Rockdale has long been characterized as a suburb on the cusp. Well-located, well-connected, but historically underserved by modern apartment offerings.

It has everything going for it: outstanding connectivity to the Sydney CBD, just four train stops to Central Station, strong local amenity anchored by Roc​kdale Plaza and a growing main-street dining scene, and enviable proximity to Brighton-Le-Sands. The six-kilometre beachfront is lined with bayside restaurants, cafés, and walking paths, giving residents a lifestyle typically associated with much more expensive coastal suburbs.

What Rock​dale has lacked is high-quality contemporary apartments. Most existing developments date back several decades, with floorplans that no longer support modern living needs, and buildings constructed long before today’s standards in engineering, efficiency, and sustainability.

Lender, fund manager and apartment developer Princeton identified the gap early. Seeing all the right ingredients in Rockd​ale, transport, lifestyle, retail, and affordability, they set out to deliver what the suburb was missing. Their answer is <a href="https://www.apartments.com.au/new-apartments/marque-rockdale-602-608-princes-highway-rockdale-nsw-2216">Marque Rockdale</a>, a collection of 58 one-, two-, and three-bedroom apartments now nearing completion just a short walk from Ro​ckdale Plaza, home to over 50 specialist retailers and anchored by&nbsp;Woolworths, Big W and Aldi.

[smartcode_project:default project_id=136442 project_image_fid=355216]

Understanding they would be resetting the benchmark for the area, Princeton focused on ensuring buyers received best-in-class quality, longevity, and protection.

A major step was securing the sought-after Latent Defects Insurance policy from Resilience Insurance. This policy protects apartment buyers from structural or waterproofing defects for the first 10 years of the building’s lifecycle. Crucially, it is first-response insurance, meaning that if an issue arises, the insurer pays immediately for remediation—rather than waiting for lengthy investigations to determine fault before work can begin. For purchasers, it offers an unprecedented layer of security rarely seen in Sydney apartment projects.

During construction, independent building inspection firm SDSS has been providing Technical Inspection Services, bringing highly specialised construction experts on-site at key stages to ensure workmanship meets the highest standards. The project is being built by Coplex, an iCIRT-rated construction company, and throughout the build SDSS has frequently referred to <a href="https://www.apartments.com.au/new-apartments/marque-rockdale-602-608-princes-highway-rockdale-nsw-2216">Marque Rockdale</a> as one of the best projects currently on their books.

Princeton also doubled down on comfort, acoustics, and livability.&nbsp;As well as being the only building along Princes Highway with a landscaped buffer between the building and the road, Princeton has purposefully included double-glazed windows in all apartments to reduce noise.

Apartments feature double-glazed, noise-reducing windows and ducted air conditioning in every residence.&nbsp;In addition to the project’s transport convenience, Princeton has partnered with GoGet Car Share to provide a dedicated GoGet vehicle housed permanently within the building. Residents will receive a free annual GoGet membership, paying only usage fees, offering a flexible alternative to owning a second car and enhancing the project’s sustainability credentials.

[smartcode_project:default project_id=136442 project_image_fid=277075]

Residents will enjoy an exclusive rooftop oasis, purpose-designed as an extension of their living space. The communal rooftop includes BBQ facilities and outdoor entertaining areas, a&nbsp;pergola-shaded dining zone, a dedicated children’s play space, and a landscaped herb garden.

Princeton and Coplex is approaching completion of <a href="https://www.apartments.com.au/new-apartments/marque-rockdale-602-608-princes-highway-rockdale-nsw-2216">Marque Rockdale</a>, and are expecting residents to move in early in the new year. The mix of apartment configurations and price points have been a hit with young professionals, those who need to commute to the CBD, and families who appreciate doorstep amenity.

“Marque is a place where residents will be proud to call it home," Princeton Head of Development George Young says.

"We’ve worked really hard with Coplex and our design team to deliver an incredible building for the future home owners to make their own. The homes are all designed to allow the residents to make it their own, a place to belong and live a stylish urban life."

[smartcode_project_cta:default project_id=136442]

Joel Robinson

Marque Rockdale sets a new standard of apartment living in Sydney's south

Plans to revitalize the&nbsp;long-established Benowa Gardens Shopping Centre into a mixed-use community combining living, shopping, dining, health and wellbeing facilities, have been proposed to the Gold Coast City Council.

The Benowa Gardens Urban Village proposal by Benowa Gardens Holdings seeks to transform the 17,660 sqm site at <a href="https://www.apartments.com.au/new-apartments/203-ashmore-road-benowa-qld-4217">203 Ashmore Road</a> into a contemporary, sustainable destination that reflects global trends in modern community design while retaining the familiar local character residents value.

The site is bordered by Ashmore and Benowa Roads and Carrara, with ready access to Pindara private hospital, four schools, TAFE, sports fields and the nearby Botanic Gardens.

Benowa Gardens Holdings is seeking a preliminary Council approval only for its proposed masterplan and variations to the site’s Neighbourhood Centre zoning.&nbsp; 
Formal Public Exhibition commenced Friday and also marks the start of comprehensive community consultation with surroundings residents, schools, P&amp;Cs, existing retailers, nearby sporting clubs, arts groups and Botanic Gardens volunteers.

Designed by Neylan Architecture, the masterplan envisions around 413 new apartments, complemented by upgraded retail, dining, and wellness amenities as part of 10,000 sqm of retail, and 9,630 sqm of office space/medical suites.

The development will feature green open spaces, shaded promenades, landscaped terraces, pedestrian walkways, and expanded healthcare and lifestyle services in synergy with the neighbouring Pindara Private Hospital and local schools.

<img alt="Benowa" data-entity-type="file" data-entity-uuid="244f4d54-2e67-4141-92b8-78d5735f47c2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-11-26%20at%2012.47.34%E2%80%AFPM.png?VersionId=FmF5lzhpwVZc7POsdB770TJ_Bf2c0od8" />

“This concept embraces the way people increasingly want to live - safely, conveniently, and within strong local communities,” said Patrick Lu, Director of Benowa Gardens Holding.

“Benowa Gardens will set a new benchmark for integrated living on the Gold Coast. It’s a thoughtful, community-minded evolution that brings global best practice in urban design to one of the city’s most established areas.”

Lu said this isn’t just a redevelopment, it’s a renewal with purpose.

“Benowa Gardens has served the community for decades. Our goal is to ensure it continues to do so for generations to come, as a lively, connected Urban Village where people can truly live, work and thrive. We’re already talking to school leaders and the community to seek their feedback on our proposal, and have taken on board their ideas to improve student safety with additional “traffic calming” measures on Carrara Street. We’re conducting meaningful and sincere consultations and want to play our role in preserving and enhancing the local community."

The proposed redevelopment aims to deliver tangible benefits across the Benowa and wider Gold Coast community, including:

<ul>
	<li>Improvement of retail amenity, to capture the under-served local market demand and keep the local business at their local shopping centre.</li>
	<li>Housing diversity; offering a range of apartment types for key workers, downsizers, and local families who wish to remain in the area.</li>
	<li>Enhanced shopping and dining; revitalised retail spaces designed to support local businesses and attract more visitors.</li>
	<li>Health and wellbeing access; additional medical and wellness amenities to complement existing local facilities.</li>
	<li>Improved traffic flow and access; two new access points, upgraded intersections, upgrade pedestrian pathway’s signal and proposed upgrade of pedestrian and cycle connections/space to improve safety and convenience, especially for school children.</li>
	<li>Environmental sustainability; energy-efficient design, green rooftops, and water-sensitive landscaping to reduce emissions and enhance comfort.</li>
	<li>Local jobs and investment; supporting hundreds of construction and long-term roles while stimulating local economic growth.</li>
</ul>

The group behind the project boasts extensive experience in the property development industry, both in Australia and international markets. Over the past 23 years, the group has been involved in the development and management of a diverse portfolio of assets including residential dwellings, shopping centres, bulky-goods stores, community and medical facilities, childcare centres, offices, hotels, and taverns, across Brisbane, Ipswich, and the Gold Coast.

Benowa Gardens to become new mixed-use urban village

Demand for townhouses in Melbourne’s inner west has surged as buyers seek the elusive combination of space, affordability, and location.&nbsp;

With family-first apartments increasingly rare and standalone homes often out of reach, townhouses have emerged as the new sweet spot, delivering generous living areas with lower maintenance needs within close proximity to the Melbourne CBD.&nbsp;

<a href="https://www.apartments.com.au/new-townhouses/kings-lane-south-kingsville-50-58-new-street-south-kingsville-vic-3015">Kings Lane</a>, the new under-construction townhouse development by the family-owned developer&nbsp;<a href="https://www.apartments.com.au/developers/blue-run">Blue Run</a>&nbsp;in South Kingsville, responds directly to this trend. Comprising just 25 residences designed by <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a>, the project offers a compelling alternative to both apartment downsizers and family upsizers. With three-bedroom homes priced under $1 million, it presents one of the area’s rare attainable pathways to townhouse living less than eight kilometres from the CBD.

[smartcode_project:default project_id=145042 project_image_fid=355147]

<a href="https://www.apartments.com.au/developments/south-kingsville-vic-3015">South Kingsville</a> itself is quietly becoming one of Melbourne’s most dynamic pockets of urban renewal. Flanked by the established appeal of Yarraville, Newport and Williamstown, the suburb balances quiet, village-like streetscapes with major infrastructure upgrades and a growing slate of retail, dining and lifestyle amenity.&nbsp;

Kings Lane occupies a well-connected site at 50–58 New Street, just off Blackshaws Road and within walking distance of the emerging Union Quarter precinct, a major retail destination anchored by Woolworths, specialty food outlets and wellness services.

A 400-metre stroll brings residents to the Vernon Street shops, a local favourite known for its mix of independent grocers, cafes and family-run eateries. For broader shopping options, Altona Gate Shopping Centre and Yarraville Square are both within a short drive. Spotswood IGA and the Williamstown retail strip further broaden the convenience of daily essentials.

[smartcode_project:default project_id=145042 project_image_fid=355139]

Dining options in the area lean toward eclectic and community-driven, with standouts like Rocco’s Deli, Dad and Dave’s, and Pizza d’ASPORTO offering a range of casual and elevated menus. Cafés such as Hudson Road Wine &amp; Beer and Blacksheep Coffee add to the lively yet local feel of the neighbourhood.

Green space is another hallmark of life at Kings Lane. Edwards Reserve is close enough for morning walks or casual sport, while larger parks like Newport Lakes, Yarraville Gardens, and Cruickshank Park are all a few minutes’ drive away. More than half of the nine-hectares of new green space or parkland being created as part of the West Gate tunnel works is located just at the end of New Street, the same street as Kings Lane.

&nbsp;

For those with school-age children, South Kingsville is home to a range of quality childcare centres and schools, including Kingsville Primary, Spotswood Primary, and Williamstown North Primary. Community Children’s childcare and South Kingsville Preschool are nearby, making the suburb particularly attractive to young families.

Transport links continue to improve, with Spotswood Station and the West Gate Freeway both within a five-minute radius. Future upgrades, including the proposed sky rail for Newport and Spotswood, and the delivery of the West Gate Tunnel project, promise even better access to the CBD and Melbourne Airport in the years to come.

Kings Lane's 25 all-electric townhouses are currently under construction, and will complete in late 2026.

[smartcode_project_cta:default project_id=145042]

Staff Writer

Kings Lane townhouses offers rare value in Melbourne's thriving inner west

Developer-builder <a href="https://www.apartments.com.au/developers/billbergia">Billbergia</a> has set a new apartment price record for <a href="https://www.apartments.com.au/developments/rhodes-nsw-2138">Rhodes</a>, a suburb the company has been instrumental in transforming over the past two decades.

The milestone follows the delivery of thousands of apartments across the harbourside peninsula, culminating in the $4.5 million sale of a 220 sqm penthouse in the <a href="https://www.apartments.com.au/buildings/rhodes-central-oasis-39-marquet-street-rhodes-nsw-2138">Rhodes Central Oasis</a> building, which Billbergia completed earlier this year. It is the first apartment in Rhodes to surpass not only the $4 million mark for settled sales, but also the $3 million mark, eclipsing the previous $2.75 million record set in 2021.

The purchaser had originally secured several apartments in the 40-storey tower off the plan as investments. During settlement, she spent more time in the Rhodes area and was so impressed with the building that she decided to downsize from her Northbridge home into the four-bedroom plus MPR penthouse.

The sale underscores the long-term work Billbergia has undertaken in Rhodes since the early 2000s. The company, rated 4.5 Gold Stars under the NSW iCIRT system, identifying it as one of the state’s most trustworthy and financially secure developers, was a pioneer of the area’s urban renewal. What was once a heavily industrial waterfront has become one of Sydney’s most successful examples of transit-oriented development.

<img alt="Billbergia" data-entity-type="file" data-entity-uuid="56093d7f-db18-42f4-bf9b-115bdf76f5f3" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-11-26%20at%2011.10.06%E2%80%AFAM.png?VersionId=pca77Mr.H83nwXbJexmaLUAqBewtQ7d9" />

Billbergia is now driving the peninsula’s next major evolution: the most ambitious project in its nearly four-decade history. They are planning the Rhodes Bay Masterplan, an eight-tower, mixed-use precinct on Leeds Street. Currently with the NSW Government’s Housing Delivery Authority which is now championing large-scale projects across the state, the Rhodes Bay Masterplan lays the groundwork for a generational reshaping of this important pocket of Sydney’s Inner West.

The masterplan spans more than 31,000 sqm of amalgamated industrial land along the foreshore, land that has been privately held and inaccessible to the community for more than a century. According to Billbergia’s Development Director, Saul Moran, reclaiming this land for public use is central to the company’s vision. 
 
“What’s so exciting is that we have over 300 metres of privately-held industrialised waterfront, land that’s been locked away for more than 100 years, which we’re bringing back to the community,” he says. “It’s taken many years to assemble sites like these, and the goal now is to transform them into meaningful public space where new homes can be built in an integrated, amenity-rich setting.”

At full completion, the Rhodes Bay Masterplan is expected to deliver over 2000 apartments, with the first 1000 to be completed by 2029. Billbergia’s design focused on nine slender towers, so they could give back more to the ground plane. There will be more than 16,000sq m of new parkland and recreation space, including sports fields, a foreshore play area and waterfront green links. Around 14,600 sqm of retail is also proposed, extending the precinct’s role as a true mixed-use hub.

<img alt="Rhodes Bay" data-entity-type="file" data-entity-uuid="240ffc41-4f26-421a-9606-5c56f6fc2d93" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-11-26%20at%2011.05.48%E2%80%AFAM.png?VersionId=BkBxZr7S8CAt1vgNa8AF3zjdc3YuVh0L" />

“Density only works when it’s paired with amenity, transport and open space, and that’s what’s made Rhodes such an amazing success story,” Moran says, adding that the demographic shift Billbergia has seen over the last two decades has informed their future development pipeline in the suburb.

“Rhodes has moved from being largely an investor market to a strong owner-occupier community,” Moran says. “There’s real demand for three-bedroom homes, flexible intergenerational layouts, and apartments people can grow into.”

&nbsp;“We’re designing taller, more slender towers to free up the ground level for sport, recreation and green space. High-density communities thrive when people have the best backyards in Australia, and that’s what we want to create here.”

Demand remains robust, evidenced by Billbergia’s recent results. “We achieved a record sale across the entirety of Rhodes Central just last week,” Moran says. “It shows the depth of confidence buyers have in what’s being built here.”

Billbergia’s vertically integrated model allows them to overcome the recent cost escalation and challenges in the build environment. “Having an in-house construction team lets us control feasibility, value management and quality from day one,” Moran says. “It’s critical in the current market, where construction escalation is at the forefront of every project’s viability.”

The company is also leveraging the NSW Government’s new Housing Delivery Authority process, which Moran describes as a more efficient pathway without compromising design standards. 
 
“We’re really applauding the NSW Government for its efforts to increase housing supply. There’s been a remarkable improvement in how they’re helping deliver more homes, more quickly.”

Billbergia has already commenced construction of Stage One of the Rhodes Bay masterplan. They will be lodging the State Significant Development Application before Christmas.

“We’re moving quickly, but with due care,” Moran says. “This is a generational precinct, and it needs to be done right.”

Billbergia smashes suburb record as Rhodes transformation continues

The sheer scale of the two skyscrapers at <a href="https://www.apartments.com.au/new-apartments/victoria-albert-broadbeach-20-albert-avenue-broadbeach-qld-4218">Victoria &amp; Albert</a>, soaring 40 and 64 storeys above the heart of Broadbeach, was always destined to deliver some of the highest and most luxurious apartments ever built in the suburb.

Now, builder-developer <a href="https://www.apartments.com.au/developers/iris-capital">Iris Capital</a> has unveiled the Horizon Collection, a selection of residences with the largest floorplans and most commanding views in the towers. The three-bedroom apartments, starting from $4.64 million, include butler’s pantries, multi-purpose rooms, and, in some layouts, master retreats with private sitting areas.

[smartcode_project:default project_id=107928 project_image_fid=3944]

The most prestigious apartments in the Horizon Collection are the sub-penthouses and penthouses. The two sub-penthouses on the 38th level of the Albert Tower are priced at $8.85 million.

Each features three bedrooms, a study, and a flexible multi-purpose room with a sliding partition that allows half the space to function as a games room.

The open-plan kitchen, living, and dining area, complete with a butler’s kitchen and private wine cellar, flows onto a full-width balcony framing panoramic coastal views.

[smartcode_project:default project_id=107928 project_image_fid=3943]

There is now just one sub-penthouse for sale on the 62nd level of the Victoria Tower, with one already secured by an expat owner-occupier. The remaining sub-penthouse, priced at $8.95 million, offers four bedrooms and a wraparound balcony that captures panoramic views up and down the Coast. vistas from every angle.

Crowning each tower is a full-floor penthouse offering multiple expansive indoor and outdoor living and entertaining spaces. Atop the Victoria building is Oceania, which measures over 735 sqm of living space, and Kurrara atop the Albert Tower, which is almost 800 sqm. They each have four bedrooms, including a master and guest suites, a full 360-degree panorama of the Gold Coast, and all the bells and whistles expected of a luxury penthouse. They are priced from a little over $18 million.

“Every detail, every finish has been thoughtfully considered to imbue the penthouses with the ultimate sense of luxury,” says Susan Rossi, Director of Interior Design at <a href="https://www.apartments.com.au/architects/dbi">DBI</a>, who led both the architecture and interiors for V&amp;A. “We shaped these skyhomes to embody the spirit of Gold Coast luxury.”

[smartcode_project:default project_id=107928 project_image_fid=234091]

Victoria &amp; Albert, colloquially known as V&amp;A, is the flagship Gold Coast development by the Sydney-based Iris Capital. Led by developer and hotelier Sam Arnaout, Iris Capital acquired the landmark Niecon Plaza site in 2021. At the time, Arnaout described the company’s expansion into Queensland as a strategic move to capitalise on one of Australia’s strongest growth markets.

“We were initially looking to expand into Victoria, but the massive migration to the regions that followed the pandemic created a new dynamic across the Australian market,” Arnaout said.

“From a strategic point of view, Queensland — and the Gold Coast in particular — is the perfect fit for our business. The fundamentals here are strong: genuine employment growth, high net migration, and an undersupply of apartments driven by strong demand. The Gold Coast has matured into a thriving, progressive regional city with a fantastic future.”

[smartcode_project:default project_id=107928 project_image_fid=234097]

Across its two towers, V&amp;A will deliver 425 luxury apartments, supported by a suite of resort-style resident amenities. These include a subtropical podium featuring a 25-metre lap pool, gym, yoga deck, residents’ lounge, kids’ play area, zen garden, and barbecue terraces with outdoor dining spaces.

<a href="https://www.apartments.com.au/project-marketer/colliers">Colliers</a> Queensland Director David Higgins, who has managed sales at V&amp;A since its 2021 launch, says the project has set a new benchmark for Broadbeach’s luxury apartment market. Colliers Queensland Director David Higgins, who has managed sales at V&amp;A since its 2021 launch, says the project has set a new benchmark for Broadbeach’s luxury apartment market.

“The premium market has definitely spoken, with V&amp;A having now reached over half a billion dollars in presales since our launch,” Higgins says, adding that over 65 per cent of V&amp;A is now sold.

“Our buyers continue to validate the success of the Victoria &amp; Albert development vision and the luxury amenity that comes along with their apartment purchase. Of course, Broadbeach’s most walkable location, just 100m from the Broadbeach surfing beach, makes this luxury apartment a compelling addition to your real estate portfolio.”

Last year, Iris Capital brought construction in-house through its new arm, Iris Built. Completion of the 40-level Albert Tower is scheduled for late 2027, with the 64-level Victoria Tower, the taller of the two, expected to follow in mid-2028.

[smartcode_project_cta:default project_id=107928]

Victoria & Albert’s Horizon Collection takes Broadbeach living to new heights

Consumer Sentiment

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<h2>EXPERT INSIGHT</h2>

A pull back in the Index was to be expected.

Since the last survey in the second week of December we have seen domestic border closures; the emergence of Covid clusters in some states; and the sharp upswing in Covid cases overseas, notably the US and the UK.

This result compares to the 15% fall that was registered over July and August last year as the nation was shocked by Victoria’s severe second wave and associated hard lockdown. It still points to healthy Consumer Sentiment.

At 107.0 optimists clearly outnumber pessimists while the Index is 14.6% above the level a year ago and 41.5% above the low in April.

There may also be an element of statistical correction given that the Index had surged by 40% between August and December with the December print reaching its 10 year high. 
All components of the Index fell in January.

There were significant falls in the components associated with the economic outlook with the ‘12 month outlook’ falling by 8.3% and the ‘5 year outlook’ down by 4.5%.

Respondents were also less positive about their finances. The component ‘family finances relative to a year ago’ fell by 7% while the ‘12 month outlook for family finances’ was steady, falling by only 0.3%.

Spending intentions were also down with the component ‘time to buy major household items’ slipping by 2.8%.

Since January last year, before Covid was impacting Sentiment the ‘economic outlook’ components have lifted by around 26%; the ‘finances’ components by around 9%; while the ‘time to buy’ is up by 4.8%.

BILL EVANS is the Chief Economist at Westpac
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bevans

Consumer sentiment pulls back: Westpac's Bill Evans

<html><body>
EXPERT OBSERVER
Consumer confidence continues to improve in September. Sentiment has lifted in four of the past five weeks.
Importantly, households are showing increased appetite for making a major household purchase.
In fact, the ANZ-Roy Morgan sub-index measure of whether it was a ‘good time to buy a major household item’ rose by 5.3 per cent to 1.8 points last week – the highest level since late June.
‘Stay-at-home’ Aussies have shown a strong desire to upgrade their homes during the pandemic. CBA credit and debit card spending on household furnishings and equipment over the week to September 11 is up 28 per cent on a year ago. And annual spending is above 30 per cent across all states and territories except Victoria (up 6.1 per cent).
Post-lockdown retail spending has been boosted by greater mobility, government payments and superannuation withdrawals. And household savings and potential tax cuts – along with closed international borders – could see pent up demand from consumers even as stimulus is tapered into year-end.
What do the reports and figures show?
Consumer sentiment – Week ended September 13
The weekly ANZ-Roy Morgan consumer confidence rating rose by 1.4 per cent to 92.4 (long-run average since 1990 is 112.6). Confidence has lifted in four of the past five weeks. Sentiment is up by 41.5 per cent since hitting record lows of 65.3 on March 29 (lowest since 1973).
Four out of five of the major components of the index rose last week:
The Commonwealth Bank (CBA) credit card data – Week ended September 11
According to Commonwealth Bank (CBA), card spending in the week to September 11 was up 4.7 per cent on a year ago, compared to a 5.2 per cent lift for the week ended September 4. Online spending rose 17.4 per cent on a year ago (previous week: +21.9 per cent), but in-store spending was down 0.6 per cent (previous week: -2.1 per cent). Victorian card spending fell by 11.3 per cent on a year ago (previous week: ‑10.3 per cent), but Tasmanian spending was up 16.4 per cent (previous week: +18.2 per cent) compared to a year ago.
CBA noted, “Annual spending growth in all jurisdictions broadly tracked sideways over the past week. Spending on eating and drinking out has firmed over the week. In‑store spending is edging higher nationally and in Victoria it looks to have passed the trough.”
The Commonwealth Bank (CBA) Household Spending Intentions Series (HSI): August
According to the CBA, “The impact of the stage 4 lockdowns in greater Melbourne throughout August are clearly evident in the CBA Household Spending Intentions series for the month. The improvement seen during July in Home Buying, Retail, Travel, Entertainment and Education spending intentions all stalled in August. Health and Fitness spending intentions picked up in August, while Motor vehicle spending intentions continued to edge higher.”
On home buying intentions: “Home buying spending intentions for August retreated from their July highs. While there was a further increase in home loan applications, Google searches related to home buying declined slightly on the month.”
On retail spending intentions: “Retail spending intentions pulled‑back in August, consistent with our high‑frequency CBA credit/debit card spending data.”
On travel spending intentions: “The recovery in Travel spending intentions stalled in August, impacted by the restrictions imposed in Victoria.”
On health &amp; fitness spending intentions: “Health &amp; fitness spending intentions picked up in August. While actual spending was a little lower on the month, Google searches related to health saw an increase.”
On entertainment spending intentions: “Entertainment spending intentions pulled‑back a little in August, led lower by declines in food (eating out) and alcohol spending on licenced premises.”
On education spending intentions: “Education spending intentions were little changed in August, with some softness in spending and in Google searches for the education sector.”
On motor vehicle purchase intentions: “Motor vehicle spending intentions picked up in August and are back in positive territory for the first time since the start of the Covid‑19 pandemic.”
Kepler index of retail sales activity – Week ended September 13
The Kepler index of retail sales reported that aggregate sales fell by 13.2 per cent last week (September 13) to be down 26.9 per cent on the year. Average transaction value rose 0.1 per cent last week to be up 22.6 per cent on a year ago. Passer-by traffic fell 1.9 per cent last week to be down 52.6 per cent on the year. The weekly store shut down rate rose to 29 per cent (prior week: 27 per cent) with Victoria’s rate at 87 per cent.
OpenTable restaurant reservations – Week ended September 13
Australian restaurant reservations were down 9 per cent on September 13 from a year earlier, firmer than the 40.7 per cent drop recorded on September 6, according to OpenTable. Sit down diners fell by 99.7 per cent in Victoria (previous: -99.9 per cent), but were up by 61.6 per cent in Queensland (previous: up 146 per cent) and up 35.2 per cent in NSW (previous: +127 per cent).
Moovit change in public transport demand – Week ended September 13
Demand for public transportation – as measured by the urban trip planning app Moovit – was mixed over the week to September 13 (compared with the pre-pandemic level of January 15) from a week earlier in most of Australia’s biggest cities:
<ul>
<li>Sydney &amp; NSW: -43.7 per cent (previous week: -43.3 per cent)</li>
<li>Perth: -32.7 per cent (previous week: -36.5 per cent)</li>
<li>Brisbane &amp; South-East Queensland: -41.5 per cent (previous week: -41.1 per cent)</li>
<li>Melbourne &amp; Victoria: -83.1 per cent (previous week: -83 per cent).</li>
</ul>
What are the implications for investors?
Consumer confidence continues to improve due to increasing mobility in virus ‘free’ states and territories. Outside of Sydney and Melbourne, Aussies are more confident about going about their daily activities with the virus all but supressed. The notable weakening in sentiment last week in the two biggest cities and virus ‘hotspots’ – Melbourne (down more than 5 per cent) and Sydney (down over 3 per cent) – suggests that consumer caution remains elevated, weighing on the broader economic recovery.
Next week’s standout data release will be much-anticipated preliminary retail trade figures for August. The CBA Household Spending Intentions survey released today suggests that retail spending intentions pulled back in August. High frequency weekly CBA card spending and the Kepler Analytics retail gauge also imply a decline in spending during the month. Of course, Melbourne entered stage 4 lockdown restrictions in August with Victorian retail spending adversely impacted by social distancing measures and temporary retail store closures. But greater mobility in the ‘virus free’ states and territories are supportive of consumption and could yet offset the decline in Victorian spending.
RYAN FELSMAN is a Senior Economis at CommSec
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j.ballantyne1990-6AQqhLzZaK

Consumer spending intentions hit 11-week high: CommSec's Ryan Felsman

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EXPERT OBSERVER
The Westpac-Melbourne Institute Index of Consumer Sentiment surged by 18% from 79.5 in August to 93.8 in September.
We suspected last month’s 9.5% collapse in the Index was an over-reaction but this month’s 18% rebound is a pleasant surprise nonetheless. It comes despite official confirmation in the survey week that Australia had experienced its first recession since 1992. Clearly this was ‘old news’ with respondents more focussed on the future.
The rebound means the Index is now just 1.6% below the average over the six months prior to the emergence of COVID-19 in March.
Recall that the sharp fall in August was in reaction to the deteriorating virus situation in Victoria which had seen the state government announce hard lockdown measures at the start of the month including ‘Stage 4’ restrictions for Melbourne. But the more concerning message in August was the weakness in other states – in particular, the 15.5% slump in confidence in NSW.
The state had seen persistent clusters of virus cases and combined with Victoria’s problems, sparked concerns of a wider ‘second wave’ outbreak. To a lesser extent these fears were also apparent in Queensland where confidence tumbled 8.1%.
However, Victoria’s new cases slowed markedly once lockdown measures were in place and we saw no evidence of second waves in either NSW or Queensland.
It should be noted that the September survey was completed before the announcement by Victorian State Premier Andrews on September 6 of a slower than generally expected move towards reopening. The disappointment with that announcement could have been expected to dampen the 14.9% surge in confidence in Victoria, although frustration at the extended lockdown measures would likely still be more than outweighed by the clear success they have had in containing the virus.
We do not expect the Premier’s announcement would have had any impact on the positive results in other states.
BILL EVANS is the Chief Economist at Westpac
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Consumer sentiment roars back despite news of recession: Bill Evans

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EXPERT OBSERVER
The Westpac-Melbourne Institute Index of Consumer Sentiment fell 9.5% to 79.5 in August from 87.9 in July.
The scale of the fall comes as a major surprise. At 79.5, the Index is back near the extreme low of 75.6 seen back in April when Australia entered a national lockdown.
Since the July survey we have seen Victoria enter Stage 4 restrictions and evidence of some ‘hot spots’ in New South Wales. Under those circumstances it is certainly reasonable to have expected a sizeable fall in Consumer Sentiment.
However, collapsing to only 5.1% above the lows we saw in April when consumers were first confronted with a national lockdown may well prove to be a significant overreaction.
The biggest surprise was in NSW where sentiment collapsed by 15.5% – well in excess of the 8.3% fall in Victoria. Remarkably, the index in NSW has reached 77.8, below Victoria’s read of 78.
Even in Queensland, where cases have been largely eliminated, there was a fall of 8.1% putting the index in Queensland at 79.7, only slightly above NSW and Victoria.
The index in South Australia fell by 5.8% to 81.8 while only Western Australia was stable, falling by 1.5% to 85.9.
While some of the weakness in NSW and Queensland will reflect the direct economic drag from Victoria’s lockdown and the closure of interstate borders, the overall response seems disproportionate to the evidence on developments around the virus.
This emphasises the fear of the unknown.
Consumers across the nation appear to have been rattled by the developments in Victoria and fear that other states may also succumb to the ‘second wave’ outbreak.
NSW has seen several clusters although, after more than a month, there has been no evidence that these cases will develop into a Victorian-style disaster.
Queensland has seen even fewer cases and faces even more secure prospects.
Our view is that these fears are likely to have become overblown. While consumers are right to be concerned, virus risks still look low outside Victoria. Even in NSW new case counts remain well below the levels seen when Victoria’s outbreak started to ramp higher in the second half of June.
Certainly, the prospect of Victorian-style outbreaks taking hold across all of Australia seems remote. Fears across the nation will be lowered further as and when lockdown measures start to improve the situation in Victoria
Victoria’s progress in containing the virus with its current heavy lockdown policies will be much clearer by the first week in September when we conduct the next survey.
BILL EVANS is <a href="https://westpaciq.westpac.com.au/Article/44613/14186/" target="_blank">Westpac's chief economist</a>
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Consumer sentiment collapsed in August especially in NSW: Bill Evans

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EXPERT OBSERVER
The drop in confidence reverses all of last month’s impressive gain, taking the Index back to the weak levels seen in May but still leaving it 16% above April’s extreme low of 75.
The timing of the survey is relevant. It covered the week in which the lock down was announced for Melbourne but the survey closed before the news of a significant cluster was reported for Sydney.
Sentiment has been rocked by the resurgence in Coronavirus cases over the last month. After averaging about ten a day through late May and early June, new cases have lifted significantly, running at close to 200 a day in the July survey week.
These increases have been almost exclusively in Melbourne prompting the state government to reinstate lockdowns for the city and several regional areas, and the closure of Victoria’s state borders – measures that were announced in the first half of the survey week.
Daily responses suggest these announcements were followed by a slight firming in sentiment in the second half of the week.
<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/2020/7/15/Consumer%20sentiment.jpg" alt="">
It is of some concern that the survey pre-dates the news of a significant cluster of cases in Sydney which emerged last weekend – a day after the end of the survey.
State readings underscore the importance of virus-related developments: Victoria’s sentiment index plunged 10.4% in July but sentiment across the rest of the nation showed much milder declines (down 4.5% on a combined basis).
While milder, the weakness in other states is also likely to be linked to the outbreak in Victoria, reflecting concerns about the virus spreading interstate and spill-over effects on the wider economy.
The component detail shows the renewed COVID threat hit consumer expectations for the year ahead hard but also significantly undermined medium-term expectations for the economy.
The ‘economy, next 12mths’ sub-index recorded the biggest decline, slumping 14% in July to be 25% below pre-COVID levels – that compares to the 40% drop during the ‘first wave’ of the virus in March-April.
The ‘economy, next 5yrs’ sub-index recorded a sharp 10.3% fall.
This is disconcerting as medium- term expectations for the economy held up reasonably well during the initial COVID shock – only falling 5.1% in March–April – and were slightly above pre-COVID levels in June.
Bill Evans is the chief economist at Westpac 
 
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Westpac consumer sentiment drops as new COVID-19 cases shake confidence: 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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CommSec senior economist, Ryan Felsman, predicts that the RBA will cut interest rates in the coming months to support the economy.
Pressure was also building on the Federal government to announce significant fiscal initiatives in the May Budget, the analysis suggested.
It noted consumer confidence has dropped by 0.7 percent according to the weekly ANZ-Roy Morgan rating system, representing an eight-month low in public economic trust.
Falling to 108.3 points, sentiment remains below both the average of 114.1 points held since 2014, and the longer-term average of 113.1 points held since 1990.
<img src="https://www.urban.com.au/images/2020/2/24/cc%20CONSUMER%20CONFIDENCE.png" alt="">
Three of the five major components of the index rose last week; Economic conditions over the next 12 months was up from -12.6 points to -10.5 points, economic conditions over the next 5 years was up from +1.3 points to +4.0 points, the measure of whether it was a good time to buy a major household item was up from +20.3 points to +22.4 points, and the measure of inflation expectations was up from 3.9 per cent to 4.1 per cent.
<img src="https://www.urban.com.au/images/2020/2/24/cc%20JOB%20INSECURITY.png" alt="">
Meanwhile, the estimate of family finances compared with a year ago was down from +8.6 points to +4.3 points, and the estimate of family finances over the next year was down from +27.7 points to +21.1 points.
Analysis by Mr Felsman suggests that Australia’s horrific fire-season over the Summer, and concerns among investors about to the growing threat of the Novel Coronavirus (COVID-19) epidemic outside of mainland China, are largely responsible for this downturn.
<img src="https://www.urban.com.au/images/2020/2/24/cc%20SPENDING%20.png" alt="">
CommSec's report notes that the Coronavirus’s cost to the Aussie economy is still largely unknown, however even minor reductions in Chinese demand for iron ore, coal, natural gas and agricultural produce could hurt Aussie exporters and producers.
The timing of the outbreak has raised particular concerns, due to its overlap with the current post-ceasefire recovery following the 2-year long US-China trade war.
Bloomberg has estimated that just 50-60 per cent of Chinese factories and businesses have reopened after the enforced extension to the Lunar New Year holiday break, however the Aussie dollar’s current weakness – at 11-year lows against the greenback – is acting as a ‘shock absorber’ for the national economy.
<img src="https://www.urban.com.au/images/2020/2/24/cc%20HOLIDAYS.png" alt="">
 
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Coronavirus denting consumer confidence; CommSec's Ryan Felsman

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The Westpac-Melbourne Institute Index of Consumer Sentiment declined 1.8% to 93.4 in January from 95.1 in December.
It is entirely reasonable to have expected that the Index would have fallen during this period of devastating bushfires. Perhaps it is somewhat surprising that the fall in the Index was not more severe particularly in light of the 5.8% fall we saw during the Queensland floods in 2011.
However the fall in the Index during the floods was from 111.0 to 104.6 – overall confidence levels during that period were very high – much higher than we are currently experiencing.
Indeed, since the lows of the Global Financial Crisis where the Index averaged only 89 over a 15 month period from March 2008 to May 2009 there have only been seven monthly readings where the Index has printed below 93.4.
In short, Confidence has been further eroded by the bushfires but because the Index was starting from such a modest level it was likely that the fall in Confidence would be less than some may have expected.
Arguably, because the survey occurred in a week where there was widespread rain the negative impact of the bushfires was somewhat reduced. If the survey had been conducted a few weeks earlier then the Index is likely to have fallen by even more, notwithstanding the very low starting point.
This low level of Confidence is consistent with the generally lack lustre reports on consumer spending. The surprising jump in retail sales which was reported for November is likely to have largely reflected the “Black Friday” effect. A more widespread boost to spending will be required before there are credible grounds to dispute the downbeat signals associated with the consistently low levels of the Index.
Apart from the fires, which would have been the dominant influence on Sentiment for this survey, other factors should have been somewhat supportive. Optimism around financial markets and the global economy has lifted, with the Australian share market up by 6% since the start of the year.
Furthermore, the housing related components of the survey also pointed to ongoing confidence in the housing market.
All the economic components of the Index recorded declines in January.
The ‘economy, next five years’ sub-index fell 3.7% in January and the ‘economy, next 12 months’ sub-index fell 5.4%. Both are down sharply on a year ago (–8.9% and –11.9% respectively).
The ‘time to buy a major household item’ sub-index fell 1.8% in January. At 113.4, the sub-index is well below its long run average of 127 and 4.1% down on last year, suggesting consumers are likely to be extra cautious, particularly in December and January.
Consistent with improved performance of financial markets and housing we saw the “own finances” components remain broadly steady.
The ‘finances vs a year ago’ sub-index rose 0.7% in January and the ‘finances, next 12 months’ sub-index increased by 0.9%.These components are down by 3.1% and 3.2% respectively on a year ago.
The Westpac-Melbourne Institute Unemployment Expectations Index fell 2.9% to 134 in January, up 8.4% on this time last year (recall that higher readings indicate that more consumers expect unemployment to rise in the year ahead). The readings are consistent with a slowdown in jobs growth and steady increases in the unemployment and underemployment rates over the year ahead. Note that Westpac is expecting the unemployment rate to lift to 5.6% from 5.2% over the course of the first half of 2020.
Housing-related sentiment was strong in January, with views on time to buy lifting while price expectations continued to surge.
The ‘time to buy a dwelling’ index rose 5.7% in January to 118.8, nearing the long run average of 120. Despite the increase in this index we expect that it has peaked in this cycle. The index is down by 6.4% from its peak in August, shortly after the low point for prices which occurred in June.
<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/2020/1/22/7_OBS%20graph.jpg" alt="" width="552" height="387">
Note that, similarly, the index bottomed out at 90.0 in May 2017 – coinciding with the peak in prices in the previous cycle.
On that basis (current level of 118.8 compared to low point of 90.0 in the previous cycle) it certainly appears that price gains have further to run. If, as we expect, this Index loses ground through 2020 then the pace of house price appreciation may slow. Sydney’s low point in the previous cycle was 74 in May 2017. Melbourne’s low point was 83 a little later in August 2017. Currently the Sydney index sits at 117.4 and Melbourne’s is at 105.8, off recent peaks of 130 and 133 respectively.
The Westpac-Melbourne Institute Index of House Price Expectations Index rose 8.1% in January to 151.48, up a staggering 58% over the year. While the Index has reached higher levels in previous price cycles the boost in optimism has not been as dramatic as we are witnessing in this cycle. Before, the previous peak (which had outstripped the current level of 151.48) the annual lift in the index was “only” 26.7%.
“The “Time to Buy” Index and the “House Price Expectations “Index are both likely to provide useful lead indicators of the shape of this current house price cycle. For now, the indexes are indicating that this current period of positive price action is unlikely to end in the near term.
The Reserve Bank Board next meets on February 4. Westpac expects that the Board will decide to cut the cash rate by 0.25% to 0.5%.
Markets are not convinced. Market probabilities for a rate cut are priced at around 50%.
 <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/2020/1/22/7_OBS%20Table.jpg" alt="" width="847" height="295">
The other complication around this meeting is that there has, understandably, been no public communication from the Reserve Bank for the weeks of the holiday period.
The minutes of the last Board meeting therefore take on considerable importance. From our perspective the key observations were that the Board would review the outlook in February (unusual to be so specific in minutes); the ongoing concern with weak wages growth; and the emphasis on the effectiveness of monetary policy.
In fact, the Governor has previously emphasised the boost to spending from a positive wealth effect of higher house prices and the direct impact of rising housing turnover on expenditure on household goods.
There has been recent media criticism about the effectiveness of monetary policy but the Reserve Bank Board is very clear in the minutes, “While members recognised the negative confidence effects for some parts of the community arising from lower interest rates, they judged that the impact of these effects was unlikely to outweigh the stimulus to the economy from lower interest rates”.
Finally, it is always reasonable to point to the limited further scope the Reserve Bank has with respect to easing rates. However the Board has also been clear on that point, arguing that it is the level rather than the change in rates that counts, so if lower rates are needed then best to move regardless of whether there is limited further scope.
The decision to cut the cash rate in February is also expected to be supported by a downgrade in the growth forecasts for 2020.
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Consumer sentiment falls further: Bill Evans  

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Australians are becoming more and more confident in the housing market, suggests Westpac's November Housing Pulse.
Westpac have said Australia's housing market is now into a "self-sustaining recovery."
The Westpac Housing Consumer Sentiment Index remains near five year highs, however the time to buy segment has softened a touch.
"Prices have lifted and are set to finish up slightly for the 2019 calendar year," the report advised.
"Turnover has been slower to turn but is starting to show a clearer pick up as well."
Westpac suggests the positive sentiment readings are consistent with a pick up in turnover which will carry through year end and in to the first half of 2020. 
<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/2019/11/26/Westpac%20consumer%20sentiment.jpg" alt="">
"The swing that became apparent mid year continues to be led by a strong resurgence in NSW and Vic but with other states also showing a clear pick up.
"Auction markets, finance activity, prices and listings now all confirm the turn."
 Westpac suggest conditions continue to vary markedly by state.
They say NSW is showing a strong, broad based price rebound, however that is already bringing affordability issues back to the fore.
<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/2019/11/26/NSW%20VIC%20WESTPAC%20SENTIMENT.jpg" alt="">
Victoria's recovery has good momentum but is more uneven across segments, while Queensland missed out on most of the recent price cycle, but is showing signs of perking up.
South Australis is seeing a gentle firming but Western Australia is still struggling to pull out of its multi-year correction.
 
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Australia's housing market into self-sustaining recovery: Westpac's November Housing Pulse

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EXPERT OBSERVER
Aussie consumers remain downbeat. In fact, the weekly ANZ-Roy Morgan consumer sentiment index is down by 4.1 per cent between June 9 and November 17 2019 – the period in which interest rates have been lowered three times to a record low 0.75 per cent. Last week, the release of disappointing job and wage reports served to highlight the sense of unease Aussies are currently feeling about the economy. In fact, consumer views on ‘current’ economic conditions are now at the lowest level since April 23 2017.
While ultra-low interest rates are currently working their way through the economy and showing up primarily in rising capital city home prices, although rising unemployment, tepid pay rises and still-elevated household debt continue to restrain consumer spending intentions.
According to Commonwealth Bank (CBA) and Google trends searches data, measured household spending intentions edged higher in October. The modest upturn signals a potential improvement in consumer spending in the lead up to online retail shopping events - Black Friday and Cyber Monday - later this month, ahead of the all-important Christmas trading period.
The CBA gauge also revealed that consumer spending intentions on entertainment and travel are positive, suggesting that households are still keen to deploy their hard-earned coin on ‘pleasure pursuits’. But gyms and car dealerships remain under pressure as consumers’ rein-in non-essential spending on goods and services.
The rebound in home prices continues. The CoreLogic 5-Capital City Daily Home Value Index is up by 1.2 per cent so far in November, led by gains in Sydney (up 1.8 per cent), Melbourne (up 1.2 per cent) and Brisbane/Gold Coast (up 0.5 per cent). The lift in housing demand, supply constraints and record-low borrowing costs are pushing-up home prices – so it’s no surprise that home buying intentions are near record highs in early 2017, according to CBA Group economists.
What do the figures show? Consumer Sentiment
The weekly ANZ-Roy Morgan consumer confidence rating fell by 1.1 per cent to 109.9 points. Sentiment is below both the average of 114.3 points held since 2014 and the longer term average of 113.1 points held since 1990.
Three of the five major components of the index rose last week:
1. The estimate of family finances compared with a year ago was up from +10.6 points to +10.9 points;
2. The estimate of family finances over the next year was up from +25.6 points to +25.8 points;
3. Economic conditions over the next 12 months was down from -7.0 points to -9.4 points;
4. Economic conditions over the next 5 years was down from +6.0 points to +0.8 points;
5. The measure of whether it was a good time to buy a major household item was up from +20.6 points to +21.1 points.
The measure of inflation expectations was down from 4.1 per cent to 3.8 per cent.
The CBA Household Spending Intentions Series (HSI) – October
On home buying intentions: “Home buying intentions rose further in October and are now close to the record highs seen in H1 2017. Current HSI readings are consistent with an ongoing pick up in dwelling prices. And also consistent with a turn in leading indicators of residential construction like building approvals.”
On retail spending intentions: “Retail spending intentions are bouncing around at present but the lift in October means a modest uptrend is in place.”
On travel spending intentions: “Travel spending intentions are turning up, albeit from low levels. The trend in Australian residents holidaying overseas has slowed. The pick-up in the Travel HSI may be an indication that a lower AUD [Aussie dollar] is encouraging domestic holidays instead.”
On health &amp; fitness spending intentions: “Intentions to spend on health &amp; fitness have levelled out. Households are willing to allocate scarce disposable income to driving health &amp; fitness spending with little impact from the vagaries of the economic cycle.”
On education spending intentions: “Education spending intentions are high and rising. Policy makers and economic commentators can all see the need to lift productivity growth.”
On motor vehicle spending intentions: “Motor vehicle purchase intentions remain deep in negative territory. And the tentative signs of a turn up in the past few months have stalled.”
Reserve Bank November 5 Board minutes
Last paragraph – easing bias retained: “The Board concluded that the cash rate should be held steady at this meeting. As part of their deliberations, members also agreed that it was reasonable to expect that an extended period of low interest rates would be required in Australia to reach full employment and achieve the inflation target. The Board would continue to monitor developments, including in the labour market, and was prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time.”
A rate cut was considered by the Board: “The Board agreed that a case could be made to ease monetary policy at this meeting…”
Impact on consumer confidence and savers: “While members judged that lower interest rates were supporting the economy through the usual transmission channels (including a lower exchange rate, higher asset prices and higher cash flows for borrowers), they recognised the negative effects of lower interest rates on savers and confidence. They also discussed the possibility that a further reduction in interest rates could have a different effect on confidence than in the past, when interest rates were at higher levels.”
Stimulus is working its way through the economy: “The established housing market was picking up, which would have positive spillovers for the broader economy, although the size of these spillovers was uncertain. Further evidence on spending by households was required before drawing a conclusion on the effects of the tax cuts and low interest rates. Having already delivered a substantial monetary stimulus in recent months, there was a case to wait and assess the effects of this stimulus, especially given the long and variable lags.”
Interest rate pause?: “The most appropriate approach would be to maintain the current stance of monetary policy and to make another full assessment once more evidence of the effects of the earlier monetary easing had become available.”
‘Gentle turning point’ reiterated: “The outlook for the Australian economy was little changed since August. After a soft period in the second half of 2018, GDP growth had picked up a little in the first half of 2019 and it appeared that a gentle turning point had been reached. Looking forward, growth was expected to strengthen gradually to 2¾ per cent over 2020 and around 3 per cent over 2021.”
On the job market: “The unemployment rate had remained steady at around 5¼ per cent and was expected to decline only gradually. Spare capacity was likely to remain in the labour market for some years.”
On inflation: “Inflationary pressures had remained subdued, held down by very low housing-related prices and slow growth in labour costs and administered prices.”
On the global economy: “Global financial markets were signaling a decline in pessimism, which, if sustained could lead to better-than-expected outcomes for the global economy.”
Financial markets pricing of future rate cuts: “Financial market pricing implied that expectations for a further reduction in the cash rate had been scaled back since the previous meeting, with some chance of a 25 basis point reduction around the middle of 2020.”
What are the implications for interest rates and investors?
According to the Reserve Bank Board’s minutes – released today - policymakers considered another rate cut at their meeting in early November. The Board, however, opted to ‘sit pat’, instead cautioning that “they recognised the negative effects of lower interest rates on savers and confidence.” And in light of its diminishing conventional monetary policy ammunition, Board members also emphasised that, “Having already delivered a substantial monetary stimulus in recent months, there was a case to wait and assess the effects of this stimulus, especially given the long and variable lags.”
That said, the Reserve Bank has retained its policy easing bias. Further evidence of a continuing loss of momentum in the job market could be the catalyst for another rate cut. In fact, Board members concede that “spare capacity is likely to remain in the labour market for some years” with little progress expected to be made boosting Aussies pay packets – two essential ingredients for an improvement in consumer spending and a pick-up in inflation.
CommBank Group economists have pencilled in an interest rate cut in February 2020, but view further fiscal initiatives as being more effective in delivering additional support for the economy.
RYAN FELSMAN is a Senior Economist at CommSec
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