The residential transformation of St Kilda Road is set to continue into with more new apartment plans for the sought-after boulevard.

Wing Tai Asia has lodged plans for a major residential tower at 464-466 St Kilda Road, replacing the former VACC House with an 18-storey mixed-use development designed around a retained heritage podium and a sculpted contemporary tower.

The proposal, prepared under Victoria’s Significant Residential Development with Affordable Housing pathway, would deliver 325 apartments and ground-floor retail across the prominent 4,653 sqm boulevard site in Melbourne’s St Kilda Road North Precinct.

The project centres on the adaptive reuse of the site’s heritage-listed VACC Building, an eight-storey office designed by Bernard Evans that has occupied the address for decades. Planning documents state the development would involve “carefully dismantling and conserving off-site the original metal fabric of the podium visible from St Kilda Road,” before reinstating it as the defining frontage of the new scheme.

Above the restored podium, Wing Tai is proposing a curvilinear residential tower. The scheme includes 172 one-bedroom apartments, 63 two-bedroom apartments, 66 three-bedroom apartments, and 24 four-bedroom apartments, alongside two ground-floor food and beverage tenancies fronting St Kilda Road.

The tower has been designed with substantial articulation and variable setbacks to minimise perceived bulk and maintain view corridors along the boulevard. Urbis, which prepared the planning report, said the design “has been significantly articulated through a curvilinear design” with “an interplay with materials, façade expression and depth” to create visual separation and visual interest.

The proposal also includes 254 basement car spaces, landscaped pedestrian links connecting St Kilda Road and Queens Lane, and a biophilic landscape strategy featuring canopy trees, raised planters, cascading greenery and a glass oculus pool overlooking the eastern frontage.

Planning documents confirm the $270.1 million development will contribute 3 per cent of project costs to the Social Housing Growth Fund as part of the application process.

Wing Tai acquired the St Kilda Road property in 2018 alongside Abacus Property Group for $95.38 million, before later consolidating ownership of the site. The property previously served as the Victorian Automobile Chamber of Commerce headquarters for around 60 years.

The transformation of the St Kilda Rd boulevard is already beginning to materialise, with a number of high-profile projects recently completed, launched, or approaching launch as developers continue to back the long-term appeal of the precinct.

Among the most notable recent completions is Louise by Samuel Property Group, just off the strip on Queens Lane, the same pocket Hirsch &amp; Faigen recently launched The Queensbury. Mirvac is too on the same street with The Albertine, which is approaching completion.

Dexus recently secured approval for its slice of St Kilda Road, while Gurner also has approved plans for the precinct.

Joel Robinson

Wing Tai unveils 325-apartment St Kilda Road tower on former VACC House site

Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

First look: SP Setia targets St Leonards skyline with 40-storey TOD tower

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

First look: Urban Property Group unveils Newcastle’s latest tower at Wickham interchange

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

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The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
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[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

Consumer Sentiment

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GUEST OBSERVER 
The Westpac Melbourne Institute Index of Consumer Sentiment increased by 2.0 percent in August from 99.1 in July to 101.0 in August. 
The survey was conducted over the first four days of August, covering the Reserve Bank’s August 2 announcement of a 0.25 percent cut in the overnight cash rate from 1.75 percent to 1.5 percent.
The response to this development has been much more muted than we saw in May when the Bank last cut the rate, from 2.0 percent to 1.75 percent.
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On that earlier occasion the Index lifted by an impressive 8.5 percent from 95.1 to 103.2. That was an exceptionally large positive response and much stronger than the average rise following rate cuts historically. 
That can be explained by a number of factors. Firstly, there was a larger surprise element to the May decision with, arguably, significantly less intense media speculation than we saw in August. Secondly the standard variable mortgage rate offered by most banks was reduced by the full 0.25 percent, whereas in August the four major banks only reduced variable rates by 0.10- 0.14 percent. Finally, the Index was coming from a significantly lower starting point in May (95.1) than in August (99.1). 
Another development that may have unnerved respondents in August has been political unease. With the government having been returned with a wafer thin one seat majority in the House of Representatives and considerable change in the Senate, respondents might also be somewhat uncertain about future prospects around potential political stability. 
Finally we have to accept that as interest rates go progressively lower some respondents, particularly those who may not have a mortgage, may become more unnerved about the signal that record low rates is sending about the economy. For example, in today’s result, while respondents with a mortgage responded strongly, there was a 1.3% fall in the confidence of those respondents who wholly own their properties. 
That negative might have been expected to be even bigger for respondents that have low debt and rely on interest income. However, the decision by banks to raise some term deposit rates following the RBA rate cut has instead given a notable boost – sentiment amongst retirees in particular posted a strong 7% rise. 
Notably, consumers do not expect to see more interest rate relief. In our special question around the outlook for mortgage rates, 37% of respondents expect mortgage rates to rise over the next 12 months; 36 percent expect rates to be steady; and just 27 percent expect further rate cuts. 
Overall the lift in the Index is still consistent with an improved outlook for the Australian economy. We are now back in the range where optimists outnumber pessimists. Over the last thirty months there have only been eight when optimists have been in the ascendency with three of those months figuring in the last four. 
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In particular, prospects for the housing market appear to have been boosted by the rate cut. The confidence of those respondents who hold a mortgage lifted by 7 percent. 
Westpac’s Index of ‘time to buy a dwelling’ rose by 10.1 percent to be up by 9.2 percent over the last year. In particular, the key states of NSW and Victoria showed strong improvements. The Index lifted by 19 percent in NSW and by 12.8 percent in Victoria. This is particularly significant for the key Sydney market where the Index is now 61 percent above the average of the second half of 2015 when confidence collapsed in the Sydney housing market. 
The Westpac Melbourne Institute House Price Expectations Index was basically flat for the month but, consistent with the ‘time to buy’ index is signalling considerably more confidence than we saw at the start of the year. This Index has increased by 28 percent since the end of 2015. 
Despite the lift in overall confidence prospects in the labour market deteriorated somewhat. The Westpac Melbourne Institute Unemployment Expectations Index increased by 1.7 percent from 138.8 to 141.2 (recall that higher reads indicate higher expectations for unemployment and a worsening outlook for labour market conditions). The Index is still 4.4 percent below its level from a year ago. However the promising improvement we saw in the Index near the end of last appears to have stalled over the course of this year. 
Both of the components of the Index that assess family finances increased in the month. The ‘family finances vs a year ago’ sub- index lifted by 1.0 percent and the ‘family finances over the next 12 months’ sub-index was up by 4.3 percent. This is the second highest read on the outlook for finances since October 2013 although there has been no comparable outperformance for the backward- looking component, which is 9.6 percent below its level from a year ago. Note that in its Statement on Monetary Policy the Reserve Bank gives most attention to this component of the Index. 
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Short term confidence in the economy improved. The ‘economic conditions over the next 12 months’ sub-index lifted by 3.5 percent to be up by 10.5 percent over the year. While there was little movement in the ‘economic conditions over the next 5 years’ sub-index (down 0.7 percent) that Index is also up by an encouraging 11.5 percent over the year. 
Retail prospects improved marginally with the ‘time to buy a major item’ sub-index up 1.6 percent (although still down 2.7 percent on a year ago).
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The Reserve Bank Board next meets on September 6. Having cut rates at its last meeting the Board is almost certain to keep rates on hold in September. However it is clear from the Bank’s recent Statement on Monetary Policy that it holds an easing bias. That sentiment has encouraged markets to expect a further cut in November following the release of the next inflation report. The case for a cut is based on Australia’s ongoing low inflation environment. 
However, by November, consistent with some of the messages in this survey we expect that economic conditions will have firmed sufficiently for the Bank to be more patient with its inflation objective. It may recognise that rigid adherence to the current inflation target of 2–3 percent might not be the best way to run policy in this current low inflation world. 
Accordingly we expect that the Bank will decide to hold rates steady in November
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BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>. Justin Smirk is ‎senior economist, Westpac Group and can be contacted <a href="https://www.westpac.com.au/about-westpac/westpac-group/" target="_blank">here</a>.
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jchancellor-FAypfDUnLy

Case for rate cuts based on Australia’s ongoing low inflation: Westpac's Bill Evans

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With the major events of ‘Brexit’ and prolonged election uncertainty it is not surprising to see a fall in the Index. In fact, given these developments, this fall appears to be surprisingly modest. 
The survey was conducted over the period July 4 to July 7. 
By the time of the survey market volatility associated with ‘Brexit’ had largely settled down and media commentary was, correctly in my view, concentrating on the implications for the UK economy rather than the initial reaction which speculated on some disastrous contagion for the whole of Europe. 
However concerns would have lingered for many respondents given the blanket publicity which the ‘Brexit’ development received. 
On the other hand election uncertainty persisted throughout most of the survey period. 
Respondents would have been particularly unnerved about the prospect of an inconclusive election result given the experience during the last ‘hung’ Parliament in 2010 to 2013. 
Consequently, to see the Index fall by only 3%, back to its level of March 2016 and still 4.2% above its April level is encouraging. 
Since the end of the survey period we have seen some welcome political certainty with the prospect of a hung Parliament avoided. It is reasonable to speculate that had the survey been conducted over the last few days the results would have been more positive. 
Furthermore, we expect the Reserve Bank to move to cut rates again following its meeting on August 2. 
Following the cut in May the Index surged by 8.5% putting it firmly in positive territory above 100, indicating optimists outnumber pessimists. With 
the Index currently poised only slightly below 100 we can be reasonably confident that the Index will be back above a 100 next month despite having to negotiate two major shocks in ‘Brexit’ and election uncertainty. 
With a 3% fall in the overall Index it is not surprising that respondents were a little less confident around the labour market. 
The Westpac Melbourne Institute Index of Unemployment Expectations rose 1.9% in July but the Index is still 4% below its level in April and, most importantly, 8.0% below its level of a year ago. 
Our assessment of that Index is that it is indicating a steady improvement in the labour market. 
Reflecting market volatility and political uncertainty, both components of the Index that relate to households’ assessments of their own finances were weaker. The sub-index tracking assessments of ‘family finances compared to a year ago’ fell by 
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5.2% while the ‘family finances over the next 12 months’ sub- index fell by 2.7%. 
Concerns about the short term economic outlook intensified with the component ‘economic conditions over the next 12 months’ falling by 6.1% although the 5 year outlook was steady. 
The sub-index tracking vies on ‘time to buy a major household item’ fell by 1.5%. 
Over the last 12 months the overall Index has increased by a healthy 7.4%. However that improvement has been dominated by the ‘economic outlook’ components which have risen by nearly 20% on average whereas the ‘family finances’ components have only improved by an average of 2.4%. Respondents may be buoyed by reports of overall improving economic conditions but they are not feeling the same improvement in their own financial position, pointing to a less encouraging basis for boosting consumer spending than may be implied by the overall Index. 
Signals in the housing market were mixed. The ‘time to buy a dwelling’ index fell by 1.8% to 101.8. 
This Index has been markedly weaker since the middle of last year although there has been no sign of further deterioration in 2016. 
On the other hand respondents are regaining their confidence in the outlook for prices. The Westpac Melbourne Institute Index of House Price Expectations lifted by 4.3% in July to its highest level since August last year and up around 17.3% on the average of the last quarter of last year. 
The Reserve Bank Board next meets on August 2. We expect that it will decide to further reduce the overnight cash rate to 1.5%. 
This will follow the decision to lower rates by 0.25% at its Board meeting in May. 
Westpac had not expected that move because we underestimated the significance which the Board had read into the March quarter inflation report. On the basis of that report the Board lowered its forecasts of underlying inflation in 2016 from 2.5% to 1.5% and in 2017 from 2.5% to 2.0% – the bottom of the Bank’s target range.
We do not believe that it would have made such significant changes to its assessment of the inflation outlook without being prepared to cut rates further. Indeed its own forecast of 2% in 2017 incorporated the market forecast of a further rate cut.
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With the AUD lifting above USD 0.76 and the inflation target at risk it seems a sensible policy option to cut rates further. 
However we are mindful that despite cutting rates the Board did not lower its growth forecasts indicating that the motivation behind the May decision was entirely around the need to credibly achieve the inflation target over the forecast period. Rigid adherence to that policy in future might be questioned particularly, as hinted at in this survey, if the rate cuts spill over into excessive exuberance in asset markets. Hence we expect that this cut will, most likely, be the last in the current easing cycle. 
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Bill Evans is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Consumer sentiment falls on Brexit and election concerns: Westpac's Bill Evans

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Consumer anxiety has fallen for the fourth straight quarter due to improvements in the labour market and an upswing in the non-mining economy according to the The NAB Consumer Anxiety Index, Q2 2016.
The NAB Consumer Behaviour Survey: Q2 2016, conducted across two weeks in May after release of the 2016-17 Federal Budget found chief among concerns and financial stress were financing retirement, providing for family and healthcare.
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NAB Chief Economist Alan Oster said this is the fourth survey in a row where overall consumer anxiety has trended downward, with consumer anxiety is now at its lowest level since half-way through 2013, and well below its long-term average.
“While we continue to expect moderate growth in consumer spending throughout 2016, this is contingent upon further pick-up in labour market conditions and risks associated with further declines in the household savings rate,” he said.
The NAB Consumer Behaviour Survey: Q2 2016 also found consumers continue to focus spending on ‘essential’ items such as paying down debt, medical and utility bills, and groceries, above ‘non-essential’ items such as entertainment, travel and eating out.
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Consumer anxiety at its lowest level since mid 2013: NAB

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GUEST OBSERVER
An election may be just over a month away, but it is so far, so good for the economy. Consumer confidence hasn’t fallen in the past four weeks, and hopefully that means that people are just quietly getting on with life. Usually election periods are viewed with suspicion – with uncertainty about the likely outcome causing people to delay spending, investing or hiring staff.
But consumer sentiment remains positive and above long-term averages. Importantly, the outlook for family finances remains well above long-term averages.  
In terms of consumer confidence, the Reserve Bank is keenly focussed on the outlook for family finances. Simply, if the outlook for finances is positive, consumers are more likely to spend. The good news is that Aussie consumers positively view the outlook for their finances with the latest survey result not far off the best level seen in six years.  
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The Reserve Bank Governor covered a lot of ground at today’s question and answer “unplugged” session. Amongst the topics discussed were inflation and inflation targeting; China’s economic transition; industries of the future; household finances; and the supply of housing and home prices. The key takeaway is that while growth is good – but could be better – and unemployment has come down, inflation is too low. That by itself doesn’t point to lower rates ahead. The Reserve Bank Governor also indicated his belief that inflation will eventually lift and be back in the 2-3 percent target band.  
The Reserve Bank Governor noted that ‘leverage’ was a factor being monitored closely when assessing the state of the housing market. While households were holding more debt and were doing a good job with managing their finances, the Reserve Bank Governor indicated that debt couldn’t continue to rise much further from current levels.  
Asked about what industries will provide future economic growth, Governor Stevens said that growth would come from a variety of places. He indicated for that to happen it was important to have the “right overall policy settings”. Policy settings include the labour market, competition policy as well as those encouraging innovation and risk taking.  
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What do the figures show? 
Consumer confidence 
The ANZ/Roy Morgan consumer confidence rating rose by 0.5 per cent to 115.7 in the week to May 22. Confidence is up 1.9 per cent over the year, up 3.6 per cent over the past four weeks and above the average of 112.1 since 2014. Three of the five components of the index rose in the latest week:</div>
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<div class="column">The estimate of family finances compared with a year ago was up from +4 to +5; The estimate of family finances over the next year was up from +26 to +29; Economic conditions over the next 12 months was unchanged at +3; Economic conditions over the next 5 years was down from +10 to +7;</div>
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<div class="column">The measure of whether it was a good time to buy a major household item was up from +33 points to +34 points.</div>
<div class="column">Reserve Bank Governor Remarks
The appearance by the Reserve Bank Governor was termed an “unplugged” session – involving him answering questions from a facilitator as well as the audience.
The Reserve Bank Governor reiterated his defence of the current 2-3 per cent inflation target band.
Governor Stevens suggested there would be “quite some years of hard repair work ahead” for the Federal Budget.</div>
<div class="column">The Australian economy was regarded in good shape: growth was good, but could be stronger; unemployment had fallen and had been better than the Reserve Bank expected a year ago; but inflation was too low.</div>
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 The Reserve Bank Governor said that China was "making reasonable progress" with the shift from manufacturing to services and consumption-led growth. The Aussie dollar was currently "doing what you expect it to do". The Governor seemed comfortable with the current level of the currency.</div>
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<div class="column">While a lot of housing supply was set to come on to the market, the Governor noted that this was necessary as for a period of time not enough homes were being built. If the lift in housing supply met the level of demand with little change in prices, the Governor noted that this was the desired outcome from an economic standpoint. He didn’t make any observation on future home prices. He repeated his advice, though, that Aussie home buyers and owners shouldn’t expect that home prices would always rise. The Reserve Bank Governor noted that leverage was a key issue when assessing the current state of the housing market.
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?</div>
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<div class="column">It is clear when looking across all the key economic indicators that the economy remains in good shape. If rates are to be cut again, Reserve Bank Board members may take some persuading that a rate cut is in the interests of the economy. The state of the housing market would provide a key input into the discussion process.</div>
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 The encouraging readings on the outlook for family finances are positive for retailers and other consumer- focussed businesses. The Aussie dollar broadly fell from US72.20c to US71.95c in response to the Governor’s remarks. The Governor didn’t close the door on future rate cuts.  
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<div class="column">Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</div>
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Confident Aussies, RBA Governor “unplugged”: CommSec's Craig James

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<div class="section">The Westpac Melbourne Institute Index of Consumer Sentiment rose by 4.2% in February to 101.3 from 97.3 in January. <div class="layoutArea">
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The Index has now recovered all the ground it lost in January when it fell by 3.5%. 
The Index has now returned to a level (above 100) where optimists outnumber pessimists. This is good news in that there have only been five months over the last two years when we have had optimists in the ascendency. 
Last month we interpreted the 3.5% fall in the Index as being mainly due to respondents’ concerns with the sharp falls in share markets and the oil price from the beginning of the year. 
Between the beginning of the year and the final day of the January survey Australia’s share price Index fell by around 8% and the oil price was down by 20%. 
Over the four weeks to the end of this February survey there has been little net movement in either share markets or the oil price although we have continued to see significant volatility. Respondents were clearly relieved that markets did not follow on from the steep declines we saw in early January. 
While the plunge in the oil price is disturbing from a market perspective, households are now benefitting from lower petrol prices. 
Since the survey in January “average pump price” has fallen by 8.5% providing households with a decent boost to disposable incomes. 
It is important to note that since the February survey closed on February 6 there has been renewed weakness with the Australian share market down by nearly 3% and oil prices down by 8%. 
Of course it is too early to speculate whether markets will continue to weaken over the next few weeks. 
The significant influence of markets on the recent Confidence measures is best demonstrated in the component of the Index measuring how respondents assess family finances relative to a year ago. 
In its recent Statement on Monetary Policy the Reserve Bank highlighted this component in its discussion on consumption indicators. 
In today’s survey ‘family finances relative to a year ago’ lifted by 11.3% following a 9.4% fall in January. This component of the Index is now up by 3.4% compared to a year ago. 
The other component of the Index which measures respondents’ assessments of their own financial position – ‘family finances over the next 12 months’ – was also strong – rising by 3.8%. 
The outlook for the economy improved by less than respondents’ own financial assessments. The sub-indexes tracking expectations for ‘economic conditions over the next 12 months’ fell by 0.6% and ‘economic conditions over the next 5 years’ increased by 4.0%.
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Retail signals were also encouraging with the ‘time to buy a major household item’ sub-index up by 3.1%. 
There has been a disappointing deterioration in respondents’ confidence around the jobs market. Despite ongoing strong employment reports and a marked fall in the unemployment rate the Westpac Melbourne Institute Index of Unemployment Expectations increased by 1.9% to now be 7.7% above its recent low in October (recall that higher reads indicate a more pessimistic outlook for unemployment). Certainly, the Index is still below its level from a year ago by 1.7% but that compares with October when it was down by 9.2% over the previous year and was providing a signal quite consistent with the improving employment reports. 
After sending some encouraging signals in January, sentiment toward housing soured again in February. Some of this variation is likely to be seasonal. The ‘time to buy a dwelling’ index fell 12% to 99.3 after increasing by 14% in January. The Index is now back at its December level. It is 21% below its level of a year ago. 
Despite the overall Index being back at its December level there has been significant movement amongst the states with NSW and Victoria substantially above the December levels and the smaller states all well below. 
We saw a similar story for House Price Expectations. After lifting by 20.5% in January this Index fell by 12.5% in February. However the Index is still comfortably above its December lows. 
The Reserve Bank Board next meets on March 1. Following the recent turmoil, markets are convinced that the Reserve Bank will be cutting rates by May, if not earlier. Today’s report highlights that one of the Bank’s most significant concerns of whether international developments will weigh on domestic demand will need more time to resolve. Certainly the resilience of Consumer 
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Sentiment, and in particular, respondents’ assessments of their own financial position are not pointing to a significant deterioration in domestic demand. 
The other key issue for the Bank is whether recent momentum in the labour market can be sustained. In that regard today’s report provides a less encouraging insight with the Westpac Melbourne Institute Index of Unemployment Expectations printing a disappointing result. 
We are maintaining our call that rates will remain on hold over the course of 2016.
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Consumer sentiment bounces back: Westpac's chief economist Bill Evans

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The Westpac–Melbourne Institute Index of Consumer Sentiment fell by 3.5% in January from 100.8 in December to 97.3 in January.
The Index is at its lowest level since September 2015 but remains 4.3% above its level of a year ago.
With limited domestic news during the holiday season consumers appear to have been mainly impacted by the spate of negative news on the international front and the spill over effect on financial markets.
Over the two weeks to the end of the survey the oil price has fallen by 20%.
Furthermore, over the same period, the Australian share market has fallen by 7.6% and the US market by 8.0%.
News on China’s volatile share market may also be affecting households with the Chinese market down by around 15% since the beginning of the year.
Partly reflecting those forces, we have also seen a fall in the Australian dollar from USD 0.73 to USD 0.69.
Not surprisingly these concerns have weighed most heavily on how respondents assess their own financial position. The component of the Index tracking views on ‘family finances vs a year ago’ dropped by 9.4% to be at its lowest level since July last year. The component tracking expectations for ‘family finances over the next 12 months’ fell 2.3%.
Among the other components: ‘economic conditions over the next 12 months’ fell by 5.0%; ‘economic conditions over the next 5 years’ improved by a modest 0.3%; and ‘time to buy a major household item” fell by 1.7%.
Both the Index and its components are seasonally adjusted to take account of the regular positive impact on confidence of the holiday season.
Other Indexes in the survey are not seasonally adjusted so results for these Indexes in January need to be treated with some caution.
The Westpac Melbourne Institute Index of Unemployment Expectations increased by 0.7% from 141.7 to 142.7. This implies a slightly more concerned feeling amongst respondents about the outlook for the unemployment rate. However, the Index is 5.3% lower than in January 2015 indicating that there has been a material improvement in respondents’ attitudes to the labour market over the year. 
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There was a sharp 13.9% increase in the ‘time to buy a dwelling’ index from 99.2 in December to 113.0 in January. That is the highest reading for this Index since May last year. 
The Index is now only 1.4% below its level for January 2015. The sharp increase in the Index in January will reflect some seasonality but the move is so large that we can only conclude that this print may be signalling some improving optimism in the housing market. 
Most of the improvement in the national Index was driven by a sharp improvement in New South Wales which has regularly posted the weakest readings amongst the states in recent times. For this reason it is best to be cautious but nevertheless encouraged by this result.
This improvement in the outlook for housing was also indicated in the Westpac Melbourne Institute Index of House Price Expectations. The Index increased by 21.1% in January from 103.7 in December to 125.8 in January. The Index is still down by 10.2% over the year but this read represents the best result since September 2015. 
The Reserve Bank Board next meets on February 2. Despite markets confidently expecting that the Reserve bank would cut rates by February Westpac has remained firmly of the view that the Bank will remain on hold throughout the second half of 2015 and the whole of 2016. We retain that view despite some concerns from this survey that consumers may slow their spending in response to this current global uncertainty. 
The Australian dollar has adjusted further providing the important ongoing boost to Australia’s competitiveness which is now assisting the economy’s adjustment as the mining sector slows. Furthermore the survey has provided an early signal that the pessimism which has dominated the housing market in the second half of 2015 may be easing. 
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Bill Evans is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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NSW cautious but encouraging spike in housing confidence: Westpac's Bill Evans

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Westpac chief economist Bill Evans has released the Westpac-Melbourne institute index of consumer sentiment.
There was a decline overall, but some optimism to be had with a spike in time to buy dwelling confidence.
The report showed an overall confidence decline of 3.5 percent from 100.8 in December to 97.3 in January, it's lowest level since September 2015.
However the index remains 4.3 percent above its level this time last year.
There were quick responses on twitter from Forex and FX options trader Mark Carrington (<a href="https://twitter.com/go4forexprofits" target="_blank">@go4forexprofits</a>).
The senior manager at research group BIS Shrapnel Angie Zigomanis was also quick to respond to the news, telling Domain there may still be some growth for New South Wales and Victoria.
The figures have received worldwide attention with tweets coming from Miami and England.
Global markets and economics reporter for Business Insider Australia David Scutt (<a href="https://twitter.com/David_Scutt" target="_blank">@David_Scutt</a>) tweeted a summary from Westpac regarding the housing sentiment. 
<a href="/news/nsw-cautious-but-encouraging-spike-in-housing-confidence-westpacs-bill-evans">For Bill Evans full commentary click here</a>
 
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Tweet of the day: Westpac-Melbourne index sees January confidence decline, but housing up

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The Westpac-Melbourne Institute Index of Consumer Sentiment increased by 4.2% in October from 93.9 in September to 97.8 in October.
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This result is a little short of the increase we would had expected given the strong boost the government received in the polls following recent leadership and ministerial changes. 
The rise in the Index has failed to offset the loss we saw last month with the Index 1.6% below its August level and still below the key 100 level indicating pessimists still outnumber optimists. The Index has now been below 100 for 18 of the last 20 readings. 
Given that politics is probably the most significant factor in the result it is noteworthy that the Index is 11.6% below the level (110.6) it reached following the election of the Abbott Government in September 2013. 
Other factors that may have contributed to the boost in sentiment this month include recent recoveries in the Australian dollar and the sharemarket, complemented by a steady improvement in the labour market. 
The AUD rose just over 2¢ against the USD between the September and October surveys, and the ASX 200 was up 3.4%. 
The unemployment rate was recently reported to have fallen to 6.2% and jobs growth has been much stronger than anticipated over the past year. 
In that regard, there has been a very significant and unexpected boost to respondents’ assessment of the state of the labour market which looks to be an even more significant result than the increase in the overall Index. 
The Westpac Melbourne Institute Index of Unemployment Expectations fell by 16.3% from 156.3 to 134.9. Because the Index measures respondents’ outlook for the unemployment rate, a fall indicates an improvement in expectations around the labour market. This Index is now at its lowest level since November 2011 indicating a very significant improvement in how respondents assess the labour market including job prospects for those out of work and job security for those in work. This comes after a recent business survey which also showed a significant boost in businesses’ hiring intentions. 
Four of the five components of the Index increased in October. Both components measuring views on family finances increased: the sub-index on ‘family finances vs a year ago’ increased by 1.3% and the sub-index on ‘family finances over the next 12 months’ rose by 3.5%. 
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Expectations around the economy were more mixed: the sub- index on ‘economic conditions over the next 12 months’ rose by 20% whereas the sub-index on ‘economic conditions over the five years’ fell by 7.9%. 
That caution about the longer term outlook contrasts with the 7.1% increase in the five year economic outlook which occurred following the September 2013 election. 
The sub index tracking assessments of ‘time to buy a major household item’ increased by an encouraging 6.3%. 
Confidence around housing remains weak. The ‘time to buy a dwelling’ index slipped from 101.7 to 101.3 (down by 0.4%) to be down by 11% over the year. This Index peaked in September 2013 at 145.3 and is down over 30% from that peak. 
There was a sharp fall in confidence around the outlook for house prices. The Westpac Melbourne Institute Index of House Price Expectations fell by 3.9% to 124.2. It is now down by 14.9% over the last three months and 25% from its peak in December 2013. 
The Reserve Bank Board next meets on November 3. It will be encouraged by the signals from this survey and the official data that employment conditions and confidence around employment prospects appear to be finally improving. However it will probably be a little disappointed that confidence remains below the 100 level where pessimists outnumber optimists. 
Westpac has been firmly of the view that rates will remain on hold for the remainder of 2015 and 2016. Improving conditions in the labour market are very important from this perspective. However, changes in financial conditions will also warrant scrutiny in the period ahead 
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Bill Evans is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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