As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

[smartcode_project:default project_id=426 project_image_fid=359199]

The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

[smartcode_project:default project_id=426 project_image_fid=360299]

The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

[smartcode_project:default project_id=426 project_image_fid=360300]

What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Joel Robinson

Elevated amenity anchors daily life at Aeris, Melrose Park

Repeat buyers are one of the strongest measures of confidence in any apartment development.

At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.

Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/FH_1EzB-1vs?si=XScVlP1ERsTDJoME" title="YouTube video player" width="560"></iframe>

"I had some boxes I wanted to tick," he says.

Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.

“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.

He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.

[smartcode_project:default project_id=135096 project_image_fid=356818]

After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.

"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."

Today, Keith says the move has completely changed how he experiences Newcastle.

"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."

[smartcode_project:default project_id=135096 project_image_fid=356828]

Beyond the location, he says it's the sense of community that has surprised him most.

"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."

For Aimee and Lyle Goodman, the journey started almost by chance.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/tsioMLcnjas?si=zq-ys3JuWpfa5hFv" title="YouTube video player" width="560"></iframe>

The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.

"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."

As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.

"We actually catch up more as a family now," Aimee says.

"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."

[smartcode_project:default project_id=135096 project_image_fid=356829]

Lyle says their confidence came from GWH's reputation within Newcastle's building industry.

"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."

That confidence only grew throughout the buying process.

"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."

[smartcode_project:default project_id=135096 project_image_fid=351104]

Aimee says one moment stood out.

"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."

The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.

Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.

[smartcode_project:default project_id=135096 project_image_fid=356822]

ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;

The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.

[smartcode_project:default project_id=135096 project_image_fid=356826]

For Keith, the appeal remains straightforward.

"You feel at home even before you've moved into your home."

For Aimee, the change is measured in time.

“I just felt like I had more time,” she says.

[smartcode_project:default project_id=135096 project_image_fid=351102]

Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.

ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.

[smartcode_project_cta:default project_id=135096]

From ONE to ERA: Why buyers are choosing GWH again in Newcastle West

Virgate Property Group is preparing to commence construction of Verdé, its new apartment development in Melbourne's Arts Precinct at Southbank, following a strong run of sales that has seen more than half of the project's 173 apartments secured.

Verdé has attracted a broad mix of first home buyers, owner-occupiers upgrading from nearby inner-city suburbs and investors, with younger owner-occupier couples aged between 28 and 45 accounting for the strongest enquiry. Many are already living in Southbank, South Melbourne, Albert Park, Port Melbourne, South Yarra and the CBD.

"Verdé is located in one of the most desirable pockets of southern Melbourne," Blair Property Group Director Darren Blair, who is managing sales at Verdé, said.

"It's within walking distance of the Arts Centre, Royal Botanic Gardens, Albert Park Lake, and Southbank's restaurants and retail. It's a great lifestyle location with strong amenity and liveability, which made it a very attractive choice for the project."

[smartcode_project:default project_id=4661 project_image_fid=372549]

Virgate was already familiar with the precinct, having previously delivered the successful Domain House development in neighbouring South Melbourne. That experience gave the developer confidence to acquire the Coventry Street site and continue expanding its presence in Melbourne's inner south.

"We had been keeping an eye on the site and the broader precinct for a few months before deciding to move forward with the acquisition," Virgate said.

The project was ultimately secured in 2020 following feasibility studies, planning assessments and due diligence, with the brief centred on delivering "a high-quality, considered design that feels both refined and fit for purpose."

[smartcode_project:default project_id=4661 project_image_fid=314259]

Designed by <a href="https://www.apartments.com.au/architects/bruce-henderson-architects">Bruce Henderson Architects</a>, Verdé comprises 173 one, two and three-bedroom apartments priced from $599,000. The architecture is distinguished by a faceted glass façade that responds to both the site's outlook and Melbourne's changing light conditions.

According to Bruce Henderson Architects, the coloured glazing gives the building a distinctive identity while also providing privacy and solar shading, with residences oriented to capture views across the bay, city skyline and surrounding parklands.

Inside, <a href="https://www.apartments.com.au/interior-designers/designoffice">DesignOffice</a> has created interiors focused on natural light, efficient planning and enduring materials. Apartments feature engineered oak flooring, natural stone benchtops, floor-to-ceiling glazing and SMEG appliances, while a restrained material palette aims to complement the expansive outlooks rather than compete with them.

[smartcode_project:default project_id=4661 project_image_fid=372550]

Resident amenity has also been designed around everyday functionality rather than occasional use. Facilities include a concierge-serviced lobby, residents' lounge with fireplace, library and co-working space, gym, terrace garden with barbecue facilities, ground-floor café, and package delivery management.

The project's location continues to be one of its strongest drawcards. Positioned on Coventry Street, Verdé sits within walking distance of the National Gallery of Victoria, Arts Centre Melbourne, Royal Botanic Gardens and Albert Park Lake, while Southbank's dining precinct, Sturt Street trams and the new ANZAC Station are all nearby. The surrounding education catchment also includes Melbourne Grammar, Melbourne Girls Grammar, Mac.Robertson Girls' High School and several major university campuses.

The sales team says buyers have responded particularly well to the combination of location, design quality and long-term liveability.

"They're responding really positively to the quality of the design, premium resident amenities and the uninterrupted views. Many also appreciate the location and how connected it is to everything they need."

The ability to secure stamp duty savings before completion has also been a key factor for purchasers, alongside the opportunity to personalise finishes ahead of settlement.

With construction set to commence soon and more than half the apartments already sold, Verdé enters its next phase as one of the Arts Precinct's more established apartment developments, offering remaining buyers an opportunity to secure a residence before construction advances further. Expected completion is scheduled for late 2027.

[smartcode_project_cta:default project_id=4661]

Virgate's Verdé Southbank moves toward construction as sales fly past halfway stage

Downsizer-focused apartment development Kooyongkoot in Hawthorn has been recognised at the 2026 Better Future Melbourne Design Awards, taking home Gold and Silver awards in two categories.

<a href="https://www.apartments.com.au/new-apartments/kooyongkoot-hawthorn-1-kooyongkoot-road-hawthorn-vic-3122">Kooyongkoot</a>, currently being delivered by developer PQD and designed by Cera Stribley, received Gold in the Interior Design – Proposed category and Silver in the Architecture – Proposed category.

The dual recognition reflects the design approach behind the boutique development on prestigious Kooyongkoot Road, where the focus has been on creating homes for downsizers seeking the space, quality and functionality of a detached house within a low-rise apartment building.

Rather than maximising apartment numbers, <a href="https://www.apartments.com.au/developers/pqd">PQD</a> and <a href="https://www.apartments.com.au/architects/cera-stribley-architects">Cera Stribley</a> limited the development to just 18 residences, allowing for larger floorplans, greater privacy, generous landscaping and expansive communal spaces.&nbsp;The majority of the apartments also benefit from corner aspects, allowing for dual sources of natural light.

Now around 70 per cent complete and on track for completion in November 2026, Kooyongkoot will comprise a mix of garden residences, ter​race apartments, sub-penthouses, and is crowned by two half-floor penthouses with direct lift access and private rooftop terraces.

[smartcode_project:default project_id=102717 project_image_fid=355297]

The Silver Award for Architecture recognised the way the building responds to its prominent corner position at the ent​rance to Hawthorn's Scotch Hill precinct, one of Melbourne's most established residential neighbourhoods.

Rather than competing with the grand homes that line Kooyongkoot Road, the architectural approach focused on restraint and longevity, using curved brickwork, generous landscaping and carefully considered proportions to integrate with the existing streetscape.

"The form feels fluid and timeless, as though shaped by the landscape itself – architecture that belongs, rather than competes," said Chris Stribley, Co-Founder and Managing Principal of Cera Stribley.

The judging submission also highlighted practical innovations throughout the building, including lift cores servicing only nine homes each, a central landscaped lightcourt designed to bring daylight and ventilation into the building, and fully enclosed private storage rooms with lighting, power and shelving to better accommodate residents transitioning from larger family homes.

[smartcode_project:default project_id=102717 project_image_fid=355293]

The Gold Award for Interior Design recognised the project's focus on long-term liveability rather than display-home aesthetics.

According to the awards submission, the interiors were designed from the inside out, prioritising how homes would function over decades of daily use through generous proportions, practical storage, durable natural materials and flexible layouts.

The specification includes natural stone throughout, upgraded acoustic glazing, V-ZUG appliances and fully enclosed storage rooms, alongside an amenity offering focused on wellness, entertainment and everyday convenience.&nbsp;

Residents will have access to a gym and yoga studio, a wellness centre featuring traditional and infrared saunas, a cold therapy shower and treatment room, as well as a residents' lounge and golf simulator/cinema room for entertainment.&nbsp;Kooyongkoot has also considered the everyday convenience of its residents by offering a private carwash and pet wash facilities on site as well as dedicated parcel lockers and oversized fully enclosed storage rooms.&nbsp;

[smartcode_project:default project_id=102717 project_image_fid=355303]

The project's attention to detail has already resonated with buyers. Earlier this year, Kooyongkoot recorded one of Boroondara's highest apartment sales when an $8 million penthouse was purchased by a Melbourne CEO downsizing from a nearby family home.

"Every detail feels deliberate, from the overall design down to the smallest touches," the purchaser said.

"The level of quality and refinement is exceptional, but what really sold it was how liveable it felt... It felt like a place where everything had been considered, not just a luxury building."

[smartcode_project:default project_id=102717 project_image_fid=355304]

Sustainability also formed a key part of both award submissions. Kooyongkoot is targeting a minimum 7.5-star NatHERS rating across all residences, supported by passive design principles, high-performance glazing, EV charging infrastructure, water reuse systems and a wellness model focused on lower-energy dry facilities rather than pools and large wet areas.

Located within walking distance of Scotch College, Methodist Ladies' College, Koo​yong Lawn Tennis Club, Aubur​n Village and Camberwell Junction, Kooyongkoot continues to target owner-occupiers looking to remain in Melbourne's inner east without compromising on space or quality. A limited selection of two, three and four-bedroom residences remains available, with prices starting from $1.9 million.

[smartcode_project_cta:default project_id=102717]

Kooyongkoot wins Gold and Silver at Better Future Melbourne Design Awards

New apartment supply has become increasingly constrained across <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a> in recent years, with fewer projects progressing through to completion as development conditions have become more challenging.

It makes <a href="https://www.apartments.com.au/developers/novm">NOVM</a>'s 2021-completed <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> one of the most recently completed residential towers on the Parramatta River, and among the newest apartment developments in Sydney's second CBD.

With the project largely completed before the sharp escalation in construction costs and inflation following the pandemic, The Lennox is now offering pricing that would be difficult to replicate in a comparable new development in Parramatta today, or across much of Western Sydney.

The majority of the 413 apartments at The Lennox sold before and shortly after completion. A limited release of the remaining apartments has recently been brought to market by capital partner <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a>, with entry-level pricing from $700,000 and two-bedroom apartments available from under $1 million.

Rising above the Parramatta River at 12 Phillip Street, The Lennox comprises one, two, three and four-bedroom apartments, appealing to first home buyers, young professionals, families, downsizers and interstate investors seeking a completed apartment in one of Australia's fastest-growing economic centres.

[smartcode_project:default project_id=5743 project_image_fid=372394]

Rather than positioning Parramatta as an alternative to Sydney's CBD, Equitifund believes the city has reached a point where it stands on its own merits.

"Parramatta is no longer simply an alternative to Sydney CBD, it's becoming a destination in its own right," Equitifund Executive Chairman Greg Huxley said.

"The Lennox captures that evolution with a level of quality and amenity that's difficult to match at its price point."

[smartcode_project:default project_id=5743 project_image_fid=953]

Designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, the tower responds directly to its riverfront setting through expansive glazing and open-plan layouts that maximise views across the Parramatta River and city skyline. Interiors feature engineered timber flooring, stone benchtops, stainless steel appliances and floor-to-ceiling glazing, while generous balconies extend the living spaces outdoors.

Marchese Partners says the project was conceived to balance high-quality apartment living with practical, long-term functionality, pairing larger, efficient floorplans with amenities more commonly associated with five-star hotels.

That emphasis continues through the resident facilities, which include a 20-metre rooftop swimming pool, fully equipped gym and wellness spaces, full-time concierge, a residents' lounge, function room, private lifts, secure basement parking and rooftop communal areas overlooking the Parramatta River. Ground-floor boardwalk retail and dining further activate the riverfront and integrate the building into the surrounding public realm.

[smartcode_project:default project_id=5743 project_image_fid=925]

Australian housing and finance group Equitifund has secured the remaining apartments, believing there are few completed apartment opportunities in Parramatta that offer the same combination of location, amenity and pricing.

Equitifund National Sales Director Ben Hamblett says buyers are increasingly recognising that premium apartment living no longer needs to come with Sydney CBD pricing.

"The Lennox is where aspirational living becomes attainable," Hamblett said.

"Wake to river and mountain views, step into Sydney's Second CBD, and arrive home to resort-calibre amenities, all without the harbour price tag."

Hamblett says owner-occupiers are also attracted by the convenience of having Westfield Parramatta, Church Street's dining precinct, Parramatta Park, Riverside Theatres, Western Sydney University and major transport connections all within walking distance.

"At The Lennox, lifestyle is not an afterthought, it is the foundation."

[smartcode_project:default project_id=5743 project_image_fid=5374]

The Lennox places residents within walking distance of Parramatta Square, Westfield Parramatta, Church Street Eat Street, Parramatta Station, the ferry wharf, Light Rail, the future Sydney Metro West, Parramatta Park and CommBank Stadium, reinforcing Parramatta's position as one of Australia's most connected metropolitan centres outside Sydney's CBD.

Equitifund says buyers visiting the display suite consistently comment on the quality of the finishes, generous floorplans, river and skyline views, and the walkability of the location. The project has attracted a broad mix of local professionals, upsizers, downsizers, buyers relocating from Sydney's inner suburbs and interstate investors seeking long-term growth opportunities.

That demand aligns with Parramatta's continued evolution as an economic powerhouse. Equitifund Research and Market Insights specialist John Bekiaris says sustained population growth, infrastructure investment and expanding employment opportunities continue to support long-term housing demand across the city.

"Parramatta has evolved from a satellite city into one of Australia's most important economic centres. Population growth, infrastructure investment and employment are all supporting sustained long-term housing demand."

[smartcode_project_cta:default project_id=5743]

The apartment price gap drawing Sydney buyers west

Commsec

<html><body>
CommSec has analysed all results from ASX 200 companies. Traditionally brokers or analysts focus on smaller subsets of results. And some merely focus on just whether companies have met or fallen short of “market expectations”.
So far 125 of the ASX200 have reported half-year earnings. The earnings season effectively ends on February 28.
Some of the key results:
<ul>
<li>In aggregate, revenues are up 7.0% on a year ago; expenses are up 8.2%; profits are down by 1.5%; dividends are up 9.5% and cash is up 5.3%.</li>
<li>Excluding BHP, CBA and Telstra, profits are up 3.2% on a year ago.</li>
</ul>
The following points relate to those companies that have reported half-year results (HY reporting companies).
<ul>
<li>On revenues, 81% reported increases and 19% reported declines.</li>
<li>On expenses, 78% reported increases and 22% reported declines.</li>
<li>On profits, 94% reported a profit.</li>
<li>57% reported a lift in profit and 43% a decline (long-term average 61.4%).</li>
<li>Of those reporting a profit, 57% lifted profits and 43% reported a decline.</li>
<li>Of all HY reporting companies, 86% have issued a dividend and 14% haven’t.</li>
<li>Of those reporting a dividend, 75% lifted the dividend, 8% cut and 17% left dividends unchanged.</li>
<li>Of all companies reporting half-year earnings, 57% lifted cash holdings over the year and 43% cut cash levels.</li>
<li>Cash holdings of both full-year and half-year reporting companies stood at $112 billion at December 31, up 4.4%.
</li>
</ul>
The trends
<ul>
<li>Surveys conducted of the business sector over the past six months have generally been positive. The NAB business conditions index hit record (21-year) highs in October 2017. Using rolling averages, business conditions are at decade highs.  
</li>
<li>So it makes sense that companies are making money. In fact all but seven of the 125 ASX200 companies reporting for the six months to December, reported a profit. The 94.4% of companies recording a profit matches the record high proportion in the 2017 interim reporting season a year ago. 
</li>
<li>But aggregate profits aren’t soaring. In fact aggregate profits are down 1.5% on a year ago. Stripping out heavyweight companies, a small lift in aggregate profit was achieved. 
</li>
<li>In addition, if you look at the proportion of companies able to lift profits, it was only 57% – the smallest share in five years. 
</li>
<li>So where have the funds gone? Aggregate revenues lifted 7% over the year but expenses posted a stronger 8.2% increase. Some companies have chosen to invest more into their business. Others may have lifted marketing expenses to stay competitive. Still others may have faced higher costs – certainly energy bills have continued to lift along with other commodity prices. 
</li>
<li>Cash levels are still healthy, up 5.3% on a year ago for half-year reporting companies. But in the year to June 2017 cash levels were up by 23.5%. 
</li>
<li>As a result of decisions or circumstances that have led to a lift in expenses, thus restraining profits, a smaller proportion of companies have issued dividends. 
</li>
<li>For some time this had been expected – companies had to reach a point where they needed to spend more on the business. So the 86% of companies issuing a dividend was the smallest proportion for three years.  
</li>
<li>The important point is that for those companies paying a dividend, the desire has been to lift or maintain the dividend. In fact almost 92% of the dividend payers, elected to lift or maintain dividends – the highest share in the 16 reporting seasons we have tracked. 
</li>
<li>In aggregate, dividends per share were up 9.5% on a year ago. 
</li>
</ul>
What are the implications for interest rates and investors?
<ul>
<li>Corporate Australia remains in strong shape. All but seven of the half-year reporting companies recorded a profit for the period despite stronger growth in expenses. 
</li>
<li>Corporate Australia is solidly in the black. But the bottom-line profits aren’t rising like they were in the recent past. And that is understandable. The base level of corporate profits is higher; global competition continues to lift; companies are investing more; and there was a solid lift in energy costs in the second half of 2017. 
</li>
<li>Looking ahead, the Australian economy is expected to grow at a faster pace over the coming year. A near record number of homes are being built although fewer new projects are likely to be started over the coming year, especially in Sydney and Melbourne and the Brisbane apartment market. 
</li>
<li>A growing number of infrastructure projects will support prospects of construction, industrial and transport sectors. 
</li>
<li>Resource companies and other companies with substantial operations overseas will benefit from stronger global economies. The challenge will be to restrain costs, particularly energy costs. 
</li>
<li>US sharemarkets have been volatile over February as investors weigh up high valuations and the prospects for higher interest rates. The Australian sharemarket will be affected like other sharemarkets should the volatility continue. But the Australian sharemarket is attractively valued with the lagged price-earnings at 15.79, only slightly above the long-term average. 
</li>
<li>CommSec expects the All Ordinaries to be trading in a 6,250-6,650 point range by the end of calendar year 2018 with the ASX200 around 100 points lower than the stated range.</li>
</ul>
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/26/CI%205.jpg" alt="">
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/26/CI%206.jpg" alt="">
Craig James is chief economist at CommSec.
</body></html>

cjames-5S2v74qSNK

Bottom-line profits of corporate Australia are rising like the recent past: CommSec's Craig James

<html><body>
The weekly ANZ/Roy Morgan consumer confidence rating fell by 3.5 per cent last week. Sentiment towards household finances and the economy fell, despite a recovery in global stock markets and strong jobs data. However, the index remains above its long-term average of 112.9.  
<div class="x_WordSection1">
Consumers’ inflation expectations rose to 4.7 per cent last week, up from 4.4 per cent in the previous week. This is the equal highest reading in 13 months. The consumer assessment comes at a time when US markets are pricing-in higher inflation. The strongest US wages growth since June 2009 prompted the market sell-off a few weeks ago.
Assistant Governor Michele Bullock spoke on “Household Indebtedness and Mortgage Stress” in Sydney this morning. The Assistant Governor allayed concerns about household debt and mortgage stress. She highlighted that the “the overall level of stress among mortgaged households remains relatively low”. She also cited the HILDA survey, suggesting that “mortgage repayments were not at levels that would indicate an unusual or high level of financial stress for most owner-occupiers”. In fact, “the number of households experiencing financial stress has fallen steadily since the mid-2000s”. This view is in contrast to some private sector surveys which have pointed to rising financial/mortgage stress and the negative impact on household consumption.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/21/comm1.jpg" alt="">
Reserve Bank Board minutes: The minutes from the February 6 Board meeting were issued. The Board’s neutral policy bias remain intact with a period of record low interest rate stability ahead for the foreseeable future. It noted that “inflation also remained low, but was expected to increase gradually as the economy strengthened and wage pressures rose over the forecast period.”
The consumer confidence figures have implications for retailers, and other consumer-focussed businesses. The Reserve Bank Board minutes provides guidance on interest rate settings.
</div>
 
<div class="x_WordSection2">
What does it all mean?
·         Political uncertainty in Canberra, falling home prices and lingering concerns about stock market volatility weighed on household’s views toward their finances and the economic outlook last week.
·         The weaker consumer confidence rating occurred despite record jobs growth and a recovery in share markets during the survey period. In fact, the Australian S&amp;P/ASX 200 Index, while down so far in February (-1.6 per cent to February 19), has outperformed US equities (Dow Jones Industrial Index, -3.6 per cent).  
·         Aussie households are also acutely aware of global developments. Inflation pressures are building in the US. Rising inflation in the form of wages growth and interest rate anxiety prompted the recent sell-off on Wall Street.
·         The US is enjoying full employment with the unemployment rate at 16-year lows of 4.1 per cent. Strong jobs growth and a tightening labour market have contributed to average hourly earnings jumping to 2.9 per cent on an annual basis in January, the largest increase since June 2009. 
·         And on Friday, the US January core Consumer Price Index increased by 0.35 percentage points - the highest monthly result in 12 years.
·         Despite US economic outperformance, the Aussie labour market is strengthening. In fact, a record 16 consecutive months of jobs growth has been posted with the annual pace of jobs creation (403,100) the highest in 12½ years.
·         Record jobs growth has lifted the consumer sentiment rating off its most recent lows back in August. And while consumer prices remain subdued because of global competition, Aussies’ expectations for price rises are growing. Certainly buoyant business conditions and profits are pre-conditions for pay rises. Skilled job vacancies are beginning to emerge in some industries.
·         The Reserve Bank Governor Philip Lowe recently spoke about the benefits of stronger wage growth. He was concerned that annual wage growth near 2 per cent was seen as the new norm. Governor Lowe said that a 2.5 per cent inflation rate was consistent with a 3.5 per cent lift in wages. 
·         In today’s February meeting minutes, the Board surmised that “it was possible that ongoing strength in the demand for labour might result in wage growth picking up by more than anticipated, both in Australia and abroad.”
·         The Reserve Bank appears comfortable with the rebalancing of the Aussie housing market and overall levels of household debt. Putting things into perspective, Assistant Governor Michele Bullock concluded that “the overall level of stress among mortgaged households remains relatively low” and “mortgage stress has fallen over the past decade”.
·         The Assistant Governor also remarked that risks from “household mortgage stress are not particularly acute at the moment”, with large mortgage buffers and other data suggesting “mortgage stress has fallen over the past decade”. Similarly, for investors, Ms. Bullock noted that these mortgagees tend to have higher deposits, higher incomes, more assets, have been “resilient to the recent (regulatory) changes” and that the risk to financial stability from this source also “remained low”.         
What do the figures show?
Consumer Sentiment
·- The weekly ANZ/Roy Morgan consumer confidence rating fell by 3.5 per cent to 115.3. Confidence is down by 3.2 per cent over the year, but well above the average of 113.5 since 2014 and average of 112.9 since 1990.
- All five components of the index fell in the latest week:
- The estimate of family finances compared with a year ago was down from +5.9 to +4.2;
- The estimate of family finances over the next year was down from +25.2 to +23.6;
- Economic conditions over the next 12 months was down from +13.2 to +7.0; 
- Economic conditions over the next 5 years was down from +16.5 to +6.3; 
- The measure of whether it was a good time to buy a major household item was down from +36.9 to +35.6.  
- The measure of inflation expectations 2 years ahead rose to 4.7 per cent from 4.4 per cent.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/21/comm2.jpg" alt="">
 
Household Indebtedness and Mortgage Stress speech:
- Last paragraph: “The information we have suggests that, while there are some pockets of financial stress, the overall level of stress among mortgaged households remains relatively low.”
- “Appropriately prudent lending standards will continue to play an important role in ensuring that the financial system remains stable and households borrow responsibly.”
- On mortgage serviceability: “As recently as 2016, mortgage repayments were not at levels that would indicate an unusual or high level of financial stress for most owner-occupiers.” From the HILDA survey: “the median ratio of mortgage servicing payments to income has been fairly stable through time, remaining around 20 per cent in 2016”. Also, “financial stress for owner-occupiers with mortgage debt has not changed much over the past decade, and is actually lower than in the early 2000s. Around 12 per cent of such households indicated that they would expect difficulty raising funds in an emergency in 2016.”
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/21/comm3.jpg" alt="">
- On measures of financial stress: “Banks' non-performing housing loans have been trending upwards over the past few years, although they remain very low in absolute terms at around 0.8 per cent of banks' domestic housing loan books. Much of this rise is attributable to a rise in non-performing loans in the mining-exposed states of Western Australia and Queensland – not unexpected given the large falls in employment and housing prices in some of these regions.”
- On investor borrowing: “The recent increases in interest rates on investor loans, in response to APRA's measures to reduce the growth in investor lending, has probably affected the cash flows of investors. Interest rates on outstanding variable-rate interest-only loans to investors have increased by 60 basis points since late 2016. However, over the past few years, lenders have been assessing borrowers' ability to service the loan at a minimum interest rate of at least 7 per cent. So while interest rates and required repayments have likely risen, many borrowers should be relatively resilient to the recent changes.”
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/21/comm4.jpg" alt="">
 
Reserve Bank Board minutes:
- Last paragraph: “Taking into account the available information, the Board judged that holding the stance of monetary policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time.”  
- “Members noted that global growth could continue to surprise on the upside, given the synchronised nature of the current upturn. Stronger demand could induce higher global inflation than expected, which would have implications both for financial asset prices and exchange rates. Stronger global growth would boost growth and inflation in Australia, particularly if the exchange rate were to depreciate.”
- “Household debt levels remained elevated and members agreed that household balance sheets still warranted careful monitoring.”
- “Strong competition in the retail sector, which had placed downward pressure on the prices of consumer durables and food for some time, was expected to persist in the next few years.”
- Business conditions had remained at a relatively high level in recent quarters. Private non-mining business investment had increased by more than expected in the September quarter, to be nearly 10 per cent higher over the preceding year. Members noted that the prospects for private non-mining investment were more positive than they had been for some time.”
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/21/comm5.jpg" alt="">
- “Members observed that, while standard variable interest rates for housing loans had been little changed since mid 2017, the average outstanding variable rate had declined slightly as new and refinanced loans were typically being offered at lower rates.”
- “The unemployment rate was expected to decline a little further over this period to 5¼ per cent, consistent with GDP growth rising to be above potential.”  
- “Over 2017, progress had been made in reducing the unemployment rate and bringing inflation closer to target.”
- “There was still a risk that growth in consumption might turn out to be weaker than forecast if household income growth were to increase by less than expected.” 
- “Members noted that there had continued to be positive spillovers from the pick-up in public infrastructure investment, particularly in New South Wales and Victoria.”
- “The Australian dollar had appreciated a little on a trade-weighted basis over prior months, but had remained within the relatively narrow range in which it had been over the preceding couple of years.”
<h1>What is the importance of the economic data?</h1>
- The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
The Reserve Bank releases minutes of its monthly Board meeting a fortnight after the event. The minutes give a guide to Reserve Bank thinking on interest rate settings.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/2/21/comm6.jpg" alt="">
<h1>What are the implications for interest rates and investors?</h1>
- Consumer confidence has improved since bottoming in August last year. Sentiment was at 4-year highs at the beginning of the year on the back of strong jobs gains and record low interest rates. The economic backdrop has not fundamentally changed despite recent share market volatility. 
- Political uncertainty in Canberra is nothing new to most Aussies. Hung parliaments and small government majorities have been the norm since 2010.
- But Aussie households are becoming acutely aware of building global inflationary pressures. All eyes will be on tomorrow’s quarterly Wages Price Index print.
- The Reserve Bank expects inflation to only increase gradually as the economy continues to strengthen on the back of robust business investment and infrastructure-related government spending. The global economic backdrop is supportive.
- The Bank’s liaison program also implied a recovery in retail sales following recent global competition-related weakness, a gradual rise in rents and a moderation in average outstanding variable mortgage rates.
- In an environment of weak income growth, household consumption and elevated mortgage debt remains an uncertainty this year. It is expected that as spare capacity in the labour market recedes over the year, this could boost wages growth, albeit gradually. 
- On a positive note, the Reserve Bank believes that Aussie mortgage stress is “relatively low”. And while debt levels are high, the number of owner-occupiers currently experiencing acute financial stress is not growing rapidly. 
- CommSec doesn’t expect a change in interest rates until late 2018 at the earliest.
 
</div>
</body></html>

jrobinson-rf4aSBido9

Reserve Bank content, but consumers cautious: CommSec

<html><body>
This is the third year running that this topic has been included in the year’s Big Issues.
In 2015 we said: “the answer will be revealed over 2016.” In 2016 we were more circumspect saying “we believe that discussion will continue to swirl about what sort of landing the housing market will experience.”
And indeed the issue has continued to be debated. But arguably the longer that the issue is debated, the more likely that Australia’s buoyant housing markets, notably Sydney and Melbourne, will experience a soft landing.'
Certainly there are many parts of the country that have far different experiences. Perth and Darwin housing markets are going through corrections after mining and energy construction booms. Adelaide and Brisbane have generally seen steady conditions. However the significant apartment building in Brisbane has led to a very soft rental market. Interestingly though, demand for some accommodation like townhouses is strong and not being met by supply, supporting prices.
The Hobart housing market is firm, benefitting from an overflow of housing demand from Sydney and Melbourne. The issue is one of under-supply rather than over-supply. And the Canberra housing market remains healthy, due in part to the control of land supply by the ACT Government.
The Sydney housing market has certainly softened with a combination of cooling demand and the gradual completion of more homes, especially apartments. The auction clearance rate has eased to around 61 per cent, down from around 80 per cent a year ago. But population growth remains solid in Sydney and rental vacancy rates are still low. In Melbourne, the market remains solid, again supported by population growth.
A key factor that points to the potential for a “soft” landing rather than “hard” landing in markets such as Sydney and Melbourne has been the policy of lenders. Reflecting on the experience of housing over-supply in the US and Europe during the Global Financial Crisis, Australian lenders adopted a new policy. Before lenders would provide finance to developers they sought that around 100 per cent of properties be sold “off the plan” by developers. There is still scope for ‘indigestion’ in some markets with a lot of building going on, but less scope for a broader “hard landing”.
Craig James cited a number of big issues for 2018:
- US President Donald Trump 
- How long will inflation stay low?
- The disconnect between jobs and wages
- Housing: Hard landing or soft landing?
- Infrastructure
- The economic benefit of lower taxes
- Consumer Debt
- The 'slowdown' of the Chinese economy
 
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>. 
</body></html>

Housing hard landing or soft landing? CommSec Research - The Big Issues of 2018

<html><body>
The average floor size of an Australian home (houses and apartments) has fallen to a 20-year low, though latest data indicates that Australian homes are the second biggest in the world, behind the US.
Data commissioned by CommSec from the Australian Bureau of Statistics, shows the average new home is 189.8 square metres, down 2.7 per cent over the past year and the smallest since 1997.
The smaller home size can be attributed in a major way to the increased apartment construction, CommSec said in the report.
Although free-standing houses are still bigger. 
In fact, the average new house built in 2016/17 was 233.3 square metres, the biggest in four years and more than 11 per cent bigger than 20 years ago. 
The average house built today is over 30 per cent bigger than 30 years ago (the 1986/87 financial year).
On average, US houses are still bigger by around 5 per cent. And US homes (houses and apartments) are 8 per cent bigger.
<a href="https://www.propertyobserver.com.au/images/2017/11/17/NewHomesBuilt.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/11/17/NewHomesBuilt.png" alt="">
Victorians are building the biggest houses in Australia, ahead of Western Australia and NSW. But the average size of houses built in South Australia in 2016/17 was the biggest in the state’s history.
In fact, the size of the average new house has grown slightly over the past two years. 
House sizes are important when comparing prices over time, the CommSec report says. 
“Not only are houses far bigger than those built in the 1980s and before, but the standard of fit-out today is far superior with quality kitchens, bathrooms, floor coverings and inclusions like air-conditioners,” it said.
Compared to US, Australian homes are the second biggest in the world.
The average new house built in the US last calendar year (latest available) was 245 sqm, around 5 per cent bigger than in Australia. And US homes (houses and apartments) averaged 204 sqm in 2016, around 8 per cent bigger than in Australia.
<a href="https://www.propertyobserver.com.au/images/2017/11/17/AvgHomeSize.png" target="_blank">Click to enlarge</a>
 <img src="https://www.urban.com.au/images/2017/11/17/AvgHomeSize.png" alt="">
Neighbouring New Zealand is not far behind, with the average home built in 2016/17 (data on houses isn’t available) being 178.3 sqm, around 6 per cent smaller than in Australia.
The last global survey conducted by the United Nations indicates that the average floor area of new homes built in US, Australia and New Zealand were far larger than in other European economies.
In recent years a key trend in Australia has been the rise in construction of apartments, which now make up nearly half of all homes built unlike seven years ago when only around 27 per cent of homes built were apartments. 
The increase in the number of apartments being built has reduced the size of the average home in Australia. 
In fact the average home was 189.8 sqm in 2016/17, the lowest level in 20 years and down 2.7 per cent on a year ago.
Through the 2004-2009 period, the average apartment was around 140 sqm. Today, it is closer to 130 sqm.
“The shift to smaller apartments may mean that more of them need to be built to house the growing population compared with free-standing houses. And this point emphasises that when considering issues like under-supply and over-supply, a range of issues need to be considered,” says the report.
Five years ago economists were baffled by the failure of home building to lift to the level of assumed underlying demand. However the “apparent paradox” was explained by structural change such as demographics and increased utilisation of Australia’s large homes.
Now household size is falling again, and at the same time that the average home size is also falling. If current trends continue, more homes can be built without resulting in over-supply conditions. In short, supply would merely be responding to stronger demand. 
“The key point being that it is not just population, but demographics and choice of accommodation driving demand,” says the report.
</body></html>

jonathanchancellor-7SQnKwU6yx

Australian home size hits 20-year low: CommSec report

<html><body>
It is difficult to be negative about the economy when data shows that there were more new vehicles sold in 2016 than any calendar year before.
And it is not just so-called ‘standard’ vehicles being sold, but sports/luxury vehicles are taking a bigger share of total sales.
It’s not hard to see why people are updating their rides.
Car affordability is at the best levels recorded, employment is rising, interest rates are at record lows and wealth levels are at record highs.
Car affordability is even stronger when you consider that vehicles built in 2016 are far superior to those sold in the early 1970s.
Vehicle sales should remain solid in 2017. Interest rates are unlikely to rise any time soon and car manufacturers are competing hard for business, restraining prices.
In addition, all indications point to firm conditions in the job market.
The area to watch is the housing market as softer home prices could restrain car buying enthusiasm - although even that seems to be an unlikely outcome.
The services sector expansion is now accelerating at a healthy pace. In fact the Performance of Services index is now showing the fastest pace of expansion in almost 10 years.
And more importantly the resurgence in activity is broad-based with all five components of the index recording strong gains.
In particular the lift in new orders and the employment sub-indices bode well for hiring in coming months.
It was interesting that respondents noted a variety of reasons for the lift in service sector activity - from stronger customer demand, a lift in mining sector activity, to a lower Australian dollar and “good agricultural harvests”.
As we have been saying for a couple of months, the result mirrors the lift in activity noted across internal Commonwealth Bank Indicators like the Business Sales Indicator.
<a href="https://www.propertyobserver.com.au/images/2017/01/05/CS-1.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/05/CS-1.jpg" alt="">
The Reserve Bank will be quietly confident on how the economy is panning out.
The key will be how non-mining business investment evolves over the next six months. CommSec expects no change to interest rates over 2017.
According to the Federal Chamber of Automotive Industries (FCAI), new motor vehicle sales totalled 98,763 in December, down 0.9 per cent on a year ago.
In 2016, a total of 1,178,133 new vehicles were sold – a record for a calendar year.
Sales by State: NSW (397,563), Victoria (326,269), Queensland (233,026), Western Australia (100,234), South Australia (71,738), Tasmania (19,751), ACT (18,816) and NT (10,736).
Respective market shares by vehicle type were: passenger (41.3 per cent), SUV (37.4 per cent), light commercial (18.5 per cent), and heavy commercial (2.8 per cent).
The top-five segments by volume were small cars (224,450, down 4 per cent), medium SUV (172,194, up 16.5 per cent), 4×4 ute (146,820, up 10 per cent), large SUV (142,495, up 2 per cent) and small SUV (110,414, up 2 per cent).
The sub-total of sales by buyer type for 2016 was: private (571,544, down 7 per cent), business (472,156, up 13 per cent), government (40,989, down 1.4 per cent) and rental (60,335, up 6 per cent).
Buyers using their ABN to buy a single car count as a business sale, while novated leases count as private.
Leading vehicle sources: Japan (325,689), Thailand (285,465), Korea (162,642), Germany (87,392) and Australia (87,096).
The top-selling vehicle was the Toyota HiLux, ahead of the Toyota Corolla, Hyundai i30, Ford Ranger, Mazda 3, Toyota Camry, Holden Commodore, Mazda CX-5, Mitsubishi Triton and Hyundai Tucson.
Top makes for 2016: Toyota (14th year in succession) with 209,610 units (up 1.6 per cent), ahead of top full- importer Mazda (118,217, up 3.7 per cent) and Hyundai (101,555, down 0.4 per cent). Holden finished outside the top-three, in fourth place on 94,308 (down 8.4 per cent), holding out a resurgent Ford (81,207, up more than 15 per cent).
The Australian Industry Group Australian Performance of Services Index lifted by 6.6 points to 57.7 in December – marking the highest result since May 2007.
AI Group notes “All five activity sub-indexes in the Australian PSI® were above 50 points and indicate expansion in December.
Sales jumped 14 points in December, up to 62.1 points from 48.1 in November.
New orders rose by 6.4 points to 60.4 points. Stocks lifted 5.7 points to 52.6 points, growing in ten out of the past eleven months.
The employment subindex picked up the pace, growing by 4.3 points to 56.6 points.”
<a href="https://www.propertyobserver.com.au/images/2017/01/05/CS-2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/05/CS-2.jpg" alt="">
“A number of respondents to the Australian PSI® noted that conditions were more positive in December with: customer demand strengthening; increased orders from the mining sector; a lower value for the Australian dollar; interest rates remaining stable and (for regional services) good agricultural harvests.
Overall, there was a sense of increased confidence from respondents across many services sub-sector.”
The Federal Chamber of Automotive Industries releases estimates of car sales on the third business day of the month.
The figures highlight the strength of consumer spending as well as conditions facing auto &amp; components companies.
The economy appears to be regaining momentum.
But as always more data is required to confirm the change in direction.
Certainly confidence levels are healthy, providing optimism early in the New Year.
The Reserve Bank is comfortably on the interest rate sidelines.
Savanth Sebastian is a senior economist for CommSec.
</body></html>

j.ballantyne1990-6AQqhLzZaK

Difficult to be negative after record car sales in 2016: Savanth Sebastian

<html><body>
The housing sector certainly seems to have finished off 2016 with a bang. Home prices surged by 1.4 per cent in December, according to CommSec's latest economic update report.
But it was more encouraging to see that the lift in home prices was more uniform across the capital cities, and even regional house prices recorded a healthy lift.
No doubt the improvement in economic conditions and low interest rates continues to fuel the interest in property.
Resource states noted a decent lift in prices over December.
And looking forward the lift in commodity prices may mean that the mining towns have come through the worst of the downturn.
Overall policymakers will keep a close eye on the housing sector the early part of 2017, and will prefer to see more balanced house price growth across the nation.
And in particular a further lift in regional house prices would be a positive outcome.
<a href="https://www.propertyobserver.com.au/images/2017/01/03/CS-1.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/03/CS-1.jpg" alt="">
Annual growth in home prices across regional centres is still just 2.8 per cent.
Global oil prices have risen steeply over the past couple of months, however motorists across some capital cities are still enjoying petrol at or below the cost price (terminal gate price).
In Sydney, Melbourne and Adelaide pump prices are around $1.21-$1.23 a litre – only 3-5 cents above wholesale prices.
Essentially motorists using fuel discount dockets will be buying petrol below cost.
The low petrol prices are not sustainable and prices in these capital cities are likely to lift markedly in coming days.
Interestingly in Brisbane and Canberra, prices are closer to a $1.30 a litre, while prices in Perth are closer to $1.40 a litre.
The production cuts announced by OPEC and non-OPEC nations were the first in 15 years and highlight the underlying concern about over-supplied oil markets.
The focus now shifts to see if oil producers comply with the stated production cuts.
The early indications are that producers are already notifying customers in Asia, Europe and the US of cuts to oil deliveries from January.
Importantly for motorists it means higher pump prices in the medium-term.
<a href="https://www.propertyobserver.com.au/images/2017/01/03/CS-2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/03/CS-2.jpg" alt="">
The latest Australian manufacturing data is encouraging, suggesting that the current levels of interest rates and the Australian dollar are working in favour of domestic producers.
No doubt the sector is also benefitting from the stronger demand associated with the improved performance of the global economy.
The CoreLogic Home Value Index of capital city home prices surged by 1.4 per cent in December and was up 10.9 per cent over the year.
In regional Australia, house prices rose by 1.1 per cent in November and were just 2.8 per cent higher than a year ago. (Regional prices cover just houses and data is up to the end of November).
In capital cities, house prices rose by 1.4 per cent in December while apartment prices fell by 0.3 per cent.
House prices were up 11.6 per cent on a year ago and apartments were up by 5.9 per cent.
The average Australian capital city house price (median price based on settled sales over quarter) was $650,000 and the average unit price was $536,000.
Dwelling prices rose in five of the eight capital cities in December: Hobart (up 3.3 per cent), Melbourne (up 3.1 per cent), Perth (up 1.4 per cent), Sydney (up 0.9 per cent), and Brisbane (up 0.6 per cent). Prices fell in Adelaide (down 2.0 per cent), followed by Canberra (down 0.3 per cent) and Darwin (down 0.1 per cent).
Home prices were higher than a year ago in seven of the eight capital cities. Prices rose most in Sydney (up 15.5 per cent); followed by Melbourne (up 13.7 per cent), Hobart (up 11.2 per cent); Canberra (up 9.3 per cent); Adelaide (up 4.2 per cent), Brisbane (up 3.6 per cent) and Darwin (up 0.9 per cent). Prices fell in Perth (down by 4.3 per cent).
Total returns on capital city dwellings rose by 14.7 per cent in calendar year 2016 with houses up 15.3 per cent on a year earlier and units up 10.4 per cent.
The Performance of Manufacturing index rose by 1.2 points to 55.4 in December. A reading above 50.0 indicates that the sector is expanding.
AIG notes “Six of the seven activity sub-indexes in the Australian PMI® improved from November. Strong expansions in new orders (60.6 points) and sales (58.8 points) continued in December, while exports surged ahead (68.5 points), Production (58.2 points) also expanded more strongly while deliveries (52.4 points) continued to grow.
Employment (47.4 points) slipped in December, in line with recently weaker jobs growth. Five of the eight sub-sectors in the Australian PMI® expanded in December (three month moving averages).”
<a href="https://www.propertyobserver.com.au/images/2017/01/03/CS-3.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/03/CS-3.jpg" alt="">
“Comments from manufacturers in December indicate that demand (albeit somewhat mixed) appears to be improving again after a weak patch in the latter half of 2016.
The recovery in commodity prices has led to better conditions for manufacturers exposed to the mining sector, with some revival of mining investment and maintenance spending.
However, surging energy costs, weaker local demand and slower spending on particular major projects is depressing activity for some manufacturers.”
Today the national average wholesale (terminal gate) unleaded petrol price stands at a 14-month high of 118.4 cents a litre, up by 1.8 cents a litre over the week. The terminal gate diesel price stands at 115.1 cents a litre, up by 1.2 cents a litre over the previous week.
On Friday, the key Singapore gasoline price stood at a 16-month high of US$69.76 a barrel, up by US$1.66 or 2.4 per cent over the week.
In Australian dollar terms the Singapore gasoline price rose by $2.94 a barrel or 3.1 per cent to $96.82 a barrel or 60.89 cents a litre.
MotorMouth records the following retail prices for capital cities today: Sydney 121.2c; Melbourne 123.1c; Brisbane 129.8c; Adelaide 121.6c; Perth 138.9c; Canberra 127.7c; Darwin 129.3c; Hobart 128.7c.
Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP).
National average retail prices are calculated as the weighted average of each State/Territory's metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions.
AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
<a href="https://www.propertyobserver.com.au/images/2017/01/03/CS-4.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/03/CS-4.jpg" alt="">
The CoreLogic Hedonic Australian Home Value Index is based on Australia’s biggest property database. Unlike the ABS Index, which excludes terraces, semi-detached homes and apartments, the CoreLogic Hedonic Index includes all properties. Home prices are an important driver of wealth and spending.
The Australian Industry Group compiles the Performance of Manufacturing Index (PMI) each month. The Australian PMI is the Australian equivalent of the US ISM manufacturing gauge.
The PMI is one of the timeliest economic indicators released in Australia. The PMI is useful not just in showing how the manufacturing sector is performing but in providing some sense about where it is heading.
The key ‘forward looking’ components are orders and employment.
Petrol prices are headed higher. And given that petrol is the single biggest weekly purchase that most families make, higher pump prices may serve to restrain growth in spending.
If home prices lift too quickly policymakers will once again raise concerns about the need for a further tightening in lending standards.
Savanth Sebastian is a senior economist for CommSec.
</body></html>

jchancellor-FAypfDUnLy

Major city home prices soar and mining towns get through the worst: Savanth Sebastian

<html><body>
GUEST OBSERVATION
The Reserve Bank board minutes make for interesting reading, although there was no significant surprise in views.
Board members were upbeat about the improvement in the global economy – particularly China and were also aware of the likelihood of the weaker domestic September quarter economic growth result.
Interestingly, policymakers highlighted a couple of concerns at the time of the December 6 Board meeting – in particular the complications of “an appreciating exchange rate” on rebalancing the economy and “uncertainty about the moment in the labour market”.
Since the board meeting the Australian dollar has lost well over two cents (2.4%) against the US dollar and is even 1.3% lower against the trade weighted index.
Importantly the latest round of employment data showed a substantial rebound in full-time employment.
No doubt it is still early days but the improvements would give policymakers a degree of comfort.
Looking forward it is likely that the lift in commodity prices should support medium-term employment in the commodity states.
The focus for central bank official would be on how the business investment profile shifts over the coming year.
It is clear that a lift in non-mining business investment will be need to support broader economic growth.
Overall inflation remains well contained despite the lift in commodity prices.
Simply interest rate settings are likely to remain stable until well into 2017.
<a href="https://www.propertyobserver.com.au/images/2016/12/20/ComUpdate-7.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2016/12/20/ComUpdate-7.jpg" alt="">
Members noted that the international environment had been more positive in recent months, while observing that significant risks to the outlook for global activity persisted.
The Chinese economy had remained resilient, supported by expansionary fiscal policy and rapid growth in financing.
“There was still considerable uncertainty about the momentum in the labour market,” the minutes said.
The unemployment rate had declined over the past year, as had measures of excess capacity that accounted for the number of additional desired hours of work.
Part-time employment had grown strongly over the previous year, but employment growth overall had slowed.
Members noted that there was expected to be excess capacity in the labour market for some time, which was consistent with further indications of subdued labour cost pressures.
This suggested that inflation would remain low for some time before returning to more normal levels.
“Members noted that these factors had assisted the economy in its transition following the mining investment boom and that an appreciating exchange rate could complicate the adjustment.”
“Housing market conditions had strengthened overall over preceding months, although there was considerable variation across the country and between houses and apartments. Housing credit growth had picked up a little, particularly for investors.”
“Prices for a number of Australia's key commodities, including coking coal, iron ore and base metals, had increased noticeably over the June and September quarters, which had contributed to the increase in Australia's terms of trade of about 6% over that period.
“3Commodity prices had risen further over November, suggesting that an increase in the terms of trade in the December quarter was likely.
“Taking into account the information that had become available over the previous month, and having eased monetary policy earlier in the year, the Board judged that holding the stance of policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time.”
<a href="https://www.propertyobserver.com.au/images/2016/12/20/ComUpdate-8.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2016/12/20/ComUpdate-8.jpg" alt="">
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
CommSec expects the Reserve Bank to remain on the interest rate sidelines for an extended period.
Could the next move in interest rates be a rate hike rather than a rate cut? It’s important not to get too far ahead of ourselves.
Inflation is still historically low. And while there is speculation of growth-focussed policies in the US, they haven’t been fleshed out.
However you get a sense that inflation has reached an inflexion point.
Savanth Sebastian is senior economist with CommSec.
</body></html>

RBA board members upbeat about improvment in global economy: Savanth Sebastian

<html><body><div class="page" title="Page 1">
<div class="section">
<div class="layoutArea">
<div>
The Reserve Bank has left the cash rate at a record low of 1.50 per cent. The Reserve Bank is expected to await the September quarter inflation data in late October to decide the next move in rates.
What does it all mean?
<ul>
<li>Will the Reserve Bank Cut rates again? Reserve Bank Governor Philip Lowe raised doubts on future rate cuts when giving testimony just over a week ago. “The global sense is that monetary policy is not working as effectively as it might have in previous years. I think there are three possible responses to that. The one we have been doing is to just do more monetary policy: if it is not working, do a bit more until it does work. This is why we have found ourselves in some countries with interest rates in negative territory and unprecedented balance sheet expansion. You can keep doing more of something in the hope that it finally works, and my judgement is that that has not been particularly useful.”</li>
</ul>
<ul>
<li>So it is now a case of waiting for the inflation data on October 26. Growth in underlying inflation in the quarter would need to be 0.4 per cent or below for the Reserve Bank to discuss cutting rates again.</li>
</ul>
The Reserve Bank has maintained the neutral policy stance. That means, the Reserve Bank is not leaning in favour of rate cuts or rate hikes.</div>
<div> </div>
<div class="column">There has been some additional text added to the statement, but nothing substantive. Additional information has been provided on the job market, highlighting the strength of part-time jobs compared with full-time positions. In terms of housing, the RBA does note “Growth in rents is the slowest for some decades.” Perspectives on interest rates
<ul>
<li>
  The Reserve Bank has left the cash rate at 1.50 per cent. The previous rate cut was in August 2016 (25 basis points).
</li>
<li>  There have now been 12 rate cuts since November 2011, cutting rates from 4.75 per cent to 1.50 per cent.</li>
<li>  The Reserve Bank had previously lifted rates seven times from October 2009 to November 2010 – a total of 1.75 percentage points, from 3.00 per cent to 4.75 per cent.</li>
</ul>
What are the implications of today’s decision?
<ul>
<li>  Investors need to work on the premise that the low inflation/low interest rate world will be around for a while yet. And this is very much a global phenomenon. Consumers can buy goods whenever they want and wherever they are, keeping downward pressure on prices. So yield is still king when investors are assessing alternative financial assets.</li>
<li>  Note that Reserve Bank may continue to tolerate a low inflation outcome. Remember that the target band is expressed as a medium-term objective: “Both the Reserve Bank and the Government agree that a flexible medium-term inflation target is the appropriate</li>
</ul>
 
<a href="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%203.27.15%20pm.png" target="_blank">Click here to enlarge</a>
<img src="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%203.27.15%20pm.png" alt="" width="405" height="286">
 
 
<div class="page" title="Page 2"> </div>
</div>
</div>
</div>
</div></body></html>

Will the Reserve Bank cut rates again? CommSec's Craig James

<html><body>
GUEST OBSERVER
Consumer confidence: The ANZ/Roy Morgan consumer confidence rating rose by 4.4 percent to 120.6 in the week to September 25.
It was the biggest weekly gain in 11 months and the confidence reading is well above the average of 112.6 since 2014.
Finances healthy: The estimate of family finances compared with a year ago has hit the highest levels in seven years.
What does it all mean?
Just like other financial commentators and analysts, the Reserve Bank takes an interest in the regular readings of consumer confidence. Roy Morgan and ANZ compile a weekly index and the Melbourne Institute and Westpac produce a monthly confidence measure.
But from the Reserve Bank’s point of view, the questions posed on family finances are the most revealing. Clearly if consumers believe that their finances are in good shape, and are expected to stay that way, then they are far more likely to spend.
So it is important that the latest survey shows the current state of family finances at the best levels in seven years. Or expressed another way, finances are the best since the global financial crisis. Expectations of another rate cut have been receding and the latest consumer confidence readings will reinforce that trend.
The consumer survey is clearly great news for any business dependent on consumer spending, especially the more discretionary or non-essential purchases.
What do figures show?
Consumer confidence 
<a href="/images/2016/09/27/Screen%20Shot%202016-09-27%20at%2011.22.37%20AM.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/27/Screen%20Shot%202016-09-27%20at%2011.22.37%20AM.jpg" alt="">
The ANZ/Roy Morgan consumer confidence rating rose by 4.4 percent (5.1 points) to 120.6 in the week to September 25. Confidence is up 9 percent over the year and well above the average of 112.6 since 2014. All five components of the index rose in the latest week:
<ul>
<li>The estimate of family finances compared with a year ago was up from +10 to +16; 
</li>
<li>The estimate of family finances over the next year was up from +25 to +30; 
</li>
<li>Economic conditions over the next 12 months was up from +1 to +6; 
</li>
<li>Economic conditions over the next 5 years was up from +9 to +12; 
</li>
<li>The measure of whether it was a good time to buy a major household item was up from +33 points to +39 points.</li>
</ul>
What is the importance of the economic data?
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
What are the implications for interest rates and investors?
Consumer confidence is clearly healthy and is supporting a lift in spending - a result that was largely confirmed in the August Commonwealth Bank Business Sales Index, a gauge of economy-wide spending.
More confident consumers are more likely to spend – although there are no guarantees.
While we haven’t yet ruled out a November rate cut, much will depend on the inflation readings released in late October.
<a href="/images/2016/09/27/Screen%20Shot%202016-09-27%20at%2011.22.47%20AM.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/27/Screen%20Shot%202016-09-27%20at%2011.22.47%20AM.jpg" alt="">
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
</body></html>

Commsec

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Commsec

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News