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

Reserve Bank of Australia

The full statement from the Reserve Bank of Australia on its November Cup Day rate hike

At its meeting today, the Board decided to raise the cash rate target by 25&nbsp;basis points to 4.35&nbsp;per&nbsp;cent. It also increased the interest rate paid on Exchange Settlement balances by 25&nbsp;basis points to 4.25&nbsp;per&nbsp;cent.

Inflation in Australia has passed its peak but is still too high and is proving more persistent than expected a few months ago. The latest reading on CPI inflation indicates that while goods price inflation has eased further, the prices of many services are continuing to rise briskly. While the central forecast is for CPI inflation to continue to decline, progress looks to be slower than earlier expected. CPI inflation is now expected to be around 3½&nbsp;per&nbsp;cent by the end of 2024 and at the top of the target range of 2&nbsp;to 3&nbsp;per&nbsp;cent by the end of 2025. The Board judged an increase in interest rates was warranted today to be more assured that inflation would return to target in a reasonable timeframe.

The Board had held interest rates steady since June following an increase of 4&nbsp;percentage points since May last year. It had judged that higher interest rates were working to establish a more sustainable balance between supply and demand in the economy. Furthermore, it had noted that the impact of the more recent rate rises would continue to flow through the economy. It had therefore decided that it was appropriate to hold rates steady to provide time to assess the impact of the increase in interest rates so far. In particular, the Board had indicated that it would be paying close attention to developments in the global economy, trends in household spending, and the outlook for inflation and the labour market.

Since its August meeting, the Board has received updated information on inflation, the labour market, economic activity and the revised set of forecasts. The weight of this information suggests that the risk of inflation remaining higher for longer has increased. While the economy is experiencing a period of below-trend growth, it has been stronger than expected over the first half of the year. Underlying inflation was higher than expected at the time of the August forecasts, including across a broad range of services. Conditions in the labour market have eased but they remain tight. Housing prices are continuing to rise across the country.

At the same time, high inflation is weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment. Given that the economy is forecast to grow below trend, employment is expected to grow slower than the labour force and the unemployment rate is expected to rise gradually to around 4¼&nbsp;per&nbsp;cent. This is a more moderate increase than previously forecast. Wages growth has picked up over the past year but is still consistent with the inflation target, provided that productivity growth picks up.

Returning inflation to target within a reasonable timeframe remains the Board’s priority. High inflation makes life difficult for everyone and damages the functioning of the economy. It erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality. And if high inflation were to become entrenched in people’s expectations, it would be much more costly to reduce later, involving even higher interest rates and a larger rise in unemployment. To date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case.

There are still significant uncertainties around the outlook. Services price inflation has been surprisingly persistent overseas and the same could occur in Australia. There are uncertainties regarding the lags in the effect of monetary policy and how firms’ pricing decisions and wages will respond to the slower growth in the economy at a time when the labour market remains tight. The outlook for household consumption also remains uncertain, with many households experiencing a painful squeeze on their finances, while some are benefiting from rising housing prices, substantial savings buffers and higher interest income. And globally, there remains a high level of uncertainty around the outlook for the Chinese economy and the implications of the conflicts abroad.

Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks. In making its decisions, the Board will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.

Source: <a href="https://www.rba.gov.au/media-releases/2023/mr-23-30.html">www.rba.gov.au</a>

At its meeting today, the Board decided to raise the cash rate target by 25 basis points to 4.35 per cent

Staff Writer

RBA hike interest rates at Cup Day meeting

The RBA halted their aggressive cash rate increases at the April meeting, opting to not hike rates for an 11th consecutive time.

They left the cash rate unchanged at 3.6 per cent.

Below is the RBA statement by RBA Governor Philip Lowe.

At its meeting today, the Board decided to leave the cash rate target unchanged at 3.60&nbsp;per&nbsp;cent and the interest rate on Exchange Settlement balances unchanged at 3.50&nbsp;per&nbsp;cent.

This decision follows a cumulative increase in interest rates of 3½&nbsp;percentage points since May last year. The Board recognises that monetary policy operates with a lag and that the full effect of this substantial increase in interest rates is yet to be felt. The Board took the decision to hold interest rates steady this month to provide additional time to assess the impact of the increase in interest rates to date and the economic outlook.

Global inflation remains very high. In headline terms it is moderating, although services price inflation remains high in many economies. The outlook for the global economy remains subdued, with below-average growth expected this year and next. The recent banking system problems in the United States and Switzerland have resulted in volatility in financial markets and a reassessment of the outlook for global interest rates. These problems are also expected to lead to tighter financial conditions, which would be an additional headwind for the global economy.

The Australian banking system is strong, well capitalised and highly liquid. It is well placed to provide the credit that the economy needs.

A range of information, including the monthly CPI indicator, suggests that inflation has peaked in Australia. Goods price inflation is expected to moderate over the months ahead due to global developments and softer demand in Australia. Meanwhile, rents are increasing at the fastest rate in some years, with vacancy rates low in many parts of the country. The prices of utilities are also rising quickly. The central forecast is for inflation to decline this year and next, to around 3&nbsp;per&nbsp;cent in mid-2025. Medium-term inflation expectations remain well anchored, and it is important that this remains the case.

Growth in the Australian economy has slowed, with growth over the next couple of years expected to be below trend. There is further evidence that the combination of higher interest rates, cost-of-living pressures and a decline in housing prices is leading to a substantial slowing in household spending. While some households have substantial savings buffers, others are experiencing a painful squeeze on their finances.

The labour market remains very tight. The unemployment rate is at a near 50-year low and underemployment is also low. Many firms continue to experience difficulty hiring workers, although some report an easing in labour shortages and the number of vacancies has declined a little. As economic growth slows, unemployment is expected to increase.

Wages growth is continuing to increase in response to the tight labour market and higher inflation. At the aggregate level, wages growth is still consistent with the inflation target, provided that productivity growth picks up. The Board remains alert to the risk of a prices-wages spiral, given the limited spare capacity in the economy and the historically low rate of unemployment. Accordingly, it will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms.

The Board’s priority is to return inflation to target. High inflation makes life difficult for people and damages the functioning of the economy. And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment. The Board is seeking to return inflation to the&nbsp;2–3&nbsp;per&nbsp;cent target range while keeping the economy on an even keel, but the path to achieving a soft landing remains a narrow one.

The Board expects that some further tightening of monetary policy may well be needed to ensure that inflation returns to target. The decision to hold interest rates steady this month provides the Board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty. In assessing when and how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.

The RBA halted their aggressive cash rate increases at the April meeting, opting to not hike rates for an 11th consecutive time.

RBA holds official cash rate at April meeting

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The Reserve Bank could seek tightened lending standards if the current record low interest rates triggers a housing boom, according to a RBA document obtained by Nine Entertainment.

While not the official position of the central bank, the research paper found low interest rates, along with the RBA's quantitative easing program, were supporting assets including the prices of houses.

It noted higher asset prices could translate into increased spending by "credit-constrained households".

"Housing prices are likely to (increase) alongside other asset prices," it suggested.

The research paper noted loan-to-valuation ratios were increasing but were still well below the levels that prompted APRA to tighten lending standards progressively from 2015.

It raised the spectre of borrowers "likely to be in negative equity".

The paper said the Council of Financial Regulators (CFR) - the RBA, APRA, the federal Treasury and the Australian Securities and Investments Commission - would intercede if required.

"Australia’s financial regulators will monitor and control risks," the paper noted.

"CFR will act if needed."

The document obtained under Freedom of Information date back to late November considerations by the RBA.

The paper cites previous research by RBA economists that a permanent percentage point reduction in official interest rates can drive up real house prices by 30 per cent over a three-year period. 

A "temporary" percentage point reduction would push up real prices by 10 per cent.

The central bank has cut official interest rates by 1.15 percentage points since last June.
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The document obtained under Freedom of Information date back to late November considerations by the RBA.

jchancellor

Reserve Bank may seek tightened lending standards if record low interest rates triggers housing boom

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At the RBA's December 2020 meeting, the members noted that conditions in the domestic housing market were improving, but were uneven.

"Regional housing prices had increased by more than those in capital cities since the onset of the pandemic", RBA Governor Philip Lowe's meeting minutes read.

They highlighted the variation in changes in housing prices across the capitals, with Sydney and Melbourne markets more subdued than elsewhere in the country.

Lowe said that, within Sydney and Melbourne in particular, conditions in the detached housing market were firmer than for higher-density markets.

"Overall, national housing prices had increased only a little since the outbreak of the pandemic," Lowe stated.

They focused on the slowdown in population growth impacting the housing market nationally as a result of the closure of international borders.

"This had been more consequential in Australia than in many other economies," Lowe advised, saying that it has impacted the rental market in particular, with rents falling and rental vacancy rates in inner-city Sydney and Melbourne around their highest levels in many years."

Lowe touched on the strong growth in New Zealand housing markets, with population growth, expat buying interest and an earlier easing in lending standards.

"By comparison, these factors had been less relevant in Australia and, partly as a result, the increase in housing prices in Australia this year had been considerably smaller than in a number of other advanced economies."
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Conditions in the domestic housing market improving, but uneven: RBA's December 2020 meeting minutes

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EXPERT OBSERVER
Never has a virus featured so prominently in a Reserve Bank statement.
<a href="https://images.theconversation.com/files/318243/original/file-20200303-18287-3jgff.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip" target="_blank"><img src="https://images.theconversation.com/files/318243/original/file-20200303-18287-3jgff.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=237&amp;fit=clip" alt=""></a>
Source: <a class="source" href="https://www.rba.gov.au/media-releases/2020/mr-20-06" target="_blank">Reserve Bank of Australia</a>
The word “coronavirus” is mentioned <a href="https://www.rba.gov.au/media-releases/2020/mr-20-06" target="_blank">nine times</a> in the governor’s seven-paragraph statement.
His board cut the cash rate from an all-time low of 0.75 per cent to a new all-time low of 0.50 per cent “to support the economy as it responds to the global coronavirus outbreak”.
Up until the coronavirus, it had looked as if “the slowdown in the global economy that started in 2018 was coming to an end”.
The coronavirus has “clouded” that outlook.
It is “too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path”.
Financial markets have been volatile “as market participants assess the risks associated with the coronavirus”.
In most economies, including the United States, there is an expectation of further rate cuts.
The coronavirus is having a “significant effect” on Australia’s real economy, particularly in the education and travel industries.
The uncertainty is “also likely to affect domestic spending”.
GDP growth in the March quarter (but not the December quarter whose figures will be released on Wednesday) is likely to be “noticeably weaker than earlier expected”.
Once the coronavirus is contained, the Australian economy is expected to return to an improving trend.
But given the evolving situation, it is difficult to predict how large and long-lasting the effect will be.
Summing up, the bank says the global outbreak is “expected to delay progress in Australia towards full employment and the inflation target”.
It decided to cut rates to provide “additional support to employment and economic activity”. Importantly, it will continue to monitor developments closely with a view to doing more.
The final sentence, the one which usually carries the key message, says: “the board is prepared to ease monetary policy further to support the Australian economy”.
<h2>Would it have cut without the coronavirus?</h2>
It probably wouldn’t have cut without the coronavirus. It most likely would have had to cut at some point because the economy is weak. We will get an update about how things were in the three months to December on Wednesday, but the news up to the end of September was awful.
Household spending, which accounts for more than half of gross domestic product, barely budged. Over the year to September it grew just 1.2 per cent in real terms, the least since the global financial crisis. Australia’s population grew 1.6 per cent in that time, meaning the volume of goods and services bought per person went backwards.
Early figures on private new capital expenditure which will be incorporated into the national accounts released on Wednesday show business investment went backwards over the December quarter (down 2.8 per cent) and over the entire year (down 5.8 per cent).
The May budget and the December budget update forecast a jump in business investment, which it is hard to see happening.
Governor Philip Lowe has been reluctant to cut in part because he is running out of traditional ammunition.
He has said that for practical purposes the next step – 0.25 per cent – is zero, a point beyond which he would <a href="https://www.rba.gov.au/speeches/2019/sp-gov-2019-11-26" target="_blank">need to use unconventional measures</a> (which have been used so much overseas they are no longer that unconventional) to stimulate the economy further.
The most likely one is buying government and mortgage bonds from investors in order to <a href="https://theconversation.com/now-we-know-the-reserve-bank-has-spelled-out-what-it-will-do-when-rates-approach-zero-127697" target="_blank">force money into their hands</a>, making the cash rate graph the bank has been updating for 30 years now no longer relevant as an indicator of what it is doing to stimulate the economy.
<hr>
Reserve Bank cash rate
<a href="https://images.theconversation.com/files/318234/original/file-20200303-18270-1bjl5b0.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/318234/original/file-20200303-18270-1bjl5b0.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
<hr>
He has decided to cut because he is contractually obligated to do what he can to contribute to “<a href="https://www.rba.gov.au/about-rba/our-role" target="_blank">the economic prosperity and welfare of the people of Australia</a>”, which is at risk.
<h2>What good will the cut do?</h2>
Westpac and the Commonwealth Bank announced they were passing the cut on to borrowers straight away after an appeal by Prime Minister Scott Morrison to their better natures.
The government would absolutely expect the four big banks to come to the table and to do their bit in supporting Australians as we go through the impact of the coronavirus. I don’t see it any different to what Qantas did when we called out to Qantas and we said, we need your help, we need to get some people out of China.
Before today’s decisions the average standard variable mortgage rate was 4.7 per cent The average basic variable mortgage rate was 3.05 per cent. Today’s cuts will take it to 2.8 per cent.
They will save many mortgage holders an extra A$30 per month on repayments on top of the $150 saved since June. That will allow them to spend more or to borrow more by extending their mortgages, further increasing the financial attractiveness of investments such as solar panels or home insulation, and perhaps further supporting home prices which have turned up since the bank began cutting.
Where mortgage holders direct the proceeds of the cuts to Australian businesses, it’ll help keep them afloat or give them the confidence to borrow for expansion at record low interest rates.
Although it is often said that interest rate cuts have less effect when interest rates get low, there is no particular reason to believe this is the case. There is reason to believe interest rate cuts have little effect when consumers and businesses have other reasons for not borrowing or spending much, which might well be the case at the moment.
<h2>What will the government do?</h2>
The government is drawing up a stimulus plan. Just don’t call it that.
Morrison says it will:
<blockquote>
be a targeted plan, it will be a measured plan, it will be a scalable plan, we will ensure that we do not make the same mistakes of previous stimulus measures that have been put in place.
</blockquote>
That probably means he won’t be delivering cheques to households as Labor did during the global financial crisis. The Coalition tried something similar, delivering out-sized tax refund cheques after the May budget, and it didn’t work that well.
He’ll almost certainly announce new investment allowances for businesses; if necessary, ones that effectively pay them to borrow.
And he and his ministers will be surveying the economy sector by sector.
He has spoken personally with the bosses of Coles and Woolworths seeking assurances they won’t run low on supplies. He says if necessary they can talk to each other, something normally not allowed by competition rules.
They have already talked to Kimberly Clark, which manufactures toilet paper. It has set up a line of production in South Australia to ensure shops don’t run out.<img src="https://counter.theconversation.com/content/132871/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/peter-martin-682709" target="_blank">Peter Martin</a>, Visiting Fellow, <a href="https://theconversation.com/institutions/crawford-school-of-public-policy-australian-national-university-3292" target="_blank">Crawford School of Public Policy, Australian National University</a>
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/one-word-repeated-9-times-explains-why-the-reserve-bank-cut-its-coronavirus-132871" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

One word repeated nine times explains why the Reserve Bank cut: it's ‘coronavirus’

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The Reserve Bank of Australia has just announced that the official cash rate will remain at a record low of 1% as they continue to assess the impact of the June and July cash rate cuts.

The rate was lowered for the first time in almost three years in a bid to alleviate financial strains by reinvigorating household spending and attempting to boost employment rates across the country. According to CommSec’s Tom Piotrowski, Australia's economy has been growing at the slowest pace in almost a decade, however, an increase in clearance rates, rising home values, and greater housing demand could allude to a brighter outlook for Q4. 

<h2>IT’S ARGUABLY “EASIER” TO BUY PROPERTY IN THE CURRENT MARKET</h2>

In July Apartments.com.au <a href="/news/a-borrower-s-market-the-reserve-bank-of-australia-cuts-cash-rate-to-a-record-low">reported on the announcement of the 1% cash rate</a>, concluding that the property market appears to be in favour of borrowers at present, given the more relaxed lending constraints and lower interest rates on home loans.

We reached out to Jeremy Toeng, Financial Director and Lending Advisor at Chatham House Financial, who shared a similar opinion regarding the current property climate following the two 25 basis point cuts and APRA's announcement of a lowered minimum interest rate serviceability buffer.

<blockquote>
“Following both the Royal Commission and Federal Election, we feel that consumer sentiment has improved which is leading to a noticeable increase in activity, particularly for those looking to purchase property. We feel this is largely due to an easing of lending criteria which has helped consumers with affordability, as well as a reduction in interest rates.”
</blockquote>

Jeremy Toeng, Chatham House Financial Director &amp; Lending Advisor

<h2>CONCERNS ABOUT MORTGAGE SERVICEABILITY</h2>

CoreLogic Research Director Tim Lawless explains that with the low mortgage serviceability there will be an underlying concern that the issue of high household debt will remain unresolved.

<blockquote>
"...The recent step up in the pace of value growth is likely to raise some concern that the lowest mortgage rates since the 1950s is fuelling renewed housing market exuberance at a time when household debt remains around record highs.”
</blockquote>

Tim Lawless, CoreLogic Research Director via <a href="https://www.news.com.au/finance/economy/interest-rates/official-cash-rate-remains-at-1-per-cent-following-reserve-banks-september-meeting/news-story/76606fdc5d68d31e127660261d0948d0">news.com.au</a>

Lawless suggested that a solution to this could be limiting the amount given to borrowers on high debt-to-income ratios, or stricter limits on the loan to value ratio (LVR) which compares your loan amount with the value of your property – meaning the lower the 'LVR', the lower the financial risk for the bank. 

<h2>COULD PROPERTY VALUE GROWTH INDICATE A GOOD TIME TO BUY?</h2>

<a href="/guides/how-australia-s-interest-rate-cuts-could-impact-first-home-buyers">Our research showed</a> that while term deposits would experience a drop in interest return from banks, property could potentially be a safe investment, given the fact that property values have shown an exponential increase in recent months.

<blockquote>
“In line with rate cuts in June and July, housing values in Australia’s two largest cities have recorded a lift, with dwelling values rising 1.9 per cent and 1.8 per cent in Sydney and Melbourne over the past three months.” 
</blockquote>

Tim Lawless, CoreLogic Research Director via <a href="https://www.news.com.au/finance/economy/interest-rates/official-cash-rate-remains-at-1-per-cent-following-reserve-banks-september-meeting/news-story/76606fdc5d68d31e127660261d0948d0">news.com.au</a>

Jeremy Toeng also weighed in on the current markets, concluding that spring is looking up for both developers and buyers,

<blockquote>
“On the property front, clearance rates are increasing and whilst overall stock levels are low, we think this will increase as we head into spring which is traditionally the busiest time of the year in the property market.”
</blockquote>

Jeremy Toeng, Chatham House Financial Director &amp; Lending Advisor

<a href="/guides/off-the-plan-property-buyer-confidence-surges-post-election">In May earlier this year</a>, CBRE’s Andrew Leoncelli also predicted that Q4 would be a good time for developers to take their projects to market, given an uplift in demand for property. It'll be interesting to see how Q3 and Q4 play out, and whether the property market maintains upwards momentum. 

Lead image credit: Daniel Chen
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