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

Bill Evans

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As expected the Board of the Reserve Bank maintained its current policy settings, including the targets of 10 basis points for the cash rate and the yield on the 3 year Australian Government bond, as well as the parameters of the Term Funding Facility and the government bond purchase program.

Since the last Board meeting on March 2 the most important economic developments have been the announcement of the surprise fall in the unemployment rate from 6.4% in January to 5.8% in February and reports of extraordinary strength in the national housing market.

The unemployment report has prompted only a minor change in the Governor’s rhetoric from “the economy is still operating with considerable spare capacity and the unemployment rate remains higher than it has been for some years” (March) to “the economy is operating with considerable spare capacity and unemployment is still too high.” (April).

[smartcode_project:default project_id=26574]

The key sentiments from March are repeated, “it will take some time to reduce this spare capacity and for the labour market to be tight enough to generate wage increases that are consistent with achieving the inflation target” and “wage and price pressures are subdued and are expected to remain so for some years.”

Rising house prices are recognised, “prices rising in most markets.” But the same approach we saw in March is adopted where lending standards are emphasised, “the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.”

Importantly the Governor points out that “investor credit growth remains subdued.”

[smartcode_project:default project_id=29914]

It is interesting that he did not comment, at this stage, on the recent trend for new lending for housing. In February new lending for investors lifted by 4.5% in the month compared to -0.8% for “upgraders” and -4% for First Home Buyers.

In fact the six month growth rate for new investor finance approvals (31%) is now above the upgraders’ rate (24%) and First Home Buyers (30%). No doubt the Board will be watching these trends very closely.

The commitment to the 3 year bond rate target at 0.1% was confirmed and it was noted that “The Board remains committed to the 3 year government bond yield target of 10 basis points” while noting that “Later in the year it will consider whether to retain the April 2024 bond as the target bond or to shift to the next maturity.” That would be the November 2024 bond – a likely decision which would be supported by the consistent observation that “the Board does not expect these conditions (necessary to increase the cash rate) to be met until 2024 at the earliest.”

Insisting that it will be 2024 “at the earliest” is not consistent with restricting the target bond to an April 2024 maturity.

[smartcode_project:default project_id=26574]

As with March the Governor remains supportive of the bond purchase program, “the Bank is prepared to undertake further bond purchases if doing so would assist with progress towards the goals of full employment and inflation.” Note that in the March Statement the Governor indicated his preparedness to extend the policy “if necessary” – the April sentiment seems even more supportive of the bond buying approach.

Since the March Board meeting the AUD has fallen by around US 1.5c but there is no indication of “job done” with respect to the bond buying program which is directly aimed at lowering the AUD (recall that Assistant Governor, Financial Markets, Chris Kent recently estimated that the QE program had lowered the AUD by up to 5%).

Conclusion

Westpac recently confirmed its views that the Bank will extend the new $100 billion bond purchasing program (which is set to begin next week) with a further $100 billion when the new program concludes in the week ending August 27.

[smartcode_project:default project_id=29921]

However, we expect that the new program which we expect to begin in the following week will be at a slightly slower pace ($4 billion in purchases rather than $5 billion) so that it can extend into early March. Maintaining the $5 billion pace for the next program would see it concluding in late January requiring the Bank to make an announcement about any future program at the December Board meeting.

We expect that the Board will decide to taper the following program to $50 billion but such a decision will be better made at the February 2022 Board meeting rather than in December when much more information, including the intentions of the Federal Reserve, might be available.

Consistent with the tapering decision we also expect that, having extended the Yield Curve Control policy to target the November 2024 bond, the Board will announce that it is not extending Yield Curve Control beyond the November bond, making the February 2022 Board meeting an important milestone in the Bank’s long road to normalising policy.

Bill Evans is the chief economist at Westpac.
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The Governor’s Statement following the April Board meeting is as expected

bevans

Rising house prices recognised in April RBA minutes: Westpac's Bill Evans

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Having previously forecasted four per cent gains in 2021 in September, Westpac economists have lifted their forecast for dwelling prices and are now expecting 10 per cent gains in both 2021 and 2022.

Westpac chief economist Bill Evans and senior economist Matthew Hassan's expectation is the market will flatten in 2023 as rising fixed-term interest rates combine with prudential measures aimed at reining in the associated lift in leverage.

"These headwinds are not expected to emerge until 2022 with prudential measures likely to be timed for the second half of 2022," Evans and Hassan suggest.

The forecast has Perth leading the way in 2021 with 12 per cent gains, followed by Sydney, Brisbane and Adelaide at 10 per cent. Hobart and Melbourne are predicted to see eight per cent gains, with the latter jumping to 10 per cent over 2022.  

[smartcode_project:default project_id=7864]

They say the September forecast of four per cent gains in 2021 was "considered bold", given Victoria was still in lock down.

<img alt="" height="824" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/dwelling_forecast_westpac_2021.jpg" width="1200">

"The forecast for 2021 incorporated ongoing COVID-related headwinds – particularly around the end of temporary loan repayment deferrals and the impact of closed international borders on migrant inflows," Evans and Hassan continued.

"These headwinds and uncertainties around the pace of reopening and risks of further virus outbreaks were expected to restrain price gains through the first half of 2021.

[smartcode_project:default project_id=5559]

"However, the last four months have seen a faster and stronger than expected turnaround, particularly in markets that will see little or no effects from these headwinds. Even in those that are more exposed, demand is looking materially stronger than expected back in September, suggesting momentum will be better sustained.

Evans and Hassan says the upturn is being supported by record low interest rates; the confident expectation amongst borrowers that these rates will remain low for years to come; ample credit supply; and an improving economic backdrop, as the roll-out of vaccines promises to bring the pandemic to an end and drives a sustained lift in confidence.
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Westpac chief economist Bill Evans and economist Matthew Hassan's expectation is the market will flatten in 2023



Westpac now forecast 20 per cent dwelling price gains over next two years

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EXPERT OBSERVER
Some economists are concerned about the “wealth effect” of falling property prices. They need not be concerned about that. 
What should concern them is their disturbing lack of knowledge about residential real estate markets. They have misunderstood what’s happening with prices in the many different markets around Australia.
Bill Evans, high-profile economist from Westpac, is one of those who think “falling property prices” will affect consumer spending. He thinks the Reserve Bank will be forced to cut the official interest rate a couple of times this year because of this hypothetical impact of falling property prices.
Mainstream media, as if so often sadly the case, have given great credibility to these forecasts. Journalists have forgotten that Westpac, until last week, was predicting that the cash rate would not change this year and that the next move would be a rise. Now they’ve back-flipped. What does that say about their forecasting?
But the big issue is the lack of understanding about real estate markets. Like most economists, Evans and his cohorts turn their attention to residential property only occasionally, and, when they do, they generalise. They talk about “the Australian property market” and what’s happening with “Australian property prices”. This is a clue that they lack depth of knowledge.
This kind of generalisation is the curse of real estate consumers across the nation. It’s the source of much of the misinformation that permeates mainstream media and which confounds consumers.
Here’s the difference between those Westpac economists and the Hotspotting team: we spend all day, every day, researching residential markets. They do not.
And here’s what I know to be true: locations where property prices have fallen a lot are in the minority. Most markets around the nation have prices that are rising or are holding firm. 
In Hotspotting’s latest location-by-location analysis of sales activity and prices for every suburb and town across the nation, we have identified a number of “danger” markets – those where demand is falling, prices are down and vacancies are rising.
But these danger locations are greatly outnumbered by those where markets are rising. Our national survey finds only 8.5% of locations are negative – what we classify as “declining” or “danger” markets. By comparison, 20.5% of locations are strongly rising. The vast majority – the big lump in the middle – comprises markets where demand is steady and prices solid.
Here's what economists do: they look at a graph or table which describes “Australian property prices”. This is a figure from someone like CoreLogic which provides an average figure for the change in prices for the capital cities. Currently that’s a minus figure because of the weight of Sydney. So they declare that Australian property prices are falling and that this is a national problem.
Apparently, Australians will be so distressed by this that they’ll stop spending in supermarkets and retail stores. It’s a ludicrous proposition.
In Melbourne, only the top end of the market is sharply down. Undoubtedly, the Tooraks of this world have seen prices falling significantly. But Middle Melbourne is remaining very solid price-wise and the cheaper outer-ring suburbs still have rising prices. Most of the suburbs of humble Melton are up by more than 20%.
That’s why most research sources (not including CoreLogic) have Melbourne prices overall down only moderately or, in one case, slightly up.
Meanwhile, Regional Victoria is going ballistic. Geelong, Ballarat, Bendigo, Pakenham, Officer, Warragul and dozens of other regional cities and towns have rising demand and very strong prices.
Hobart prices are still rising and Regional Tasmania is as buoyant as Regional Victoria. Both those regional markets are being supercharged by demand out of Melbourne.
Canberra is rock solid. As I wrote last week, it’s the strongest real estate economy in the nation and it’s doing the opposite to struggling Sydney.
Likewise, Regional NSW. There are growth markets spread right throughout the state. Newcastle and neighbouring LGAs like Lake Macquarie, Port Stephens and the Hunter Region municipalities have formed the strongest market in NSW in the past 12months.
Other important regional centres are rising, including Orange, Tamworth, Byron Bay, Dubbo and many of the smaller towns. Overall it’s a story of growth, in defiance of the Sydney trend.
Those past their best but still solid include Wollongong, Coffs Harbour, Port Macquarie and the towns of the Southern Highlands.
Brisbane overall is not rising strongly with prices, but it’s not falling either – and individual pockets are out-performing. It’s not hard to find suburbs where median prices have risen in double digits in the past year.
The Sunshine Coast is Queensland’s strongest market, with top-end suburbs around Noosa particularly buoyant.
Central Queensland locations are recovering from the previous malaise induced by the mining sector, led by the strategic city of Mackay. Others rising from the previous downturn include Emerald, Rockhampton, Dalby, Chinchilla, Moranbah – and we’re now seeing the first evidence of recovery in Gladstone.
Key regional cities like Toowoomba and Cairns have steady markets. Only time will reveal the real estate impacts from Townsville’s floods.
Adelaide is one of the really solid markets in capital city Australia. Demand is steadily rising and, like Brisbane, the city has individual pockets that are out-performing. There’s no sign of falling values here.
Perth has been in downturn for the past four years, but no longer. All the figures show recovery is under way – vacancies down, rents starting to rise, sales activity trending up and the top-end suburbs showing good price growth.
The only markets of significance where major price decline is prevalent are Sydney and Darwin.
Darwin just can’t escape its malaise because the underlying economy is so weak. The Northern Territory is the only state or territory which failed to deliver population growth last year.
Sydney’s situation is heavily documented but very poorly reported. There are plenty of declining markets and more than a few danger ones. But there are still many markets where demand is solid and prices are resilient.
One situation that media has completely overlooked is the defiant performance of the apartment market. Sydney’s gradual decline, which started back in 2016 long before the royal commission and other distractions that economists think important, was precipitated by the market’s reaction of price levels. Affordability became an issue at all levels of the market. 
So now we have a situation where the cheaper products like apartments are still attracting demand and achieving good prices. Throughout inner and middle ring Sydney, there are many dozens of suburbs where the median house price is sharply down but the median apartment price is strongly up.
So where are all these Australians who are so afflicted by falling property prices that they’re going to hide their money under their beds and not spent. Outside of Sydney (but not all of Sydney) and Darwin, they really don’t exist.
And this is reflected in multiple surveys. The latest Westpac poll shows consumer confidence is up and is specifically not affected by all the negative media about house prices. The ME survey indicated most Australians expect house prices to stay solid or to rise this year and the Momentum Wealth survey found investors are planning to buy, with Perth and Brisbane their No.1 targets.
I think these thoughts from veteran real estate analyst Michael Matusik are also relevant: “It is somewhat sobering to find that the majority aren’t that caught up in all the incessant real estate chat. To most a house is their home and not something that needs a lot of day-to-day analysis or comment. The majority just roll their eyes at the daily house price indices. I am in that crowd.”
I, too, am in that crowd. The media and economists like Bill Evans misinterpret and over-estimate the impact of recent price decline on a relatively small number of Australians.
For most of us, a falling property market is simply not part of our day.
 
Terry Ryder is the founder of hotspotting.com.au
<a href="https://mailto:ryder@hotspotting.com.au">ryder@hotspotting.com.au</a>
twitter.com/hotspotting
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terryryder-YECXbqmri2

Westpac economist Bill Evans has the property market decline wrong: Hotspotting's Terry Ryder

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At its December meeting the Reserve Bank Board decided to maintain the policy settings it adopted at the November Board meeting.
The Governor confirmed the key forecasts that were adopted for the November Statement on Monetary Policy: “It will not be until the end of 2021 that the level of GDP reaches the level attained at the end of 2019. In the central scenario, GDP is expected to grow by around 5 per cent next year and 4 per cent over 2022”.
That growth profile is expected to be consistent with an unemployment rate of 8% by end 2020; 6.5% by end 2021; and 6% by end 2022.
It is this persistently high unemployment rate that is expected to weigh on wages growth and ultimately inflation prompting the Governor to confirm that “the Board is not expecting to increase the cash rate for at least 3 years”.
Over the course of the next few months, as we move to the next Board meeting on February 2 the Board may need to significantly review its forecasts.
Firstly, the unemployment rate in December, seems unlikely to reach 8% given its current level of 7.1%.
Westpac expects strong employment growth in November as Victoria reopens and while the participation rate is likely to rise a jump in the unemployment rate to 8% seems unlikely.
Secondly, the RBA is forecasting growth in 2020 of minus 4% implying growth of around 3.5% in the second half. We expect the GDP report for the September quarter will print around 3% leading to a growth rate in 2020 of minus 3% including growth in the second half of around 4.5%. That further supports the likelihood that the unemployment rate finishes the year well below the RBA’s 8% forecast.
With population growth in 2021 reflecting a likely contraction in net immigration potential growth in 2021 could be in the 1.5% – 2.0% range, (the Government’s current forecasts are for net migration in 2020/21 of minus 70,000 and for 2021/22 of minus 20,000).
The RBA’s forecast of GDP growth of 5% in 2021 currently implies a fall in the unemployment rate of 1.5 ppt’s – such a gap between potential and actual growth (3–3.5 ppt’s) could well see a more significant fall in the unemployment rate. Certainly, if we end 2020 with an unemployment rate below 7.5% and markets “buy” the 5% growth forecast for GDP in 2021 markets are likely to be projecting an unemployment rate of well below the RBA’s current 6.5% forecast.
For 2022 the RBA is forecasting another “above potential “growth rate of 4%. While population growth will have lifted in 2022 as foreign borders reopen we are almost certain to get a below par rate of population growth in 2022- implying perhaps a potential growth rate of 2.25% – well below the forecast rate of 4%. Markets may also be surprised that in such circumstances the unemployment rate is only forecast to fall by 0.5% from 6.5% to 6.0%.
We are sceptical about the 5% growth forecast in 2021 but would expect that if it was “delivered” the unemployment rate would finish 2021 well below the RBA’s 6.5% forecast; equally a 4% growth rate in 2022 with sub-par population growth would likely see a bigger fall in the unemployment rate than 0.5 ppt’s.
Faster than forecast falls in the unemployment rate in 2021 and 2022 would certainly invite speculation in the market about the RBA’s policy direction.
Taking the RBA’s unemployment rate forecasts at face value there is clear scope for more policy support. The RBA sees its role as complementary to fiscal policy – “monetary and fiscal support will be required for some time” and “the Board is not expecting to increase the cash rate for at least three years”.
The decision to peg the three year target bond rate at the cash rate is the strongest form of forward guidance – much bolder than we see from other central banks that engage in forward guidance.
On the face value of the RBA’s current forecasts, Westpac’s view that the RBA will be required to adjust the target rate on the three year bond around mid 2022, seems reasonable but, as discussed, the risks around the forecasts will see significant market speculation around this issue through 2021.
We also learned from Deputy Governor Debelle’s speech last week that the 3 year rate is more significant for the private sector than the longer maturities (say 5 – 10 years).
That implies that the sequence of any unwinding of the policy package of the November Board meeting is likely to be QE first; followed by yield curve control; followed by adjusting the cash rate.
In the near term the Governor’s confirmation that “The Board will keep the bond purchase program under review, particularly in light of the evolving outlook for jobs and inflation … is prepared to do more if necessary”. raises the real prospect that the $100 billion program, which is targeted to be completed by June, will be extended. That decision would certainly be consistent with the timing that Westpac currently envisages for the adjustment of the yield curve control policy.
Since the Board announced its suite of policies on November 3 the AUD has risen from USD0.716 to USD 0.737. As noted in the Governor’s Statement the policy response contributes to “a lower exchange rate than otherwise”.  Reasonably the Governor attributes the vaccine related “improvement in risk sentiment” with a depreciation of the US dollar and an appreciation of the Australian dollar”. There is no hint of disappointment or impatience with this rise in the AUD.
Conclusion
Whereas 2021 might appear to be an uneventful year from the perspective of the cash rate the introduction of the RBA’s other policy tools raises a range of uncertainties about the policy mix.
All of these uncertainties will have significant implications for markets; the yield curve; and ultimately the economy.
2021 might not be that boring after all!
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Uncertainty around RBA forecasts suggests 2021 will not be boring: Bill Evans

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EXPERT OBSERVER
Recently the Bank has communicated extensively with the market.
This has included a major speech from the Governor to the Australian Business Economists; his the semi annual appearance at the House of representatives Standing Committee on Economics; and the August Statement on Monetary Policy.
So, it comes as no surprise that the Minutes of the August Board Meeting contain no surprises.
The Board confirms that it does “not rule out adjusting the current package if circumstances warranted”.
The package is highlighted by a 0.25% cash rate and a 0.25% target for the three year bond rate.
The condition for the three year bond target is somewhat looser than for the cash rate target with “progress towards the inflation target” compared with “confident that inflation will be sustainably within the 2–3 per cent target band”.
For that reason “it would be appropriate to remove the yield target before the cash rate itself is raised”.
This policy description has been used consistently since the Board minutes of the April meeting.
It is not entirely clear as to whether “remove the yield target” means abandon yield curve control or adjust the level of the target to, say, 0.40%.
In his appearance at the Parliamentary Committee he opined that the three year target of 0.25% was reasonable since he expected that the cash rate would hold at 0.25% for the next three years.
However, he was guarded as to whether he thought it likely that the 0.25% would hold for five years and therefore it was  not encouraging that the target of 0.25% would be extended to five years.
My preference would be that if in 2022 the Bank was still of the view that the cash rate was unlikely to hold at 0.25% for another three years it would be appropriate to lift the three year target rate to, say, 0.40% thus maintaining yield curve control without having to defend an unrealistic target.
Given that this current language is likely to be used consistently in the Minutes certainly through 2021 the Board can maintain its flexibility on whether to abandon yield curve control or set a different target rate.
Another issue for policy is the Australian dollar. The Governor stated last week that a lower dollar was helpful in boosting jobs through a lift in competitiveness.
With the Bank’s assumption that foreign borders would remain closed until mid- 2021 the benefit of a more competitive dollar is blunted somewhat in the near term.
However, he stated that any move to intervene to lower the dollar would be ineffective if the value of the dollar was in line with fundamentals.
In fact, in the Minutes we see “The Australian dollar had been broadly in line with fundamental determinants, such as commodity prices and interest rate differentials”.
With the outlook for commodity prices encouraging and interest rate differentials moving in a very narrow band the opportunity for a grossly overvalued AUD to emerge prompting some currency intervention seems unlikely.
Adopting a negative interest rate policy to lower the fundamental value of the dollar through a widening the yield differential has been described by the Governor as “ extraordinarily unlikely”.
I am always interested in the detailed economic discussion for insights from the Bank’s extensive liaison work with business.
In that regard “Information from the Bank’s liaison program indicated that the share of contacts expecting to freeze wages or to implement temporary wage cuts was higher than in the past”.
With wages growth being a key determinant of inflation that news will not be comforting for a central bank targeting a return to 2–3% inflation.
All three economic outlook scenarios – base; upside; and downside had inflation below 2% (upside 1.75%) by end 2022 with the downside scenario seeing inflation at 0.5% even by end 2022.
The conclusion was that “underlying inflation pressures would remain subdued for a considerable period”.
On business investment “information from liaison with businesses and recent surveys indicated that weakness in non- mining business investment over recent quarters would become more pronounced in the period ahead”….” Firms were prioritising their liquidity positions in response to uncertainty about future demand”….” many non-residential projects that had not yet commenced were on hold”.
Conclusion
The Bank’s forecasts put the policy debate in a difficult position.
What does “progress towards full employment“ mean?
If the unemployment rate has fallen from the forecast peak of 10% (we think that is too high – more like 8.5–9.0%) to 7% does that qualify as sufficient “progress” to tighten policy?
Yes, a three percentage point fall in the unemployment rate is significant but is it sufficient “progress”?
Surely there is a case for maintaining maximum policy stimulus if you are that far away from full employment and inflation has spent years outside the target band.
On the other hand, if the forecasts prove to be optimistic (and the downside scenario prevails) there should be a  debate around what other policy options might be considered effective.
Perhaps, as we move forward, that debate will merit more attention.
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BILL EVANS is Chief Economist for Westpac. 
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RBA's forecasts put policy debate in a difficult position: Westpac's Bill Evans

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EXPERT OBSERVER
The theme around the economic outlook from both the July Board Minutes and the Governor’s speech, which was delivered 90 minutes after the release of the Minutes, is best summarised by the conclusion in the Minutes “Economic conditions had stabilised and the down turn had been less severe than earlier expected” .
However, appropriately, the outlook hinged on developments around the virus both domestically and globally. The Board concludes, “However the nature and speed of the economic recovery remained highly uncertain”.
Perhaps the best “summary” of the degree of positive surprise to the Board is set out in the Minutes when the Board refers to the Bank’s original forecast of a 20% reduction in hours worked in the June quarter.
Having fallen by 9.5% in April and a further 0.7% in May, hours worked recovered by 4% in June (not known at the time of the Board meeting) resulting in the overall fall being only around a third of the Board’s original expectations.
From my perspective the most interesting insights in the Minutes and the Speech are around the discussion of policy options.
The Minutes discuss “How the elements of the Bank’s March policy package could have been configured differently” ­– setting a lower cash rate (say 0.1%) or purchasing more bonds than necessary to achieve the target bond rate.
The Board concluded that there was “no need to adjust the package of policy measures in Australia in the current environment”.
The policies which were considered included: “negative interest rates; foreign exchange intervention; the purchase of private sector assets; and direct government financing”.
The conclusion was “all such options entail significant costs and involve very difficult trade offs and, for some policies, there are legitimate questions about their effectiveness”.
These issues were covered in more detail in the Governor’s speech.
He quickly dismissed negative interest rates confirming the Board’s view in the Minutes as being “extraordinarily unlikely”. He accepted that the main potential benefit was “downward pressure on the currency” (in the Q and A he did extol the benefits of a lower currency) but referred to a dislocation of the supply of credit and “encourage people to save more”. Unfortunately, as with the last time he referred to negative rates (November last year) he did not provide any detail to the dynamics he had in mind.
In contrast, he spent a great deal of time discussing direct government financing partly, I expect, because Stan Fischer ( Vice Chair of the Federal Reserve during the Janet Yellen period) “recently argued that central bank financing of government spending may be appropriate in some circumstances” provided there are strong safeguards to avoid the inflation problem which might result  from printing money. That could be done principally through the central bank determining the degree of financing – not the government. While recognising this argument he dismissed money printing for Australia since the government was able to finance itself in the market on very favourable terms, therefore maintaining fiscal discipline.
The practice of QE which the RBA now embraces is considered different because the RBA only buys in the secondary market and the government is committed to paying interest to the RBA rather than just issuing an “IOU” to the RBA which might threaten its profits; its contribution to government revenue and, potentially, requiring a recapitalisation. In the Fischer model that policy is close to printing money where the central bank has control of the process.
While I felt that the arguments around negative rates were not developed there were some serious arguments against intervention in the FX markets. These arguments against intervening (including when the AUD is broadly in line with fundamentals) are complicated by “financial risks to the public balance sheet” and “complicate international relationships”.
While these assessments are fairly definitive he did conclude that “the Board has not ruled out future changes while” recognising that there are limitations to what more can be achieved through monetary policy”.
He clearly supported the use of fiscal policy maintaining that the government’s balance sheet is sound with low debt ratios compared to most countries.
With interest rates at record lows “the public balance sheet is well placed to smooth out the shock to private incomes and support the economy through the pandemic”.
The speech and the Minutes present unified cases for steady policy while still leaving the door slightly ajar for further stimulus if absolutely necessary.
In the Q and A I reminded the Governor of the final words in a recent speech from Deputy Governor Debelle which concluded “ the Reserve Bank will maintain the current policies to keep borrowing costs low and credit available, and stands ready to do more as the circumstances warrant.” I asked for some clarity on “do more” but, given the theme of the speech, did not make any progress.
The key to any future policy developments might lie with the Australian dollar – certainly the Governor was particularly enthusiastic in his admiration for a low AUD.
Bill Evans is the chief economist at Westpac 
 
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RBA minutes and governor’s speech closed the door on any further stimulus, for now: Westpac's Bill Evans

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EXPERT OBSERVER
As expected, the Reserve Bank board kept its policy settings unchanged at the Board meeting in July.
The assessment in July confirms the theme in the June Board meeting (“it is possible that the depth of the downturn will be less than earlier expected”) with, “Conditions have stabilised recently and the downturn has been less severe than earlier expected”.
However, as with June, the outlook is described as “highly uncertain”.
On August 7, the Bank will release its revised forecasts out to December 2022 (extended from June 2022 in May).
We will be interested in how this more positive assessment channels into the forecasts.
From a policy perspective the most interest will be in the assessment of the medium term outlook.
We assess that the Bank expects it is extraordinarily unlikely to see the need to adjust policy settings in 2021.
But recall that in its “upside scenario” in the May Statement on Monetary Policy the Bank assessed an unemployment rate of 5% by June 2022. Such an improvement in the unemployment rate would probably see it considering a move in its three year bond target at that time since it confirmed today ”the yield target will remain in place until progress is being made towards the goals of full employment and inflation”.
The unemployment rate in the base case is forecast to be six and a half per cent by June 2022 – down from nine per cent in December 2020.
That nine per cent  is likely to be reduced (Westpac is currently at eight per cent) reflecting the “less severe” near term conditions but I would be surprised if the Bank has seen enough evidence around the growth risks to lower the base  unemployment forecast in June 2022, particularly given the Governor’s understandable caution around the virus both domestically and internationally.
Growth through to December 2020 is also likely to be revised up from minus six per cent to nearer Westpac’s forecast of around minus four per cent.
But that will be largely offset by a considerable reduction in the 2021 growth forecast of six per cent (Westpac’s forecast is three per cent).
Evidence that the Bank may adjust its 2021 forecasts downwards comes through the Governor’s observation that “As some businesses rehire workers as demand returns, others are restructuring their operations”.
Of considerable interest will be the Bank’s assessment of the level of activity in the economy by end 2021 relative to the end of 2019. Current forecasts are for activity to be only around 0.4 percentage points below that level.
Westpac is more cautious at around 1.2 percentage points but both estimates will have activity more than five percentage points below trend over those two years.
And, of course, bear in mind that those forecasts in May assumed an AUD at USD 0.64 over the forecast period. Readers will be aware that Westpac expects the AUD to lift to USD 0.72 by December 2020 and to USD0.76 by end 2021.
Markets have been expecting that the Governor might comment on the AUD’s current level which is above USD 0.695.
However, while I am sure that he would like a lower AUD there is not much point in criticising its level if he has no intention of addressing the issue through policy. Policies such as negative interest rates and/or unsterilized intervention have been variously described as extraordinarily unlikely.
The Statement today clearly signalled steady policy except with respect to targeting the three year bond rate “will do whatever is necessary to ensure bond markets remain functional and to achieve the yield target for three year AGS”.
That statement implies that the Bank has adequate commitment to add to the AUD 40 billion it has already purchased, although only around a quarter was purchased in the two – three year maturity range.
Those purchases were in a year when the Budget deficit lifted from “balance” to a deficit of (we forecast) AUD 95 billion. This year (2020/2021) we expect the deficit to balloon to AUD 240 billion, making for a more active RBA, specifically if domestic and global growth surprise to the upside or market stability falters.
The Deputy Governor Guy Debelle seemed more flexible by ending his speech to the Economic Society last week with, “the Reserve Bank will maintain the current policies to keep borrowing costs low and credit available, and stands ready to do more as the circumstances warrant”.
Candidates for those “circumstances” range from a rampant AUD to another global crisis.
Bill Evans is the chief economist at Westpac
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The RBA expects it is extraordinarily unlikely to see the need to adjust policy settings in 2021: Bill Evans

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EXPERT OBSERVATION
This week we received important updates to the state of Australia’s labour market.
In times of economic crisis the labour market, quite rightly, attracts more attention than any other economic series.
The most indelible imprint that recessions make on economies is the legacy of high sustained unemployment.
Following the recession of the early 1980’s it took six years for the unemployment rate to return to its pre-recession level; after the early 1990’s recession it took fifteen years; and the 4% unemployment rate we enjoyed in the lead up to the Global Financial Crisis has never since been achieved – nearly thirteen years later.
On June 18 the ABS reported that the unemployment rate had jumped to 7.1% in May – the highest since October 2001.
Employment decreased by 227,700 following a 607,400 reduction in employment in April.
The unemployment rate would have been much higher if not for a number of factors:
Over the April-May period 623,600 people left the labour force (that is employed or actively looking for work and available for work) – largely, we expect, due to displaced workers being discouraged with the prospects of finding work; complications around school closures or the physical limitations of looking for work during a shutdown.
Without these people leaving the workforce the unemployment rate would have been 11.3%.
In May over 360,000 did not work at all but were categorised as “employed” because they still had an attachment to their employer (reasons include being stood down for less than four weeks; insufficient work; or no work available).
This represents a reduction from 750,000 in April as some workers who had been stood down transitioned to actually losing their jobs.
In May nearly 1.2 million did some work, but worked fewer hours than usual.
BILL EVANS is Westpac’s economic spokesman and the head of economic research
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How the government responds to unemployment will be crucial to COVID-19 recovery: Bill Evans

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EXPERT OBSERVATION
Remarkably, consumer confidence is now back around pre-COVID levels, having recovered all of the extreme 20% drop seen when the pandemic exploded in March–April.
Confidence has clearly been buoyed by Australia’s continued success in bringing the Coronavirus under control, which has in turn allowed for a further easing in social restrictions over the last month.
The Index is now only 2% below the average in the preceding September to February period. Note that sentiment was already on the weak side prior to the COVID shock with the Index through this earlier period showing a persistent excess of pessimists over optimists. With the unemployment rate set to remain elevated; extensive restrictions staying in place and the economy facing permanent structural change it would be surprising if the recent upward momentum continues and is able to sustain a stable level of confidence which is above that previous period.
We have also seen more even confidence levels in the major states as restrictions begin to be eased extensively across the country. Victoria lagged NSW in May with an 8.4% lift compared to 23%. However in June confidence in Victoria has jumped by 11.7% (to 94.9) compared to 4.8% in NSW (95.5). Overall confidence is now at comparable levels across both states.
While the monthly gains are impressive, the Index is still relatively weak by historical standards – in pessimistic territory overall and down 7% on a year ago. The general picture is of continued intense pressure on family finances and concern about the near- term outlook for the economy but with firming optimism around prospects for finances in the year ahead and the economy’s medium term outlook.
The contrast between that medium-term outlook in this recession and the last recession in the early 1990s is important. This component of the Index is around 50% higher than the average over a long four years in that earlier period. Respondents are confident that they can see eventual better times ahead whereas in the early 1990s there was a pervasive mood of despair for years.
Bill Evans is an economic spokesman and researcher at Westpac.
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Consumer sentiment back near pre-COVID-19 crisis levels: Bill Evans

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EXPERT OBSERVER
Westpac's chief economist Bill Evans says there is certainly a case for negative interest rates in Australia, despite the RBA previously suggesting they have gone as low as they intend to go.
"What we have to bear in mind is the Reserve Bank is a long way from its objectives, and expects to be a long way from its objectives right out to the end of its forecast period", Evans said in an update <a href="https://westpaciq.westpac.com.au/Article/43635/14186/" target="_blank">on Westpac IQ</a>.
The forecast period is June 2022.
The RBA want full employment, which is around 4.5 per cent, and inflation in the two to three per cent range, however the Reserve Bank are forecasting the unemployment rate will be at 6.5 per cent mid-way through 2022.
"Markets have been flirting with the idea of negative interest rates in a number of economies", Evans said. "The US the UK really stand out.
"Of course we know EU has had negative interest rates since 2014 and Japan has had negative interest rates for a long time as well.
Evans says markets are predicting by the first half of next year, US interest rates will be down to 0, the UK will be down to 0, NZ will be down to 0.
But Lowe said in November, and reaffirmed in recent months, that lowering the cash rate would be extraordinarily unlikely.
To watch Evans full explanation, click below.
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Bill Evans

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