<p>Developer-builder <a href="https://www.apartments.com.au/developers/dasco-australia">DASCO</a> has pushed beyond the now-standard inclusions of rooftop pools and landscaped podiums at its recently launched new Epping project, Senso.</p>

<p>It has laid out over 4,000 sqm of resident-only amenity in a move designed to compete directly with low-density housing on livability, not just density. The result is a development that supports genuine daily use through purposeful spaces distributed across its five-building, 479-apartment precinct.</p>

<p>[smartcode_project:default project_id=134954 project_image_fid=4396]</p>

<p>Two rooftop pools form the anchor of Senso. One is a 27-metre lap pool adjoining a heated spa, designed for everyday fitness rather than just summer leisure. The second sits on a lower podium, allowing different buildings to share in vertical access and reducing crowding during peak times.</p>

<p>It is the secondary spaces that start to distinguish Senso from other large-scale suburban projects. A rooftop cinema is integrated into a landscaped terrace, offering open-air screenings with natural ventilation and passive cooling.&nbsp;</p>

<p>The inclusion of a “sensory walk”, an elevated boardwalk that threads through the site, suggests a rare investment in non-commercial, non-essential amenity: space for quiet movement that doesn’t double as access or traffic circulation.</p>

<p>[smartcode_project:default project_id=134954 project_image_fid=4402]</p>

<p>The gym and wellness centre, often relegated to a small ground-floor room in many builds, takes on more substance here. Residents have access to a fully equipped gym, as well as outdoor yoga areas and meditative zones that integrate greenery and natural light.&nbsp;</p>

<p>The Club Lounge is similarly designed to support multiple use cases, with a private dining terrace, kitchenette, workspace, and lockable wine storage. These aren’t superficial additions; their scale and spatial allocation indicate serious intent for frequent resident use.</p>

<p>[smartcode_project:default project_id=134954 project_image_fid=4391]</p>

<p>Importantly, Senso’s amenities are embedded within a site that spans more than 10,000 sqm, allowing for better separation between spaces and reduced noise spillover, a critical but often overlooked factor in high-density developments. This spatial generosity also enables multiple alfresco kitchens and communal terraces without compromising individual privacy or usable space.</p>

<p>While many developments make claims about lifestyle, few back it with this level of built infrastructure. Senso’s mix of dedicated fitness, wellness, social and passive green spaces suggests a conscious response to the post-pandemic shift in housing expectations, especially among owner-occupiers.&nbsp;</p>

<p>DASCO is one of several leading developers who have taken out Resilience Insurance's Latent Defects Insurance policy, providing buyers with a 10-year structural and waterproofing warranty, and giving them the ultimate peace of mind.</p>

<p>Senso is scheduled for completion in late 2028.</p>

<p>[smartcode_project_cta:default project_id=134954]</p>


Staff Writer

The outdoor amenities elevating life at Senso, Epping

<p>Following the proposal by the Minns Labor Government to rezone Parramatta Road to create up to 8,000 new homes, prominent developer Ceerose has gone to the NSW Gov to increase the density of its new mixed-use residential building in Leichhardt.</p>

<p><a href="https://www.apartments.com.au/builders/ceerose">Ceerose</a>, founded by Edward Doueihi nearly three decades ago, has filed plans for 154 apartments above ground-floor retail at 307-315 Parramatta Road, a key corner site near Norton Street, the main high street strip in Leichhardt.</p>

<p>It's an upsize from the previously approved scheme of 63 apartments across a seven-storey building.</p>

<p><img alt="Ceerose" data-entity-type="file" data-entity-uuid="ba1ae75b-5f08-43fb-b8d5-3de6d9f6ef71" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-04%20at%2010.31.39%E2%80%AFAM.png?VersionId=yA3hBBLPH4ev7MsAE0_hieXeqiFqBUb7" /></p>

<p>The project is being advanced through the State Significant Development (SSD) pathway, with concurrent rezoning sought to facilitate the proposal. The 10-storey development would rise over a four-level basement and deliver two retail tenancies, one a larger-format offering and the other a smaller “hole in the wall” space, addressing the Parramatta Road frontage. 21 of the apartments are dedicated as affordable housing.</p>

<p>According to the Urban Design Report by Architecture AND, the scheme includes a podium and tower configuration, with a fine-grain, two-storey parapet street wall that references the traditional shopfront rhythm along the corridor. “An elegant tower form is proposed, combined with a characterful two storey frontage... articulating it as two related buildings, providing consistency with the rhythm and grain of Parramatta Road,” the report notes.</p>

<p>The residential component is split across two slender towers set back from the street edge, a design move aimed at preserving solar access and reducing perceived bulk. This massing strategy also seeks to improve residential amenity by focusing scale toward the quieter northern interface, away from Parramatta Road’s noise and pollution.</p>

<p><img alt="Ceerose" data-entity-type="file" data-entity-uuid="347f2f8f-5d36-4388-b40a-2e77380b9c19" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-04%20at%2010.31.02%E2%80%AFAM.png?VersionId=xvyUE2ujT1lzivXTo.mHBJFF4SmfgLtz" /></p>

<p>Architecture AND has worked with Ceerose on previous Inner West projects, and cites a deep familiarity with the local character. Their design draws heavily on context, heritage, and sunlight access considerations, and engages with the Inner West Council’s “Our Fairer Future” strategic planning framework.</p>

<p>The site spans 2,712 sqm and is located near key intersections with Catherine Street, Hay Street, and Redmond Street. It adjoins a public carpark to the north and is within walking distance of Stanmore and Petersham stations. It is also flagged in state and local planning strategies, including the Parramatta Road Corridor Urban Transformation Strategy, as a suitable candidate for increased density.</p>

<p>Ceerose recently completed The Alex Collective on McEvoy Street in Alexandria, Abbie's Lane in Annandale, and the award-winning Munro House in Elizabeth Bay.</p>

<p>The Parramatta Road corridor is coming to life with the proposed rezoning which is serviced by a significant number of bus, light rail and train routes.</p>

<p>Deicorp is progressing with its $1.8 billion <a href="https://www.apartments.com.au/new-apartments/kings-bay-village-five-dock-53-75-queens-road-five-dock-nsw-2046">Kings Bay Village</a> precinct on Parramatta Road in Five Dock, as is <a href="https://www.apartments.com.au/news/nsw/toga-to-push-on-with-five-dock-mixed-use-masterplan">TOGA further down the street</a>. Those two projects alone will bring nearly 2,000 new homes to Parramatta Road.</p>


Joel Robinson

First look: Ceerose plots mixed-use Leichhardt development on Parramatta Road

<p>North Sydney's landmark 'SBS Building' on Alfred Street is set to be demolished to make way for a new mixed-use residential tower in the booming North Sydney.</p>

<p>Commercial property group FiveX is behind the plans for a <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">39-storey tower</a>, the latest project to advance under the NSW Government’s Housing Delivery Authority pathway.</p>

<p>They are proposing 184 apartments above retail spaces, which will replace the existing 20-storey commercial building. FiveX was set up more than five decades ago by Joshua and Marko Berger. It is currently led by Joshua's son Lesli.&nbsp;</p>

<p><img alt="First look: Fivex plans 39-storey residential tower at 275 Alfred Street, North Sydney" data-entity-type="file" data-entity-uuid="2efa0980-53fa-4cca-9f9e-9c3c845d4746" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29%20%281%29_0.png?VersionId=y_YyPMq3NQLfYRs84pP4os9UgWiMLp75" /></p>

<p>According to the Architectural Design Report by <a href="https://www.apartments.com.au/architects/fjc-studio">FJC Studio</a>, the slender tower form has been deliberately designed to respect the site's transitional setting at the southern gateway to the North Sydney CBD, where high-rise towers give way to lower-scale residential precincts.</p>

<p>"The slender tower form and articulated podium establish a respectful relationship with nearby heritage and low rise buildings, including the Whaling Road Heritage Conservation Area,” the architecture firm noted, adding that the tower “completes a missing link in the urban fabric” while enhancing the Alfred Street streetscape.</p>

<p>The proposed building will include a mix of one-, two- and three-bedroom apartments, with 15 percent of the gross residential floor area allocated as affordable housing. There is an agreement already in place that those apartments will be managed by Evolve Housing.</p>

<p>The project aligns with broader state housing objectives, including the National Housing Accord target of delivering 1.2 million new homes by 2029. The Scoping Report filed with the State Significant Development Application (SSDA) suggests the site "presents no impediments to rapid delivery,” with construction able to commence within 12 months of receiving consent.</p>

<p>North Sydney has been one of the most popular suburbs in Sydney for new and off the plan apartment development, but hasn't had the supply to keep up with demand, until recently.</p>

<p>AURA by Aqualand was, for a long time, the only off the plan apartment building on the market. That completed last year, and has sold the majority of its 386 luxury apartments. Recently ALAND launched <a href="https://www.apartments.com.au/new-apartments/the-walden-173-179-walker-street-north-sydney-nsw-2060">The Walden</a> on the same street, selling over $100 million within just a few hours of its launch, while developer CASA also launched&nbsp;<a href="https://www.apartments.com.au/new-apartments/the-mclaren-north-sydney-45-mclaren-street-north-sydney-nsw-2060">The McLaren</a>&nbsp;in the same precinct.</p>


First look: Fivex plans 39-storey residential tower in booming North Sydney

<p>Kokoda Property Group has announced the Sydney-based Versatile Construction as the builder for its landmark $1.5 billion <a href="https://www.apartments.com.au/new-apartments/teneriffe-banks-17-27-skyring-terrace-teneriffe-qld-4005">Teneriffe Banks</a> precinct.</p>

<p>Construction of the 17,612 sqm site is scheduled to commence in December 2025 and is expected to be delivered in stages from 2028. Once complete, <a href="https://www.apartments.com.au/new-apartments/teneriffe-banks-17-27-skyring-terrace-teneriffe-qld-4005">Teneriffe Banks</a> will comprise 212 residences across four architecturally distinct buildings, alongside Brisbane’s first Kimpton Hotel, extensive retail, hospitality, and wellness amenities.</p>

<p>[smartcode_project:default project_id=139896 project_image_fid=295098]</p>

<p>Kokoda Property Group Founder and Managing Director, Mark Stevens, said appointing Versatile Construction marks a significant milestone for <a href="https://www.apartments.com.au/new-apartments/teneriffe-banks-17-27-skyring-terrace-teneriffe-qld-4005">Teneriffe Banks</a>.</p>

<p>“Partnering with Versatile Construction gives us confidence in delivering a precinct that sets a new benchmark for luxury living, curated experiences and vibrant riverfront activation," Stevens said.</p>

<p>"Together, we will bring the vision for <a href="https://www.apartments.com.au/new-apartments/teneriffe-banks-17-27-skyring-terrace-teneriffe-qld-4005">Teneriffe Banks</a> to life, creating a destination that residents and visitors will enjoy for generations."</p>

<p>Throughout the construction phase, more than 2,000 jobs will be created, supporting hundreds of local contractors and suppliers.</p>

<p>[smartcode_project:default project_id=139896 project_image_fid=352274]</p>

<p>Marco Fahd, Chairman &amp; CEO at Versatile Group, said the company is looking forward to&nbsp;expanding their footprint in the state, taking on their inaugural project in Brisbane.</p>

<p>"We are proud of the unwavering commitment our team of experts have to quality and certainty in delivery and are excited to work with Kokoda to bring their vision for this unique project to life," Fahd says.</p>

<p>Sales reached $285 million on the launch of <a href="https://www.apartments.com.au/new-apartments/teneriffe-banks-17-27-skyring-terrace-teneriffe-qld-4005">Teneriffe Banks</a>, with sales momentum continuing to "exceed all expectations."</p>

<p>Stevens says the overwhelming response from buyers validated the group’s vision for <a href="https://www.apartments.com.au/new-apartments/teneriffe-banks-17-27-skyring-terrace-teneriffe-qld-4005">Teneriffe Banks</a>.</p>

<p>“The demand for a luxury product in this enclave has been extraordinary, we’ve never seen anything like it before. It reinforces everything we’re doing around quality, design, and creating genuine lifestyle precincts. Buyers are recognising the enduring value of Brisbane’s riverfront and are responding to the opportunity to live within a world-class destination that celebrates both place and lifestyle.”</p>

<p>[smartcode_project_cta:default project_id=139896]</p>


Kokoda appoints builder for $1.5 billion Teneriffe Banks waterfront precinct

<p data-end="246" data-start="85">Castle Hill’s booming development market is set for another boost, with builder-developer Buildex proposing a new mid-rise apartment building near Castle Towers.</p>

<p data-end="467" data-start="248">Buildex has submitted plans to The Hills Shire Council for a <a href="https://www.apartments.com.au/new-apartments/197-old-northern-road-castle-hill-nsw-2154">nine-storey building comprising 57 apartments</a> on Old Northern Road. The company acquired two adjoining sites earlier this year, totalling more than 2,683 sqm.</p>

<p data-end="597" data-start="469">Texco Design has prepared the scheme, which includes five one-bed plus study apartments, 37 two-bedrooms, and 15 three-bedrooms.</p>

<p data-end="836" data-start="599">Castle Hill has become a hotspot for developers in recent years, undergoing significant transformation driven by the opening of the Hills Showground Precinct to development and the introduction of two metro stations servicing the suburb.</p>

<p data-end="1053" data-start="838">Developers including Deicorp and Kassis Homes have already completed projects, and are progressing future developments, while Meriton, Arada, and Ellipse are currently delivering new projects in the rapidly evolving area.</p>


First look: Buildex plans 57 apartments near Castle Towers

Craig James

<html><body>
<p><strong>EXPERT OBSERVER</strong></p>

<p>The Reserve Bank (RBA) has left the target rates for both the cash rate and 3-year government bond yield at 0.10 per cent. The RBA will purchase an additional $100 billion of bonds issued by the Australian Government and states and territories when the current bond purchase program is completed in mid-April.<br>
 </p>

<h2>What has changed since the last RBA Board meeting on December 1?</h2>

<p>• Joe Biden was sworn in as the 46th US President.</p>

<p>• ANZ job advertisements rose by 2.3 per cent in January to 161,582 available positions. Ads have lifted for eight successive months to be up 5.3 per cent from a year ago.</p>

<p>• Employment rose by 50,000 in December after increasing by 90,000 jobs in November. Full-time jobs rose by 35,700 and part-time jobs rose by 14,300. The unemployment rate fell from 6.8 per cent to 6.6 per cent in December.</p>

<p>• Preliminary retail trade fell 4.2 per cent in December (9.4 per cent annual) after rising 7.1 per cent in November.</p>

<p>• The weekly ANZ-Roy Morgan consumer confidence rating rose to a 15-month high.</p>

<p>• The NAB business confidence index fell from a 31-month high of +12.7 points to +4.5 points in December. But the business conditions index lifted from +7.0 points to 28-month highs of +14.2 points.</p>

<p>• The International Monetary Fund expects the global economy to expand by 5.5 per cent in 2021, which is 0.3 percentage points higher than the October 2020 forecast.</p>

<p>• The Consumer Price Index rose by 0.9 per cent in the December quarter to be up by 0.9 per cent on the year. The trimmed mean (underlying) measure rose 0.4 per cent in the quarter to be up 1.2 per cent on the year.</p>

<p>• Private sector credit (effectively outstanding loans) rose by 0.3 per cent in December to be up 1.8 per cent over the year.</p>

<p>• In the full twelve months to December the underlying Commonwealth Government cash balance was $186,120 million (9.5 per cent of GDP). The budget deficit for the six months to December was $9.5 billion lower than the ‘profile’ deficit.</p>

<p>• A retail trading frenzy for highly shorted stocks led to volatility on global sharemarkets and spilled over into the silver market.</p>

<p>• The Aussie dollar has lifted from US73-74 cents to US75-77 cents.</p>

<h2>The Assessment</h2>

<p>The Reserve Bank Board is not expecting to increase the cash rate until 2024 “at the earliest”. The first Tuesday in the month will never be the same.</p>

<p><img alt="" height="436" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/screen_shot_2021-02-02_at_3.16.43_pm.png" width="620"></p>

<h2>Perspectives on interest rates</h2>

<p>The Reserve Bank left the cash rate at 0.10 per cent after cutting the rate from 0.25 per cent on November 3. The RBA previously cut the cash rate on March 3 and March 19, 2020, each by 25 basis points. The target rate for 3-year bond yields was left at 0.10 per cent.</p>

<p>On November 3 the RBA cut the 3-year bond target from 0.25 per cent to 0.10 per cent. The RBA implemented the 0.25 per cent target rate for 3-year bond yields on March 19, 2020. There have been 18 cash rate cuts since November 2011 with the cash rate cut from 4.75 per cent. Previously cash rates rose seven times from October 2009 to November 2010 from 3.00 per cent to 4.75 per cent.</p>

<h2>What are the implications of RBA's decision?</h2>

<p>• The Reserve Bank used the word, “strong”, five times in the statement. The economic recovery, employment and retail spending were all described as “strong”.</p>

<p>• The Reserve Bank Governor will go into more depth about the economic recovery in a speech tomorrow. Further, Governor Lowe gives testimony to the House of Representatives Economics Committee on Friday. On the same day the RBA issues the quarterly Statement on Monetary Policy that includes the latest forecasts. We received some inkling of the forecasts today: “In underlying terms, inflation is expected to be 11⁄4 per cent over 2021 and 11⁄2 per cent over 2022.”; “the central scenario is for unemployment to be around 6 per cent at the end of this year and 51⁄2 per cent at the end of 2022.”; the central scenario being for GDP to grow by 31⁄2 per cent over both 2021 and 2022.</p>

<p>• The Reserve Bank Board’s central scenario requires significant job gains and a return to a tight labour market to stoke inflation. And that is not expected until 2024 at the earliest.</p>
</body></html>

The RBA has left the target rates for both the cash rate and 3-year government bond yield at 0.10 per cent, with an increase not expected until 2024 "at the earliest"

max.kwok_55688

RBA interest rates - Set the watch for 2024: CommSec's Craig James

<html><body>
<p title="Page 1">EXPERT OBSERVER</p>
<p title="Page 1">The Westpac/Melbourne Institute survey of consumer sentiment index fell by 1.8 per cent in January after falling by 1.9 per cent in December. The index stands at 93.4 points. Consumer sentiment is below the longer term average of 101.5 points. A reading below 100 points denotes pessimism.</p>
<p title="Page 1">The Westpac/Melbourne Institute survey of consumer sentiment includes a view on house prices. The house price index rose by 8.1 per cent in January to be up 58 per cent on the year.</p>
<p title="Page 1">In trend terms, the Internet Vacancy Index increased by 0.6 per cent in December – the biggest gain in 22 months. There are record vacancies for teachers ("Education Professionals").</p>
<div title="Page 1">
<p><span style="font-size: x-small;"><em>The internet job vacancies data is a leading indicator of the job market and therefore important for consumer-focussed stocks and companies. The consumer confidence figures have implications for retailers, and other consumer-focussed businesses.</em></span></p>
<h2><strong>What does it all mean?</strong></h2>
<ul>
<li>No surprises in the monthly consumer confidence report with findings in line with the more timely weekly reports. The bushfires and East Coast drought are occupying people's thoughts at present. The worry is that the economy will soften in response to the natural disasters. Aussie consumers are not yet focussed on the substantial recovery and rebuilding operations ahead.<br><br>
</li>
<li>Views on the economy are clearly more downbeat compared with consumer views on their own finances and the outlook for those finances. Overall conservatism may prevent people from engaging in retail therapy, preferring instead to save and reduce debt or help others through charity donations.<br><br>
</li>
<li>The one stand-out feature of the monthly consumer confidence report is the question on house prices. And it is clear that Aussie consumers expect house prices to soar over 2020. The house price expectations index lifted 8.1 per cent in January to be up a massive 58 per cent on the year.<br><br><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/2020/1/22/5_Graph%202.jpg" alt="" width="620" height="203"><br><br>
</li>
<li>While positive for home owners and buyers, higher home prices are negative for budding first home buyers. The latest result is certainly something for Reserve Bank policymakers to think about.<br><br>
</li>
<li>The good news is that three indicators are pointing to better times for the job market – the skilled vacancy report, ABS job vacancies and the Westpac-Melbourne Institute unemployment expectations index.<br><br>
</li>
<li>Across Australia there is a record number of job vacancies for Education Professionals, Health and Welfare Support Workers and Health Diagnostic and Therapy Professionals.<br><br>
</li>
<li>Across states and territories, skilled job vacancies are at record highs in the ACT. And encouraging signs for Western Australia with vacancies lifting in the past seven months.</li>
</ul>
<h2><strong>What do the figures show?</strong></h2>
<p><strong><span style="text-decoration: underline;">Consumer confidence</span></strong></p>
<ul>
<li>The Westpac/Melbourne Institute survey of consumer sentiment index fell by 1.8 per cent in January after falling by 1.9 per cent in December. The index stands at 93.4 points. Consumer sentiment is below the longer term average of 101.5 points. A reading below 100 points denotes pessimism.<br><br>
</li>
<li>The current conditions index fell by 0.7 per cent. And the expectations index fell by 2.6 per cent.<br><br>
</li>
<li>
<strong>Three</strong> of the five components of the index fell in January:<br><br>
</li>
<ul>
<li>The estimate of family finances compared with a year ago rose by 0.7 per cent to 82.0 points;</li>
<li>The estimate of family finances over the next year rose by 0.9 per cent to 99.0 points;</li>
<li>Economic conditions over the next 12 months fell by 5.4 per cent to 84.8 points;</li>
<li>Economic conditions over the next 5 years fell by 3.7 per cent to 87.9 points;</li>
<li>The measure on whether it was a good time to buy a major household item fell by 1.8 per cent to 113.4 points<br><br>
</li>
</ul>
<li>
<strong>Housing outlook:</strong> A good time to buy a dwelling? The index <strong>rose</strong> by 5.7 per cent to 118.8 points to be up by 3.4 per cent on the year. House price expectations <strong>rose</strong> by 8.1 per cent to 151.5 points to be up by 58 per cent on a year ago.<br><br>
</li>
<li>
<strong>Unemployment expectations fell</strong> by 2.9 per cent to 134.0 points (implying a firmer job market).</li>
</ul>
<strong><span style="text-decoration: underline;">Skilled Job Vacancies - December</span></strong><br><ul>
<li>
<strong>The Department of Employment Internet Vacancy Index</strong> rose by 0.6 per cent in December. The index is 7.9 per cent lower than a year ago, although it is up 9.6 per cent above the level recorded five years ago.<br><br>
</li>
<li>
<strong>Occupations:</strong> In December 2019 <em>"Job advertisements increased in four of the eight occupational groups. The strongest gains were recorded for Professionals and Technicians and Trades Workers (both occupations up by 0.9 per cent), and Community and Personal Service Workers (0.6 per cent)."<br><br></em>
</li>
<li>Over the year to December 2019 <em>"Job advertisements decreased in all occupational groups. The strongest declines were recorded for Machinery Operators and Drivers (down by 14.2 per cent), Sales Workers (12.3 per cent), Labourers (11.8 per cent), Clerical and Administrative Workers (11.2 per cent) and Managers (10.6 per cent)."<br><br><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/2020/1/22/6_GRAPH.jpg" alt="" width="609" height="209" style="caret-color: #000000; color: #000000; font-style: normal;"><br><br></em>
</li>
<li>
<strong>Detailed occupations:</strong> Over the year to December 2019, <em>"seven of the 48 detailed occupational groups recorded increases in job advertisements. The largest increase was recorded for Health Diagnostic and Therapy Professionals (up by 520 job advertisements), followed by Education Professions (360)".<br><br></em>
</li>
<li><em>"The largest decrease over the year was recorded for General-Inquiry Clerks, Call Centre Workers, and Receptionists (down by 1440 job advertisements)."<br><br></em></li>
<li>
<strong>States/Territories:</strong> Job vacancies increased in six states and territories in December: NSW (up by 0.4 per cent), Victoria (up by 1.0 per cent); Queensland (down by 0.1 per cent); South Australia (down by 0.4 per cent); Western Australia (up by 0.9 per cent); Tasmania (up by 0.5 per cent); Northern Territory (up by 1.6 per cent); and ACT (up by 0.6 per cent).</li>
<li>Over the year to December 2019, job vacancies rose in one state and one territory: NSW (down by 14.1 per cent), Victoria (down by 7.5 per cent); Queensland (down by 5.9 per cent); South Australia (down by 2.8 per cent); Western Australia (up by 2.6 per cent); Tasmania (down by 9.5 per cent); Northern Territory (down by 9.7 per cent); and ACT (up by 10.8 per cent).<br><br>
</li>
<li>
<strong>Regions:</strong> Over the year to December 2019, in three month moving average terms, job advertisements increased in 14 of the 37 IVI regions and remained steady in one. The strongest increases were recorded in Yorke Peninsula &amp; Clare Valley SA (up by 15.8 per cent), followed by Bendigo &amp; High Country VIC (9.4 per cent), South West Western Australia (8.8 per cent), Canberra &amp; ACT (8.4 per cent) and Blue Mountains, Bathurst &amp; Central West NSW (7.1 per cent).<br><br>
</li>
<li>The strongest decreases in job advertisements were recorded in Sydney (down by 16.6 per cent), followed by NSW North Coast (15.1 per cent), Darwin (13.8 per cent), Launceston and Northeast Tasmania (13.1 per cent), and Tamworth and North West NSW (12.9 per cent).<br><br>
</li>
<li>Canberra &amp; ACT (up by 8.4 per cent) and Perth (3.6 per cent) were the only capital city regions to record an increase in job advertisements over the year to December 2019."</li>
</ul>
<h2><strong>What is the importance of the economic data?</strong></h2>
<ul>
<li>Westpac and the Melbourne Institute release the <strong>Index of Consumer Sentiment</strong> each month. According to Melbourne Institute: "The survey of consumer sentiment was first undertaken in 1973 and was conducted on a quarterly basis until 1976, a six-weekly basis from 1976 to 1986, and has been conducted monthly ever since." Confident consumers may be more inclined to spend, especially on major items.<br><br>
</li>
<li>The Department of Employment releases a monthly <strong>Internet Vacancy Index</strong>. The index is based on a count of online job advertisements newly lodged on three main job boards (SEEK, CareerOne and Australian JobSearch) during the month. The index is the only publicly available source of detailed data for online vacancies, including around 350 occupations (at all skill levels), as well as for all states/territories and 37 regions.</li>
</ul>
<h2><strong>What are the implications for interest rates and investors?</strong></h2>
<ul>
<li>Consumers generally remain cautious. But where they are positive is in terms of the outlook for the housing market, expecting prices to rise in the months ahead. The hope is that rising home prices can boost wealth levels, confidence and consumer borrowing capacity and, in turn, boost spending – especially 'big ticket' items like cars.<br><br>
</li>
<li>The job market seems to be moving in the right direction. Indeed if the lift in vacancies leads to lower jobless rates, the Reserve Bank will be less inclined to cut rates. The December jobs data is out tomorrow and inflation data is released on January 29. </li>
</ul>
<p><em><span>CRAIG JAMES</span> is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</em> </p>
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House prices expected to soar: CommSec's Craig James

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<p><strong>EXPERT OBSERVATION</strong></p>
<p><strong>Labour force</strong></p>
<p>Employment rose for the 33rd time in 34 months, up by 41,100 jobs in July after a revised 2,400 fall in jobs in June (previously reported as an increase of 500 jobs).</p>
<p>Full-time jobs rose by 34,500 with part-time jobs up by 6,700. Economists had tipped an increase in total jobs of around 14,000.</p>
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<div class="column">Hours worked rose 0.5 per cent in July to be up 2.0 per cent over the year. In trend terms, hours worked were up 1.8 per cent on the year.</div>
<div class="column"> </div>
<div class="column">The unemployment rate was steady at 5.2 per cent in seasonally adjusted terms. In trend terms the jobless rate rose by less than 0.1 percent to 5.3 per cent.</div>
<div class="column"> </div>
<div class="column">The participation rate rose to a record-high 66.1 per cent in July. In trend terms, the participation rate rose from 66.0 per cent in June to a record high of 66.1 per cent in July.</div>
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<div class="column">Unemployment across states in July: NSW 4.4 per cent (June 4.6 per cent); Victoria 4.8 per cent (4.8 per cent); Queensland 6.4 per cent (6.5 per cent); South Australia 6.9 per cent (6.0 per cent); Western Australia 5.9 per cent (5.7 per cent); Tasmania 6.0 per cent (6.8 per cent). In trend terms, Northern Territory 4.9 per cent (4.8 per cent); ACT 3.5 per cent (3.5 per cent).</div>
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<div class="column">Average weekly earnings: Average weekly earnings rose by 3.1 per cent in the year to May 2019 – the fastest rate in six years. The average annual wage stands at $85,009.60.</div>
<div class="column"> </div>
<div class="column">Overseas arrivals: Tourist arrivals fell by 3.0 per cent in June while departures fell by 2.3 per cent.</div>
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<div class="column">A raft of companies is affected by the employment data but especially those dependent on consumer spending. Amongst stocks affected are Nine Entertainment, West Australian Newspapers, Seek Limited and McMillan Shakespeare.</div>
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</div>
<div class="column"><strong>What does it all mean?</strong></div>
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</div>
</div>
<p>What is the definition of a strong job market? We would contend that it is one where employment is rising, more people are participating in the job market and where the jobless rate remains historically low. Australia has a strong job market.</p>
<p>While the jobless rate in Australia is higher than the US, UK and New Zealand, in Australia job growth remains strong and more people are drawing down a wage.</p>
<p>Retailers want to see more people with jobs because that converts to more opportunities to sell their goods and services. </p>
</div>
<div>
<p>It is always important to remember that indicators like employment and the unemployment rate reflect decisions made by businesses as much as six months ago.</p>
<p>Simply, the hiring process takes time – from the decision to hire, the advertising and interview process, and then the time it takes for the successful candidate to start work.</p>
<p>And the environment 5-6 months ago – before the Federal Election – was far different to today – a lot softer.</p>
<p>In the past two months, job ads have lifted, pointing to even stronger employment ahead.</p>
<p><a href="https://www.propertyobserver.com.au/images/2019/8/15/commsec%201.jpg" target="_blank">Click here</a> to enlarge: </p>
<p><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/2019/8/15/commsec%201.jpg" alt=""></p>
<p>The Reserve Bank doesn’t expect much improvement in the jobless rate over the remainder of 2019. So it will take falls in the jobless rate to prompt the RBA to back off rate cuts.</p>
<p>Reserve Bank forecasts assume a quarter per cent rate cut to be delivered late in 2019 and another cut of same size earlier in 2020.  </p>
<p>Unfortunately for the Reserve Bank, the jobs data is a ‘lagging indicator’. So it will need to be confident that more timely data, like the monthly business survey, is pointing to firmer employment ahead.</p>
<p>Another key question is how far away is the peak in the workforce participation rate.</p>
<p>If solid employment continues and the participation rate doesn’t rise in turn, the jobless rate has a chance of falling, meaning that spare capacity in the economy is being reduced. </p>
<p>The ‘problem’ – if we can call it that – is that more people are getting jobs and more people are coming into the workforce to take up the new positions.</p>
<p>So spare capacity remains. But the employment pie continues to get bigger, and that is important for retailers and government tax coffers.</p>
<p>In NSW, Victoria, Northern Territory and the ACT, jobless rates are below 5 per cent. In other states, jobless rates are around 6.0-7.0 per cent.</p>
<p>In-roads need to occur outside the main states if the Reserve Bank is to achieve the goal of a jobless rate near 4.5 per cent. And arguably this means greater use of fiscal policy, not monetary policy.</p>
<p><strong>What do the figures show? </strong></p>
<p>Employment rose for the 33<sup>rd</sup> time in 34 months, up by 41,100 jobs in July after a revised 2,400 fall in jobs in June (previously reported as an increase of 500 jobs). Full-time jobs rose by 34,500 with part-time jobs up by 6,700. Economists had tipped an increase in total jobs of around 14,000. </p>
<p>Annual job growth rose from 2.4 per cent to 2.6 per cent in July (decade average 1.7 per cent).</p>
<p>Hours worked rose 0.5 per cent in July to be up 2.0 per cent over the year. In trend terms, hours worked were up 1.8 per cent on the year.</p>
<p>The unemployment rate was steady at 5.2 per cent in seasonally adjusted terms. In trend terms the jobless rate rose by less than 0.1 percent to 5.3 per cent. </p>
<p>The participation rate rose to a record-high 66.1 per cent in July. In trend terms, the participation rate rose from 66.0 per cent in June to a record high of 66.1 per cent in July. </p>
<p>Unemployment across states in July: NSW 4.4 per cent (June 4.6 per cent); Victoria 4.8 per cent (4.8 per cent); Queensland 6.4 per cent (6.5 per cent); South Australia 6.9 per cent (6.0 per cent); Western Australia 5.9 per cent (5.7 per cent); Tasmania 6.0 per cent (6.8 per cent). In trend terms, Northern Territory 4.9 per cent (4.8 per cent); ACT 3.5 per cent (3.5 per cent).</p>
<p>In seasonally adjusted terms, the largest increases in employment were in Queensland (up 19,900 persons), New South Wales (up 13,000 persons), and Victoria (up 3,600 persons). The largest decrease was in Western Australia (down 4,200 persons).</p>
<p>The working age population rose by 34,400 in July to 20.62 million. Over the year, the working age population rose by 360,900 – a near decade high – or 1.78 per cent. But this is still down from the record 2.36 per cent annual growth in December 2008.</p>
<p>The monthly trend underemployment rate remained steady at 8.4 per cent. The monthly underutilisation rate remained steady at 13.6 per cent.</p>
<p>The monthly seasonally adjusted underemployment rate increased 0.2 pts to 8.4 per cent. The monthly underutilisation rate increased 0.2 pts to 13.6 per cent.</p>
<p><a href="https://www.propertyobserver.com.au/images/2019/8/15/commsec%202.jpg" target="_blank">Click here </a>to enlarge: </p>
<p><strong><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/2019/8/15/commsec%202.jpg" alt=""><br></strong></p>
<p><a href="https://www.propertyobserver.com.au/images/2019/8/15/commsec%203.jpg" target="_blank">Click here </a>to enlarge: </p>
<p><strong><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/2019/8/15/commsec%203.jpg" alt=""></strong></p>
<p><strong>Why is the data important?</strong></p>
<p><span>The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics. </span></p>
<p><span>The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.). </span></p>
<p><span>The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.</span></p>
<p><span>If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees.</span></p>
<p><span> If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.</span></p>
<p><a href="https://www.propertyobserver.com.au/images/2019/8/15/commsec%205.jpg" target="_blank">Click here</a> to enlarge: </p>
<p><span><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/2019/8/15/commsec%205.jpg" alt=""></span></p>
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<p><a href="https://www.propertyobserver.com.au/images/2019/8/15/commsec%206.jpg" target="_blank">Click here </a>to enlarge:  </p>
<p><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/2019/8/15/commsec%206.jpg" alt=""></p>
<p><strong>What are the implications?</strong></p>
<p>Employment growth again exceeded implications in July. ‘Normal’ annual job growth is around 1.7 per cent. In July, job growth was 2.6 per cent. That means more people with money to spend. And that benefits a raft of businesses. </p>
<p>In the past decade, 4.9 per cent was the lowest jobless rate recorded. So a jobless rate of 5.2 per cent is clearly a “good” outcome.</p>
<p>The Reserve Bank believes that we can do even better. So rates can fall again to speed the economy up and create more jobs.</p>
<p>Commonwealth Bank Group economists tip a quarter of a per cent rate cut in both November and February 2020.</p>
<p>The lift in job creation is important for business sales and profitability. So the latest outcome is positive for the sharemarket.</p>
<p>Not only are jobs being created, wages continue to outpace inflation. Average weekly earnings grew by 3.1 per cent over the past year – the fastest rate in six years.</p>
<p>Female wages are up 3.6 per cent over the year with male wages up 3.0 per cent. Female wages have exceeded male wages over the past five years.</p>
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<p align="left"><span lang="en-US"> </span></p>
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Australia's strong jobless rate is a good outcome: Craig James 

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<p>EXPERT OBSERVER</p>
<p>The Reserve Bank has left the cash rate at a record low of 1.00%. The Reserve Bank previously cut rates in both June and July, each time by 25 basis points or a quarter of a%.</p>
<p><strong>What has changed since the last meeting?</strong></p>
<ul>
<li>The US-China trade war has intensified.</li>
</ul>
<ul>
<li>The International Monetary Fund revised its 2019 estimate for global growth from 3.3% to 3.2%.</li>
</ul>
<ul>
<li>The US Federal Reserve cut the federal funds rate by 25 basis points.</li>
</ul>
<ul>
<li>The Australian jobless rate was steady at 5.2% in June.</li>
</ul>
<ul>
<li>Job ads rose 0.8% in July after a 4.6% increase in June (the biggest monthly gain in 18 months).</li>
</ul>
<ul>
<li>Capital city home prices rose by 0.1% in July – the biggest rise in almost two years.</li>
</ul>
<ul>
<li>Private sector credit rose by just 0.1% in June. Annual credit growth is 3.3% – a 5½-year low.</li>
</ul>
<ul>
<li>Retail trade rose by 0.4% in June.</li>
</ul>
<ul>
<li>In real terms retail trade rose 0.2% in the June quarter after falling 0.1% in the March quarter.</li>
</ul>
<ul>
<li>The Consumer Price Index rose 0.6% in the June quarter to be up 1.6% on the year.</li>
</ul>
<ul>
<li>Both the All Ordinaries and ASX200 share indexes hit record highs.</li>
</ul>
<ul>
<li>The Australian dollar has held around US67-69 cents.</li>
</ul>
<p><strong>The assessment</strong></p>
<p>Reserve Bank policymakers have again left the door open to further rate cuts “if needed” – the latter two words also being used in the July interest rate decision.</p>
<p>The Reserve Bank hopes it has done enough so it is not called on to cut rates again. But the Bank has made it clear that even if rates aren’t cut, that rates will stay low for an “extended period”.</p>
<p>Inflation is not expected to be in the 2-3% target band until 2021.</p>
<p>The Reserve Bank releases its quarterly Statement on Monetary Policy on Friday. And the Reserve Bank Governor delivers testimony to Parliamentarians on the same day.</p>
<p><strong>Perspectives on interest rates</strong></p>
<p>In July the Reserve Bank Board cut the cash rate by 25 basis points (quarter of a%) to 1.00% after a similar cut in June. There have now been 14 rate cuts since November 2011 with the cash rate cut from 4.75%.</p>
<p>The Reserve Bank had previously lifted rates seven times from October 2009 to November 2010 from 3.00% to 4.75%.</p>
<p><em><a href="https://www.propertyobserver.com.au/images/2019/8/7/home%20prices.jpg" target="_blank">Click here</a> to enlarge:</em></p>
<p><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/2019/8/7/home%20prices.jpg" alt=""></p>
<p><strong>What are the implications of today’s decision?</strong></p>
<p>Interest rates are at record lows and the Reserve Bank isn’t expecting to lift rates for some time.</p>
<p>At the same time, share markets have become more volatile given the trade war between the US and China. So investors will need to be vigilant.</p>
<p>Returns on shares and property still look to outperform other assets classes. But diversification is important in the current environment as is the need to maintain a defensive cash component in portfolios.</p>
<p><em><strong>CRAIG JAMES</strong> is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</em></p>
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An “extended period of low interest rates” ahead: Commsec's Craig James

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<p>EXPERT OBSERVER</p>
<p>Last month we said that there was seemingly something for everyone in the latest labour force data. And the same conclusion can be made again.</p>
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<p>There was good job growth in the month, albeit focused on part-time jobs.</p>
<p>The jobless rate didn’t budge. But the proportion of working age Aussies in the job market (participation rate) hit record highs.</p>
<p>Admittedly the data covered the election period and that may account for the skew to part-time workers.</p>
<p>Clearly there are temporary jobs created each three years for election-related roles.</p>
<p>A big question for the Reserve Bank is whether it believes that lower interest rates can truly drive the national jobless rate to 4.5 per cent or whether structural factors will impede progress.</p>
<p>NSW, Victoria, the ACT and the Northern Territory have jobless rates of 4.6 per cent or lower but next best is South Australia at 5.7 per cent.</p>
<p>So the ball is back in the Reserve Bank’s court. We know that interest rates are being driven by the job market.</p>
<p>So does the Reserve Bank follow the June rate cut with another move in July or does it wait a little longer – perhaps August after the late July inflation data?</p>
<p><a href="https://www.propertyobserver.com.au/images/2019/6/13/commsec%201%20.jpg" target="_blank">Click here</a> to enlarge: </p>
<p><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/2019/6/13/commsec%201%20.jpg" alt=""></p>
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<div class="column">We continue to favour August for the next rate cut. There certainly is no rush.</div>
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<div class="column">The economy lost momentum late in 2018/early in 2009 due to the US-China trade stoush. Other countries have similarly experienced softer growth.</div>
<div class="column"> </div>
<div class="column">Australia has also experienced slower growth in 2019 as both businesses and consumers awaited the election result.</div>
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<div class="column">With a clear election result obtained, the economy should gain pace from here.</div>
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<div class="column">The Reserve Bank doesn’t seem to see any barriers to further rate stimulus.</div>
<div class="column"> </div>
<div class="column">‘Full employment’ is now defined as a jobless rate near 4.5 per cent. And inflation is set to stay at lower levels for longer.</div>
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<div class="column">That assumption was backed by today’s data showing plunging airfares in June.<br><p>Certainly stimulus is coming from lower interest rates, the minimum wage decision, the upcoming tax cut and some loosening of home lending policy from the regulators.</p>
<p>A lower Aussie dollar is also supporting activity in the economy. Sydney home prices have lifted 0.3 per cent from recent lows with Melbourne prices up 0.2 per cent.</p>
<p><strong>What do the figures show?</strong></p>
Employment rose for the 12th straight month, up by 42,300 in May after a revised 43,100 increase in jobs in April (previously reported as a 28,400 increase in jobs).</div>
<div class="column"> </div>
<div class="column">Full-time jobs rose by 2,400, but part-time jobs rose by 39,800. Economists had tipped an increase in total jobs of around 15,000.</div>
<div class="column"> </div>
<div class="column">Annual job growth rose from 2.5 per cent to a 14-month high of 2.9 per cent (decade average 1.7 per cent).<br><p>Hours worked fell by 0.3 per cent in the month to be up 2.1 per cent over the year. In trend terms, hours worked rose 0.2 per cent to be up 2.5 per cent on the year.</p>
The unemployment rate was steady at 5.2 per cent in seasonally adjusted terms. In trend terms the jobless rate was steady at 5.1 per cent.</div>
<div class="column"> </div>
<div class="column">The participation rate rose from 65.9 per cent to a record high of 66.0 per cent. In trend terms the participation rate rose from 65.8 per cent to a record high of 65.9 per cent.</div>
<div class="column"> </div>
<div class="column">Unemployment across states in May: NSW 4.6 per cent (April 4.6 per cent); Victoria 4.6 per cent (4.8 per cent); Queensland 6.2 per cent (5.9 per cent); South Australia 5.7 per cent (6.1 per cent); Western Australia 6.3 per cent (6.1 per cent); Tasmania 6.4 per cent (6.8 per cent). In trend terms, Northern Territory 4.5 per cent (4.5 per cent); ACT 3.9 per cent (3.8 per cent).</div>
<div class="column">
<br>State/Territory jobs: In seasonlly adjusted terms, the largest increase in employment was in New South Wales (up 38,500 persons), followed by Victoria (up 28,600 persons) and Queensland (up 7,800 persons).</div>
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<div class="column">The only decrease were in Western Australia (down 4,000 persons) and Tasmania (down 400 persons)</div>
<div class="column"> </div>
<div class="column">The working age population rose by 26,000 in May to 20.56 million.</div>
<div class="column"> </div>
<div class="column">Over the year the working age population rose by 356,100 – a 91⁄2-year high – or 1.76 per cent, but this is still down from the record 2.36 per cent annual growth in December 2008.</div>
<div class="column"> </div>
<div class="column">The monthly trend underemployment rate increased 0.1pt to 8.5 per cent. The monthly trend underutilisation rate increased 0.1pt to 13.6 per cent.<br><p>The monthly seasonally adjusted underemployment rate increased 0.1pt to 8.6 per cent. The monthly underutilisation rate remained steady at 13.7 per cent.</p>
<p><strong>Domestic airfares</strong></p>
Business class airfares fell by 0.2 per cent in June after falling by 1 per cent in May. Business class airfares are down 9.6 per cent on a year ago – falling at the fastest annual rate in six years.</div>
<div class="column"> </div>
<div class="column">And the actual fares stand at the lowest level in four years. In smoothed terms, business class airfares fell by 1.3 per cent in June to be down 9.3 per cent on the year.</div>
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<a href="https://www.propertyobserver.com.au/images/2019/6/13/commsec%202.jpg" target="_blank">Click here</a> to enlarge:</div>
<div class="column"><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/2019/6/13/commsec%202.jpg" alt=""></div>
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<a href="https://www.propertyobserver.com.au/images/2019/6/13/commsec%203.jpg" target="_blank">Click here </a>to enlarge: </div>
<div class="column"><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/2019/6/13/commsec%203.jpg" alt=""></div>
<div class="column"> </div>
<div class="column">Discount airfares are volatile month-to-month. In June, fares rose by 15.2 per cent after falling by 25.9 per cent in May.</div>
<div class="column"> </div>
<div class="column">Discount airfares are down 5.9 per cent over the year to June. In smoothed terms, discount airfares fell by 1.9 per cent in June to be down 3.1 per cent on the year – the biggest fall in the annual growth rate in three years. Fares are the lowest in two years.</div>
<div class="column"> </div>
<div class="column">Restricted economy airfares rose by 0.7 per cent in June after falling by 0.5 per cent in May. In smoothed terms, restricted economy fares rose just 0.2 per cent in June to be up by 5.3 per cent on the year.</div>
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<a href="https://www.propertyobserver.com.au/images/2019/6/13/comm%20sec%204.jpg" target="_blank">Click here </a>to enlarge: </div>
<div class="column"><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/2019/6/13/comm%20sec%204.jpg" alt=""></div>
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<a href="https://www.propertyobserver.com.au/images/2019/6/13/commsec%205.jpg" target="_blank">Click here</a> to enlarge:</div>
<div class="column"><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/2019/6/13/commsec%205.jpg" alt=""></div>
<div class="column"> </div>
<div class="column"> </div>
<div class="column"><strong>Why is the data important?</strong></div>
<div class="column"> </div>
<div class="column">The Labour Force estimates are derived from a monthly survey conducted by the Bureau of Statistics.</div>
<div class="column"> </div>
<div class="column">The population survey is based on a multi-stage area sample of private dwellings (currently about 22,800 houses, flats, etc.) and a sample of non-private dwellings (hotels, motels, etc.).</div>
<div class="column"> </div>
<div class="column">The survey covers about 0.24 per cent of the population of Australia and includes all people over 15 years of age, except defence personnel.</div>
<div class="column"> </div>
<div class="column">If more people are employed, then there is greater spending power in the economy. But at the same time companies may adjust the work hours of employees.</div>
<div class="column"> </div>
<div class="column">If employees work less hours, and therefore get paid less, then spending power in the economy is reduced.</div>
<div class="column"> </div>
<div class="column">The Bureau of Infrastructure, Transport and Regional Economics (BITRE) releases data on domestic and international aviation each month.</div>
<div class="column"> </div>
<div class="column">The data is useful in tracking consumer spending and airline performance as well as broader economic activity.</div>
<div class="column"> </div>
<div class="column"><strong>What are the implications?</strong></div>
<div class="column"> </div>
<div class="column">CommSec is pencilling in another rate cut for August.</div>
<div class="column"> </div>
<div class="column">But we are looking for significant debate about whether there is value in cutting rates much further.</div>
<div class="column"> </div>
<div class="column">The southeastern corner of Australia is arguably at or near full-employment. But there is a huge gap to the other states.</div>
<div class="column"> </div>
<div class="column">The Reserve Bank Governor has a super-important speech in a week’s time: “The Labour Market and Spare Capacity”. Aussies will be hanging on every word.</div>
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<p><span><em>Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</em> </span></p>
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Australia's two-speed job market: CommSec's Craig James

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<p>EXPERT OBSERVATION</p>
<p>Aussie consumers think that the economy is in good shape. But when it comes to their own finances, consumers aren’t feeling the love. No doubt people are still miffed that wages are growing at a slower rate than in the past. But consumers are starting to warm to the fact that wages are still out-pacing prices.</p>
<p>The index of consumer views of the economy in a year’s time is +12.2 points, well above the longer-term average of -0.6 points. And the index of views on the economy in five-years’ time is 13.3, above the long-term average of +8.0 points. The results on the current and future state of consumer finances are softer than the longer-term averages, although only modestly lower. Bottom-line: consumer conservatism is set to continue.</p>
<p>The Reserve Bank is open to cutting rates. But there is no rush. Board members expect that there will be further progress in reducing unemployment, lifting wage and prices, and therefore lifting consumer spending.</p>
<p>What do the figures show?</p>
<p><strong>Consumer Sentiment</strong></p>
<ul>
<li>The weekly ANZ-Roy Morgan consumer confidence rating rose by 1.9% after falling by 1.3% in the previous week. Sentiment has yo-yo’ed up and down for the last 11 weeks. Consumer sentiment is still above the longer term average of 113.1 points since 1990.</li>
<li>All of the five major components of the index rose last week:</li>
<li>The estimate of family finances compared with a year ago was up from +3.2 points to +5.4 points; </li>
<li>The estimate of family finances over the next year was up from +22.8 points to +22.9 points;</li>
<li>Economic conditions over the next 12 months was up from +7.7 points to +12.2 points;</li>
<li>Economic conditions over the next five years was up from +11.6 points to +13.3 points; </li>
<li>The measure of whether it was a good time to buy a major household item was up from +20.6 points to +22.6 points. </li>
<li>The measure of inflation expectations fell from a 4.3% to 3.9%. </li>
</ul>
<p><strong>Reserve Bank Board meeting minutes</strong></p>
<p>Consumer spending: “Retail sales data and contacts in the Bank's liaison program suggested that growth in housing-related consumption had remained soft in recent months.”</p>
<p>Rate cut scenario: “Members also discussed the scenario where inflation did not move any higher and unemployment trended up, noting that a decrease in the cash rate would likely be appropriate in these circumstances. They recognised that the effect on the economy of lower interest rates could be expected to be smaller than in the past, given the high level of household debt and the adjustment that was occurring in housing markets. Nevertheless, a lower level of interest rates could still be expected to support the economy through a depreciation of the exchange rate and by reducing required interest payments on borrowing, freeing up cash for other expenditure...year.”</p>
<p>No rate hike: “...members agreed that the likelihood of a scenario where the cash rate would need to be increased in the near term was low.”</p>
<p>Rate outlook: “Given this outlook for further progress towards the Bank's goals, members agreed that there was not a strong case for a near-term adjustment in monetary policy. Members recognised that it was not possible to fine-tune outcomes and that holding monetary policy steady would enable the Bank to be a source of stability and confidence.”</p>
<p>Last paragraph: “Taking account of the further progress expected towards the Bank's goals, members assessed that it was appropriate to hold the cash rate steady. Looking forward, the Board will continue to monitor developments, including how the current tensions between the domestic GDP and labour market data evolve, and set monetary policy to support sustainable growth in the economy and achieve the inflation target over time.”</p>
<p><strong>What is the importance of the economic data?</strong></p>
<p>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.</p>
<p>The Reserve Bank releases minutes of its monthly Board meeting a fortnight after the event. The minutes give a guide to Reserve Bank thinking on interest rate settings.</p>
<p><strong>What are the implications for interest rates and investors?</strong></p>
<p>In the current environment, retailers have to convince shoppers that there are deals to be had. Consumer confidence is OK without being super-positive.</p>
<p>If rates were to move in any direction in 2019, it would be down. Much will depend on the job market. And much will depend on the global environment, especially the China-US trade discussions. The Reserve Bank (RBA) is in no rush to change rates, saying “it was not possible to fine-tune outcomes.” In the RBA view, leaving rates low and stable was the best contribution it could make in the current environment.</p>
<p>Inflation was expected to stay low, but one reason for this was that “governments had been working to ease cost of living pressures, including through their influence on administered prices.”</p>
<p>The RBA said that “weakness in demand” had largely driven the slowdown in home lending but “There had also been some tightening in lending practices.” In terms of businesses, the RBA notes that business lending had been robust but loan growth was strongest for big business. Credit conditions had tightened for some small businesses. Clearly this is an area to watch in surveys of business spending and investment.</p>
<p>CommSec expects interest rates to be unchanged for the foreseeable future. But the loss of momentum across global economies means central banks are skewed to more accommodative monetary policies.</p>
<p align="left"><em><span lang="en-US"><strong>Craig James</strong> is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</span></em></p>
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Consumers positive on the economy as the RBA mulls rate cut scenario: CommSec's Craig James

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<p>EXPERT OBSERVATION</p>
<p>Mid-sized companies and international shares have out-performed ‘Mums and Dads’ stocks over the past five years.</p>
<p>It is useful for investors to understand how different asset classes are performing as it may highlight opportunities.</p>
<p><strong>Smaller returns from major Australian companies</strong></p>
<p>Many Australians got their start in the share market through privatisations and demutualisations. That is, companies like Telstra, AMP, Colonial, Commonwealth Bank, Suncorp, Qantas and state betting agencies like TAB (NSW). Some retail investors have held on to these stocks over time and perhaps added modestly to their holdings with positions in other domestic companies. For others, the initial investment may have sparked broader interest with investors adding to their portfolios with domestic and international investments and perhaps positions in options and futures.</p>
<p>In 1999, CommSec devised an index called the Mums and Dads index to highlight the performance of retail investors who got their start in the share market through demutualisations, privatisations or ‘household names’ like Woolworths. The current composition of the CommSec Mums and Dads index is Telstra, Commonwealth Bank, Woolworths, Qantas, AMP, Tabcorp, Suncorp, IAG and Wesfarmers.</p>
<p>Until around five years ago, total returns on the CommSec Mums &amp; Dads index (share prices and dividends included) closely tracked total returns on the broader index – the All Ordinaries accumulation index. But over the past five years, the All Ords accumulation index has lifted around 82% while the CommSec Mums and Dads index has lifted by just 35%.</p>
<p><strong>Mid-sized companies gain favour</strong></p>
<p>One of the out-performing areas over the past five years has been the mid-tier companies. Since mid-2013 the MidCap50 accumulation index has doubled in value. As noted above, over the same period the All Ords accumulation index lifted by around 82% while returns on the CommSec Mums and Dads index rose by just 35%.</p>
<p>The MidCap50 includes a number of ‘new wave’ stocks as well as ‘disruptors’ – companies challenging those with far bigger market size or capitalisation – that is, the ‘big cap’ companies. Notable mid-tier companies include A2 Milk, Dominos, Flight Centre, JB Hi-Fi and Resmed.</p>
<p>On a shorter-term comparison, since the start of 2018 the All Ordinaries accumulation index has lifted by 6% (ASX 200 accumulation +5.9%) while the MidCap50 accumulation index has lifted by 6.6%. By comparison the CommSec Mums and Dads index has risen by just 1.6%.</p>
<p>However just as investors constantly need to track the performance of their domestic portfolios – especially the influence of new themes or paradigms – there is also the need to take a broader perspective. Considerations include the differing performance of domestic industries or sectors to those abroad.</p>
<p>Global shares have certainly performed strongly over recent years. The US Dow Jones and S&amp;P 500 indexes have hit record highs in the past month. And the Japanese Nikkei 225 index hit 27-year highs yesterday.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/10/2/commsec%201.jpg" alt=""></p>
<p><strong>Global shares</strong></p>
<p>Five or 10 years ago it was more difficult for retail investors to invest in individual companies that were listed on overseas share markets. To gain overseas exposure, investors tended to favour managed funds.</p>
<p>Today, retail investors have much more flexibility to invest in individual companies on overseas exchanges, or via exchange traded funds (ETFs) and managed funds. Australia accounts for just 2% of world share market capitalisation, so there is a raft of opportunities outside our borders. One complication is the need to take into account currency fluctuations. Since the currency was floated, the Australian dollar has fluctuated on average by US14 cents a year against the greenback, although there has been less volatility in recent years</p>
<p>One way of measuring the performance of the ‘world share market’ is by reference to an index. And one of the best known indexes is that compiled by Morgan Stanley Capital International (MSCI).</p>
<p>The MSCI World Index, is described as: “A broad global equity index that represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float- adjusted market capitalisation in each country and MSCI World Index does not offer exposure to emerging markets.” </p>
<p>The world MSCI can be tracked through finance websites on a daily basis as well as wire services and adjustments can be made for dividends and currency fluctuations.</p>
<p>Over the past five years the world MSCI in US dollar terms has risen by 41% with total returns (measured by the accumulation index) up by 56%. By comparison, in Australian dollar terms the MSCI Australian index rose by 17% and 42% respectively over the period.</p>
<p>But when you adjust the world MSCI for currency changes – convert the index to Australian dollar terms – the out- performance is enhanced even further. Over the past five years the world MSCI has lifted by 83% in Australian dollar terms with total returns up 101%.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/10/2/commsec%202.jpg" alt=""></p>
<p><strong>Shorter-run returns</strong></p>
<p>As always the time comparison chosen may affect the results obtained. And with international shares, changes in the value of the US dollar can significantly impact the results.</p>
<p>Looking back since the index was constituted in May 2000, and assessing returns in Australian dollar terms, returns on the ASX 200 have risen four-fold whereas returns on the world MSCI have doubled. So on a long-term basis the Australian share market has out-performed global shares.</p>
<p>However, looking over the past decade, Australian dollar returns for both the ASX 200 and the world MSCI tracked closely, especially up to 2014. But in the past four years the world MSCI broke away, lifting by 68% while the ASX 200 has risen by only 39%.</p>
<p>Further, since the start of 2018, the world MSCI accumulation index in Australian dollar terms has lifted by around 14%, well ahead of returns of around 6% for the Australian market.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/10/2/commsec%203.jpg" alt=""></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/10/2/commsec%204.jpg" alt=""></p>
<p><strong>The US out-performs</strong></p>
<p>The Dow Jones index is probably the best known of the US equity indexes. Other indexes include the S&amp;P 500, Nasdaq Composite and Russell 2000. And while the price index – the Dow Jones Industrial average (DJIA) – is commonly quoted, there is also a total return index for the Dow.</p>
<p>Up until the end of September the DJIA rose by 7% and total returns (includes dividends) lifted by 10% while returns on the index in Australian dollar terms have lifted by around 18%.</p>
<p>By comparison, in local currency terms the ASX 200 rose by 2.3%, the All Ords lifted 2.6% and total returns on Australian shares have increased by around 6%.</p>
<p>Certainly the US economy has performed strongly with annual economic growth sitting at 4.2%, unemployment near 18-year lows and inflation sitting at just 2%. However the old adage applies for the share market – past performance is no guarantee of future returns.</p>
<p>The US Dow Jones has made solid returns – especially over the past two years, averaging annual growth near 22% and well out-performing the Australian market.</p>
<p>While the US economy is performing strongly, the budget deficit remains high, the Federal Reserve is still in the process or ‘normalising’ interest rates and the US is engaged in trade disputes with a raft of economies such as China and the European Union.</p>
<p>In addition some would cite relatively expensive valuations for US shares with prices around 17.8 times forward earnings, well above the longer-term average of around 14.5 times earnings.</p>
<p> <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/10/2/commsec%205.jpg" alt=""></p>
<p><strong>What are the implications for investors?</strong></p>
<p>Global share markets have made solid gains in recent years reflecting economic recoveries after the global financial crisis. In this respect, the US has had one of the stand-out economies and share markets.</p>
<p>Australian investors can now embrace a broader range of opportunities than in the past, whether they are domestic companies and sectors or opportunities across global economies. While there may have been good reasons in the past for investors to stick with blue-chip ‘Mums and Dads’ investments, better performing investments locally and globally argue for a fresh look at portfolios.</p>
<p>Investments in international shares and small and mid-sized Australian companies provide scope for greater diversification in investor portfolios.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/10/2/commsec%206.jpg" alt=""> </p>
<p><em><strong>Craig James </strong>is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>. </em></p>
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'Mum and dad' stocks are underperforming: CommSec's Craig James

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<div>EXPERT OBSERVER</div>
<div> </div>
<div>Total household wealth (net worth) fell for the first time in two years, down just 0.4 per cent to $10,222.8 billion at the end of March 2018. In per capita terms, wealth eased from a record $414,277 to $410,708 in the March quarter.</div>
<div> </div>
<div>Foreigners held $557.4 billion of Aussie shares in the March quarter, down from $582.5 billion in the December quarter.</div>
<div> </div>
<div>
<div><strong>What does it all mean?</strong></div>
<div> </div>
<div>The Finance &amp; Wealth publication from the Bureau of Statistics contains the most complete figures on household finances. And for the first time in two years wealth eased slightly. This hardly comes as a surprise – home prices eased in the quarter and the losses weren’t made up elsewhere, such as on the sharemarket.</div>
<div> </div>
<div>On average, each Australian has net assets (assets less liabilities) of just over $410,000, a total that has lifted by over $9,000 in the past year. And over the past five years per capita wealth has lifted by more than $100,000 or 36 per cent. It is clear that household balance sheets remain solid.</div>
<div> </div>
<div><img src="https://www.urban.com.au/images/2018/6/29/CJ%20Graph.JPG" alt=""></div>
<div> </div>
<div>Looking ahead home prices are likely to ease further from record levels. The $64 question is whether gains on the sharemarket will offset the reduced valuations of Australian homes. Per capita wealth may consolidate near $400,000 after tremendous gains over the past five years.</div>
</div>
<div>
<div> </div>
<div>Total household wealth (net worth) fell for the first time in two years, down just 0.4 per cent to $10,222.8 billion at the end of March 2018. In per capita terms, wealth eased from a record $414,277 to $410,708 in the March quarter. Wealth is still up $9,072.70 or 2.3 per cent over the year.</div>
<div> </div>
<div><img src="https://www.urban.com.au/images/2018/6/29/CJ%20Graph%204.JPG" alt=""></div>
<div> </div>
<div>The ABS noted, “Household liabilities outgrew assets during March quarter 2018, resulting in a decrease of 0.4 per cent in household net worth, falling from a 2.0 per cent rise last quarter. Household liabilities was the largest contributor to the decrease in household net worth, detracting 0.3 percentage points, followed by land and dwellings assets detracting 0.2 percentage points.</div>
<div> </div>
<div>Households held a record $1,105.7 billion in cash and deposits at the end of March. Cash and deposit holdings represented 21.65 per cent of financial assets, down from 21.71 per cent in the December quarter but still just above the post global financial crisis (GFC) average of 21.16 per cent and the long-term average of 16.3 per cent.</div>
<div> </div>
<div>Households held a record $939.3 billion in shares or 18.6 per cent of all financial assets, in line with the average since the global financial crisis.</div>
<div> </div>
<div><img src="https://www.urban.com.au/images/2018/6/29/CJ%20Graph%208.JPG" alt=""></div>
<div> </div>
<div>Pension fund (superannuation fund) assets fell by $9.9 billion to $2,174.5 billion in the March quarter. Cash and deposits stood at 11.3 per cent of financial assets, below the 13.5 per cent average since the global financial crisis, but above the long-term average of 9.4 per cent.</div>
<div> </div>
<div>Foreigners held $557.4 billion of Aussie shares in the March quarter, down from $582.5 billion in the December quarter. Foreigners held 30.5 per cent of total listed shares (long-term average 32.9 per cent).</div>
<div> </div>
<div><img src="https://www.urban.com.au/images/2018/6/29/CJ%20Graph%205.JPG" alt=""></div>
<div> </div>
<div>
<div><strong>What is the importance of the economic data?</strong></div>
<div><strong> </strong></div>
<div>The Australian Bureau of Statistics releases the Financial Accounts publication each quarter. The data covers assets, liabilities and financial flows for the key sectors of the economy. Figures on financial wealth help reveal the true state of household finances.</div>
<div> </div>
<div><img src="https://www.urban.com.au/images/2018/6/29/CJ%20Graph%207.JPG" alt=""></div>
<div> </div>
<div>
<div><strong>What are the implications for interest rates and investors?</strong></div>
<div><strong> </strong></div>
<div>With wages tracking closely in line with prices and wealth now easing, there will be continued uncertainty about future spending by Australian families. In other words, just another reason to leave cash rates on hold.</div>
<div> </div>
<div>
<div>CommSec expects official rates to remain stable until early 2019.</div>
<p><em>Craig James is chief economist at CommSec.</em></p>
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Household wealth now falling: Commsec's Craig James

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<div>
<div>EXPERT OBSERVATION</div>
<div> </div>
<div align="justify">Private sector credit (effectively outstanding loans) rose by 0.2 per cent in May after a 0.4 per cent rise in April. It was the slowest monthly growth in 16 months. Credit was up 4.8 per cent over the year – equalling the slowest rate in four years.</div>
<div align="justify"> </div>
<div align="justify">Investor housing finance was flat in May with annual growth easing to a record low of 2.0 per cent. The data has been compiled since 1990.</div>
<div align="justify"> </div>
<div align="justify">In seasonally-adjusted terms, new detached house sales fell by 4.4 per cent in May to stand 12.8 per cent down on the peak in December and stand 14.1 per cent lower than a year ago.</div>
<div> </div>
<div>Private sector credit figures have implications for finance providers, retailers, and companies dependent on business spending.</div>
<div> </div>
<div><img src="https://www.urban.com.au/images/2018/6/29/CJ%20Graph%201.JPG" alt=""></div>
<div> </div>
</div>
<div>
<div><strong>What does it all mean?</strong></div>
<div> </div>
<div align="justify">The regulators have been clearly successful in slowing investor demand for home loans. Investor home lending is still growing, but at the slowest pace in 28 years of records.</div>
<div align="justify"> </div>
<div align="justify">Overall Aussie consumers and businesses remain wary about taking on more debt. Credit is broadly lifting in line with the nominal growth of the economy with owner-occupier home loans and business lending providing the main supports. The Reserve Bank will be comforted by recent trends.</div>
<div align="justify"> </div>
<div align="justify">Banks will need to work harder for the affections of borrowers and savers. Aussies are reluctant to borrow and returns on savings are arguably more attractive in the sharemarket.</div>
<div> </div>
<div><strong>What do the figures show?</strong></div>
<div> </div>
<div>Private sector credit (effectively outstanding loans)rose by 0.2 per cent in May after a 0.4 per cent rise in April. It was the slowest monthly growth in 16 months. Credit was up 4.8 per cent over the year – equalling the slowest rate in four years.</div>
<div> </div>
<div>Housing credit grew by 0.4 per cent in  per cent May and has risen 0.4-0.5 per cent a month over the past year. But annual growth eased from 6.0 per cent to 5.8 per cent – the lowest growth rate for over four years.</div>
<div> </div>
<div>Owner occupier housing credit rose by 0.6 in May to stand 7.9 per cent higher over the year.</div>
<div> </div>
<div>Investor housing finance was flat in May with annual growth easing to a record low of 2.0 per cent.</div>
<div> </div>
<div>Personal credit fell for the fourth straight month, down 0.1 per cent in May to be down 1.3 per cent over the year. It was the biggest annual decline in six years.</div>
<div> </div>
<div>Business credit fell by 0.2 per cent in May with annual growth easing from an 8-month high of 4.3 per cent to 3.8 per cent.</div>
<div> </div>
<div>Both M3 and Broad Money rose by 0.4 per cent in May to be up 2.5 per cent for the year. Broad Money is growing at the slowest annual pace in 25½-years.</div>
<div> </div>
<div>Term deposits with banks fell by $0.6 billion to $581.1 billion in May. Annual growth fell from 3.2 per cent to a four month low of 3.1 per cent.</div>
<div> </div>
<div>Loans and advances by banks grew by 4.9 per cent in the year to May. And loans and advances by non-bank financial intermediaries rose by 4.4 per cent over the year, down from a 9½-year high of 7.1 per cent in March.</div>
<div> </div>
<div>Deposits at banks rose by just 0.1 per cent in May to stand 2.5 per cent higher than a year ago.</div>
<div> </div>
<div>In seasonally-adjusted terms, new detached house sales fell by 4.4 per cent in May to stand 12.8 per cent down on the peak in December and stand 14.1 per cent lower than a year ago.</div>
<div> </div>
<div>The Housing Industry Association reported: The monthly reduction in May was synchronised across the surveyed states – sales fell by 6.8 per cent in New South Wales, 4.6 per cent in Victoria, 5.0 per cent in Queensland, 0.2 per cent in South Australia and 2.4 per cent in Western Australia.</div>
<div> </div>
<div>No data was published by the HIA for multi-unit sales.</div>
<div> </div>
<div><strong>What is the importance of the economic data?</strong></div>
<div> </div>
<div>Private sector credit figures are released by the Reserve Bank on the last working day of the month. Credit is separated into three categories – housing, other personal and business. Private sector credit is effectively the amount of loans outstanding in the economy. If growth in lending is strong then it suggests that credit from financial institutions is freely available, underlying demand for assets such as cars and houses is firm and that the price of credit (interest rates) is attractive.</div>
<div> </div>
<div>The Housing Industry Association releases data on the sales of new homes each month. The HIA collects the data each month from a sample of Australia's largest 100 home builders. The survey covers around 15 per cent of the home building industry.</div>
<div> </div>
<div><img src="https://www.urban.com.au/images/2018/6/29/CJ%20graph%202.JPG" alt=""></div>
<div> </div>
<div><strong>What are the implications for interest rates and investors?</strong></div>
<div> </div>
<div>Home building and buying activity will be driven by those seeking to live in the dwellings rather than looking at homes as a potential investment. The latest trends in lending should allay concerns about the potential for a massive oversupply of homes developing.<br><br>
</div>
<div>The reduction in investor home loan demand should ensure that home prices grow at more sustainable rates over the next few years.</div>
<div> </div>
<div>Credit and money growth remain sluggish, keeping inflationary pressures at bay.</div>
<div> </div>
<div><img src="https://www.urban.com.au/images/2018/6/29/CJ%20Graph%203.JPG" alt=""></div>
<div> </div>
<div>CommSec expects official interest rates to remain on hold until 2019.</div>
<div> </div>
<div><em>Craig James is chief economist at CommSec.</em></div>
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Record slowdown for investor home loans: Commsec's Craig James

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<div class="column">EXPERT OBSERVATION</div>
<div class="column"> </div>
<div class="column">China consumer prices rose by 1.8 per cent in the year to April (forecast 1.9 per cent), down from 2.1 per cent in the year to March.</div>
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<br>Food prices fell 1.9 per cent in April to stand 0.7 per cent higher than a year ago. Non-food prices rose 0.2 per cent to stand 2.1 per cent higher than a year ago.<br><p style="display: inline !important;"> </p>
<p style="display: inline !important;">China business inflation - producer prices rose by 3.4 per cent in the year to April (forecast 3.5 per cent), up from 3.1 per cent in the year to March. Raw material costs are up 5.7 per cent on the year.</p>
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The Chinese data have implications for the currency markets and therefore exporters and importers.</div>
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<div class="column"><strong>What does it all mean?</strong></div>
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<br>In China, non-food inflation has been comfortably between 2.0-2.5 per cent over the past year. In contrast Australian inflation is still struggling to get into the Reserve Bank’s 2-3 per cent target band. The bottom line is that the Chinese economy is healthy with firm activity levels and sustainable inflation. While costs for businesses are growing at a faster pace above 3 per cent, it will be remain just a watching brief for policymakers.</div>
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<div class="column">It is in Australia’s interests – especially in terms of the budget position – to have a healthy Chinese economy. At present the two largest economies – the US and China – are driving global economic growth. At the same time, a lower Australian dollar and rising energy prices are positive influences on resource sector incomes, and thus exports.</div>
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<p style="display: inline !important;"><strong>What do the figures show?</strong></p>
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<div class="column">China inflation:</div>
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<div class="column">Consumer prices rose by 1.8 per cent in the year to April (forecast 1.9 per cent), down from 2.1 per cent in the year to March.</div>
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<br>Consumer prices fell by 0.2 per cent in April after falling by 1.1 per cent in March. Food prices fell 1.9 per cent in April to stand 0.7 per cent higher than a year ago. Non-food prices rose 0.2 per cent to stand 2.1 per cent higher than a year ago.</div>
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<div class="column">Click here <a href="https://www.propertyobserver.com.au/images/2018/5/10/prices.jpg" target="_blank">to enlarge.</a>
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<div class="column"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/10/prices.jpg" alt=""></div>
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<div class="column">Over the year, food and tobacco prices rose by 1.1 per cent; clothing rose 1.1 per cent; rent, fuel &amp; utilities rose by 2.2 per cent; household goods and appliances rose 1.5 per cent; transport and communications rose 1.1 per cent; education &amp; entertainment rose 2.0 per cent; healthcare rose 5.2 per cent; and other goods and services were up 0.9 per cent.</div>
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<div class="column">Producer prices rose by 3.4 per cent in the year to April (forecast 3.5 per cent), up from 3.1 per cent in the year to March. It was the first lift in the annual rate in seven months.</div>
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<div class="column">Click here <a href="https://www.propertyobserver.com.au/images/2018/5/10/non-food.jpg" target="_blank">to enlarge.</a>
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<div class="column"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/10/non-food.jpg" alt=""></div>
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<div class="column">Over the year, the prices of raw materials were up by 5.7 per cent with the cost of processing up 3.9 per cent. The means of production were up 4.5 per cent with extraction costs up 6.1 per cent.<br><p style="display: inline !important;"> </p>
<p style="display: inline !important;">Over the year prices of consumer goods rose just 0.1 per cent with consumer durables down 0.6 per cent over the year, “daily use” goods up 0.9 per cent and clothing up just 0.2 per cent.</p>
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<div class="column"><strong>What is the importance of the economic data?</strong></div>
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<br>China’s National Bureau of Statistics releases its monthly economic statistics around mid-month. Quarterly GDP data is released around the 19th of January, April, July and October. China’s Customs Office releases trade data, and the People’s Bank of China releases financial statistics, around the 10th of each month. China is Australia’s largest trading partner and changes in the Chinese economy have major implications for the Aussie economy.</div>
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<div class="column"><strong>What are the implications for interest rates and investors?</strong></div>
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<div class="column">Chinese consumer inflation is still well below the broad target for 2018 of “around 3 per cent”. Consumer goods inflation is low with main strength in the services sector, especially healthcare.</div>
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<div class="column">Chinese producer prices are still growing in excess of consumer prices. So policymakers will remain alert, but at this stage there won’t be undue concern.</div>
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<div class="column">CommSec doesn’t expect a change in Australian interest rates in the near term. <br><span style="font-size: 12.16px;"><br></span>
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<div class="column"><span style="font-size: 12.16px;"><em>Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</em><span> </span></span></div>
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Craig James

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