trump could be with us for a while yet as his belligerent approach, his team’s inexperience and fears about trade wars and US isolationism could dominate the pro-growth positives for a while as it will take time to push through deregulation, tax cuts and increased infrastructure spending. 
While most of the global political focus has been on Donald Trump, Eurozone political risks will also feature this year. High on the list is France which has presidential elections in April and May. Polling continues to show that populist Eurosceptic Marine Le Pen will make it into the second round polling more than any other candidate at around 27 percent, but that the independent former economy minister Emmanuel Macron (polling at 23 percent) or the Republican party’s Francois Fillon (polling 20 percent) will defeat her in the second round (at 65 percent to 35 percent and 59 percent to 41 percent respectively).
<a href="https://www.propertyobserver.com.au/images/2017/02/03/Screen%20Shot%202017-02-03%20at%201.54.37%20PM.png" target="_blank">Click to enlarge</a>
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Both Macron and Fillon are pro Europe and reform oriented but Fillon has been hit by a scandal involving the employment of his wife and children as parliamentary assistants (which is legal but the issue is whether they actually worked). Whether its Macron or Fillon who makes the second round against Le Pen, it looks unlikely Le Pen will win the final round. But then again there is still several months to go and of course last year’s Brexit and Trump “upsets” can’t be ignored. As a result investors will worry about it and so French bond yields have been rising against German yields.
The 0.8 percent fall in Australian shares in January is not so positive in terms of the January barometer, which states that “as goes January so goes the year”. That said negative Januarys are less reliable a guide to the year as a whole than positive Januarys. Just recall last year! Since 1980 a negative January in Australian shares has gone on to a negative year only 31 percent of the time. Perhaps more importantly – given it impact on the direction of global and Australian shares – the US share market rose in January by 1.8 percent &amp; since 1980 a positive US January has gone on to a positive year 86 percent of the time.
Major global economic events and implication
Looking globally, business conditions PMIs continued to improve in January pointing to stronger global growth. Very different to a year ago when PMIs were heading down.
US economic data was strong with a further rise in ISM manufacturing conditions index, strong home price gains, solid consumer confidence and growth in personal spending, strong jobs data and a rise in pending home sales. That said wages growth according to the employment cost index remains modest and inflation according the core personal consumption deflator remains stuck around the same levels it’s been at for a year.
The Federal Reserve upgraded its comments regarding current conditions in the economy but there were no changes to the outlook and it continues to see interest rate hikes as being gradual. There was nothing pointing to a rate hike at its March meeting. We continue to anticipate three Fed rate hikes this year with the first being in May or June.
Over half of US S&amp;P 500 companies have now reported with 75 percent beating earnings expectations and 50 percent beating on revenue. Earnings are now expected to be up 5.6 percent from a year ago taking them to a new high, highlighting that the earnings recession that began in 2014 is long over.
Eurozone economic data was also solid with a pick-up in December quarter GDP growth and confidence and manufacturing conditions PMIs at five and a half year highs. While headline inflation rose solidly in December on the back of higher energy prices, core inflation remains stuck at 0.9 percent year on year suggesting that the ECB won’t be rushing just yet to taper its quantitative easing program.
Japanese jobs data was good with stronger than expected readings for household spending and industrial production. Meanwhile the BoJ left monetary policy on hold as expected.
Chinese manufacturing conditions PMIs fell in January but services conditions rose slightly, which points to continued solid growth into early this year.
Indian GDP rose 7.9 percent in 2016 and the Indian manufacturing conditions PMI bounced back suggesting the negative impact of demonetisation may be fading.
Australian economic events and implications
Australian data was a mixed bag. The NAB business survey showed strong business conditions in December adding to confidence that growth bounced back in the December quarter and the surge in iron ore and coal prices drove the trade balance to a record surplus in December. Against this though building approvals slipped further adding to evidence that they have peaked.
While the surge in commodity prices and the associated boost to national income won’t provide the same boost to the economy seen last decade (as tax cuts are less likely due to tougher budgetary conditions, the mining investment boom has already happened and its likely to be less durable) its better than falling national income and will provide some offset to the loss of momentum in dwelling construction.
Meanwhile, a continuing surge in credit growth to property investors in December and a strong start to the year in home price growth adds to concerns that the Sydney and Melbourne property markets remain too hot. If the RBA is to retain the necessary flexibility to cut interest rates again, another round of macro-prudential tightening by APRA is likely to be needed – perhaps lowering the 10% year on year growth threshold for the stock of property investor loans to say 7 percent.
What to watch over the next week?
In the US, apart from what President Trump may do, the main focus in the week ahead will be on December quarter earnings reports with over 100 major companies due to report. On the data front it will be pretty quiet with December trade data (Tuesday) expected to show an unchanged deficit and consumer sentiment and import price data due Friday.
Chinese trade data for January is expected to show a strengthening in import growth to around 5% year on year and a return to positive growth for exports at around 2 percent yoy.
In Australia, the focus will be back on the RBA (Tuesday) but it’s unlikely to make any changes to interest rates.
While the low September quarter inflation reading leaves the door wide open for another rate cut a move on Tuesday is unlikely as the inflation outcome was in line with the RBA’s own forecast and its likely to want to monitor the recent uptick in lending to property investors and see how the economy performs after its September quarter slump.
As a result all eyes will be on the post meeting Statement and the Statement on Monetary Policy to be released Friday.
Of most interest will be any revisions to the RBA’s forecasts, where we expect a downwards revision to the growth forecasts following the September quarter growth contraction and a possible pushing out in the return of inflation to target. Our assessment remains that - with record low wages growth, ongoing spare capacity, an
increasing risk that low inflation will feed on itself and the $A remaining too high - the RBA will cut rates again around May. Also of interest will be what the RBA has to say about the resurgent Sydney and Melbourne property markets – are they embarking on another round of discussions with APRA?
On the data front in Australia, expect a 0.2 percent rise in December retail sales and a 0.8 percent rise in retail sales volumes for the December quarter (Monday) and 0.5 percent rise in December housing finance (Friday) again driven by property investors.
The Australian December half profit reporting season will start to ramp up with 16 major companies reporting (including Rio, AMP, NewsCorp and Suncorp).
Steady earnings upgrades for resources stocks on the back of the rise in commodity prices has seen the consensus expectation for 2016-17 earnings growth rise to 17 percent from around 7 percent last September. Resource company profits are expected to more than double, but profit growth across the rest of the market is likely to be around 5 percent led by retailers, utilities, telcos and building materials companies. Key themes are likely to be: a massive turnaround for resources companies; constrained revenue growth for industrials; continuing constrained revenue growth for the banks; and an ongoing focus on dividends.
Outlook for markets
A further short term consolidation or correction in shares is likely as sentiment towards them remains very high, Trump related uncertainty will be with us for a while and as we enter the seasonally weaker month of February. However, we see share markets trending higher over the next 12 months helped by okay valuations, continuing easy global monetary conditions, fiscal stimulus in the US, some acceleration in global growth and rising profits.
Still low yields and capital losses from a gradual rise in bond yields are likely to see low returns from bonds. Australian bonds are preferred to global bonds reflecting higher yields and as the RBA remains well behind the US in moving into a tightening cycle.
Commercial property and infrastructure are likely to continue benefitting from the ongoing search by investors for yield, but this demand will wane as bond yields trend higher over the medium term.
National capital city residential property price gains are expected to slow to around 3-4 percent this year, as the heat comes out of the Sydney and Melbourne markets and rising apartment supply hits.
Cash and bank deposits are likely to continue to provide poor returns, with term deposit rates running around 2.5 percent.
<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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