<p>Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.</p>

<p>Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;</p>

<p>David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;</p>

<p>“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;</p>

<p>[smartcode_project:default project_id=110291 project_image_fid=302785]</p>

<h2>Affordable product leads, premium demand remains resilient</h2>

<p>Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;</p>

<p>Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;</p>

<p>At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.</p>

<p>Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.</p>

<p>Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;</p>

<p>[smartcode_project:default project_id=148957 project_image_fid=364102]</p>

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

<p>Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.</p>

<p>David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.</p>

<p>“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;</p>

<p>Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.</p>

<p>[smartcode_project:default project_id=108869 project_image_fid=317905]</p>

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

<p>While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;</p>

<p>Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;</p>

<p>However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.</p>

<p>Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;</p>


Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<p><a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.</p>

<p>The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.</p>

<p>Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.</p>

<p>“Brisbane was the right step for Sammut,” Sammut said.</p>

<p>“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" /></p>

<p>Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.</p>

<p>The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.</p>

<p>“We are DA approved now which is very exciting,” Sammut said.</p>

<p>“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" /></p>

<p>Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.</p>

<p>“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.</p>

<p>The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.</p>

<p>“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”</p>

<p>The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.</p>

<p>The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.</p>


Sammut secures approval for debut Brisbane apartment development in Toowong

<p>Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.</p>

<p>Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.</p>

<p>The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.</p>

<p>“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.</p>

<p>“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.</p>

<p>“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”</p>

<p>The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.</p>

<p>“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”</p>

<p>From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.</p>

<p>“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”</p>

<p>The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.</p>

<p>“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.</p>

<p>Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.</p>

<p>“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.</p>

<p>“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”</p>

<p>The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.</p>

<p>“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.</p>

<p>Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.</p>

<p>&nbsp;</p>


Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

<p>Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.</p>

<p>The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.</p>

<p>It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.</p>

<p>With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.</p>

<p>“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.</p>

<p>“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" /></p>

<p>GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.</p>

<p>“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”</p>

<p>Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.</p>

<p>“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" /></p>

<p>&nbsp;</p>

<p>One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.</p>

<p>Green praised local policy settings.</p>

<p>“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”</p>

<p>One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.</p>

<p>“The way we will be able to achieve economies of scale is through size,” Green added.</p>


One Living enters Sydney's new apartment market with Northern Beaches site acquisition

<p>It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.</p>

<p>Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.</p>

<p>Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be</p>

<p data-end="683" data-start="511">"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.</p>

<p data-end="882" data-start="690">"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."</p>

<p data-end="882" data-start="690">[smartcode_project:default project_id=134646 project_image_fid=6109]</p>

<p>The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.</p>

<p>The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.</p>

<p>Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6110]</p>

<p>Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.</p>

<p>The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6116]</p>

<p data-end="247" data-is-last-node="" data-is-only-node="" data-start="0">While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.</p>

<p>WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.</p>

<p>With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.</p>

<p>[smartcode_project_cta:default project_id=134646]</p>


WM Residences fills gap in Mordialloc townhouse market

Home Construction

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<em>CoreLogic-RP Data</em> already appears set to report further dwelling price growth in October for Sydney, with prices once again up at a sprightly pace and moving another +$5,300 higher. </div>
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<div>There has been plenty of spirited debate in the media about what comes next for house prices in Australia.</div>
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<div>Macquarie has suggested that a housing market correction of -7.5 per cent could take place - beginning some time in 2016 before ending in 2017 - while Stockland's Mark Steinert disagrees and sees prices continuing to rise by +3% to +5% through next year.</div>
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<div>This pretty much tells you everything you need to know about short term property market predictions: one analyst thinks prices will rise, another thinks they'll fall!<br><br><strong><span style="text-decoration: underline;">Central Bank</span></strong><br><br>What about the role of the Reserve Bank and monetary policy settings?<br><br>Here's what central bank expert Sophia Rodrigues thinks:</div>
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<strong><span style="text-decoration: underline;">Long term focus</span></strong><br><br>Property owners would do well to retain a long term outlook rather than waste too much energy on short term dwelling price predictions, which are invariably a hit and miss affair at the best of times.</div>
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<div>As for the bubble/crash/correction calls which have continued over the past 15 years or so, Sydney median house prices now need to suffer an enormous correction - a gargantuan fall of $300,000 - even just to get back to where they were a couple of years ago in June 2013, let alone to actually correct from there. </div>
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<strong><span style="text-decoration: underline;">Market variances</span></strong><br><br>One thing that can be said with some certainty is that there will be significant variances across the Sydney property market.</div>
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<div>Outer suburban auction markets in Sydney have already turned in favour of buyers with clearance rates tanking fast in the west, south west, and north west sub-regions.<br><br>More stringent deposit requirements appear to be biting hard in the outer.<br><br>On the other hand clearance rates have remained relatively elevated for now in the eastern suburbs, the inner west, lower north shore, northern beaches, and the city &amp; inner south.<br><br>
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<div>Higher density markets will also almost certainly fare less happily than the metropolitan averages due to a looming stock overhang.</div>
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<span>In terms of other market drivers, Sydney presently has a vacancy rate of around 1.7% but with plenty of supply now in the pipeline, while the unemployment rate for Greater Sydney is only 5.1%.</span><br><br><span>Implied yields on cash rate futures contracts are pricing a 100% chance of an interest rate cut to just 1.75% by April 2016.</span><br><br><span>This morning's Building Activity data release will shed more light on dwelling commencements and completions around the states.</span><br><br><span>Expect to see both commencements and completions respectively at close to their highest ever levels.</span>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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pwargent-M4siyDbqQY

October housing prices: Pete Wargent

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<p><span>According to the minutes of the Monetary Policy Meeting of the Reserve Bank Board,</span><span style="line-height: 1.3em;"> economic growth in Australia's major trading partners had remained close to its long-run average, although growth had eased a little in the June quarter.</span></p>
<p>The forecast for growth in 2015 and 2016 had been revised down slightly, but growth was expected to remain around its long-run average. The increase in global industrial production had slowed over the past year or so, particularly in the Asian region, and this had contributed to lower commodity prices. Members noted that, as a result, the forecast for Australia's terms of trade had been revised down since that presented at the May meeting. Globally, core inflation had been stable in year-ended terms over recent months at rates below the targets of most central banks. Monetary conditions had remained very accommodative.</p>
<p>In China, GDP growth had picked up in the June quarter to be 7 per cent in year-ended terms. However, growth in a range of other indicators of activity had moderated in the first half of 2015. The outlook for Chinese steel demand remained subdued. This had contributed to lower forecasts for iron ore prices, although they were expected to remain above levels seen earlier in the year. Members reviewed evidence that showed conditions in the residential property markets in China had improved further in recent months, but noted that this had not translated into a pick-up in residential property investment outside the largest cities. They observed that downside risks stemming from the weak property market and constraints on local government funding for infrastructure investment had receded somewhat, partly in response to policy measures designed to address these areas. The recent volatility in Chinese equity markets was not expected to have a significant direct effect on consumption, given the relatively limited direct exposure of households to equities.</p>
<p>Economic activity in Japan appeared to have been recovering gradually, but had yet to surpass the levels seen before the increase in the consumption tax in 2014. Nevertheless, the labour market remained relatively tight, wage growth had been higher than a year earlier and the Bank of Japan expected inflation to pick up to the 2 per cent target by around mid 2016. Across the rest of east Asia, output growth looked to have been below average in the June quarter, owing to weakness in both domestic demand and exports. In India, growth in industrial production had strengthened over the past year and a range of indicators pointed to further growth in investment.</p>
<p>In the United States, the economy had returned to moderate growth in the June quarter, following temporary weakness earlier in the year. Business investment was around average as a share of nominal GDP and recent indicators were consistent with above-trend growth in consumption in the period ahead. Members observed that lower oil prices should have a net positive effect on output growth in the United States, while recognising that the oil and gas sector had been adversely affected by the lower prices for its output and that households had saved some of the gains from lower fuel prices. Employment growth had strengthened in the June quarter and the unemployment rate had continued to trend lower, while wage growth had been surprisingly low and underlying inflation remained below the Federal Reserve's target.</p>
<p>The gradual recovery in the euro area had continued, supported by very accommodative monetary policy and low oil prices. Output growth appeared to have picked up in the first half of 2015 and unemployment rates in most countries continued to record modest falls. Members noted that there was considerable variation in outcomes across the euro area; sentiment had been rising in a number of countries but had declined in others, most notably Greece. Core inflation had stabilised in year-ended terms, but remained well below the target of the European Central Bank (ECB). Developments in Greece appeared to date to have had little effect on economic conditions or confidence in the region as a whole.</p>
<h3>Domestic Economic Conditions</h3>
<p>The Board's discussion of the domestic economy commenced with the observation that GDP growth over the next couple of years was expected to be slightly lower than forecast in May, although the revision was minor relative to the usual range of uncertainty. A downward revision to population growth had contributed to lower forecast growth in consumption and non-mining business investment. The forecasts for growth in public demand and business investment had been revised lower in light of new data. In contrast, the recent exchange rate depreciation had led to an upward revision to net exports. Aggregate growth was expected to remain moderate for a time before strengthening. Members recognised that the period of significant structural change for the Australian economy associated with the winding down of the mining investment boom would continue for some time.</p>
<p>Members noted that labour market conditions had been a little better than expected over the previous few months, although spare capacity still remained. The unemployment rate had been around 6 per cent in June, after having stabilised over the course of the past year, in contrast to earlier expectations that the unemployment rate would continue to drift higher. This stabilisation was consistent with both stronger-than-expected demand for labour and lower-than-expected population growth. Members discussed the role that low wage growth had played in the pick-up in the employment-to-population ratio over the past year. They noted that the ABS measure of firms' job vacancies was consistent with the unemployment rate remaining around current levels or even declining a little further in the months ahead. Other forward-looking indicators suggested moderate growth in employment in the near term.</p>
<p>The unemployment rate was expected to be a little lower than previously forecast, despite the revised growth profile, partly because the unemployment rate had been lower than expected in the June quarter, and partly because the revision to forecast aggregate demand had been broadly matched by a revision to forecast growth of the economy's productive capacity as a result of lower population growth. However, members noted that there would always be uncertainty about the balance between the growth of aggregate demand and supply.</p>
<p>Members noted that the key forces operating on the domestic economy had remained much as they had been for some time. Consumption growth had picked up a little since 2013 and the most recent data on retail sales and liaison information were consistent with the momentum in consumption growth being sustained. In addition, measures of consumer sentiment had remained around average levels. The forecast for consumption growth implied a further gradual decline in the saving ratio in an environment of continued low wage growth. The uncertainties around future consumption and saving decisions of households were discussed.</p>
<p>Housing market conditions had remained strong, supported by low interest rates. House price inflation continued to be strongest in Sydney and Melbourne, while price growth for apartments in these cities had been less rapid, consistent with increased construction of higher-density housing. Outside the two largest cities, housing price growth remained weak and prices had declined in some segments. Forward-looking indicators, such as building approvals and loan approvals for new dwellings, pointed to further strength in dwelling investment in coming quarters.</p>
<p>Housing credit growth had been stable over recent months at around 7 per cent on an annualised basis, while growth in credit to investors in housing had been steady at a bit above 10 per cent. Members noted that growth in credit to investors had been revised up as a result of a reclassification of one bank's loans, but that aggregate growth in housing credit had been unaffected. Members also noted that the Australian Prudential Regulation Authority (APRA) had announced an increase in the amount of regulatory capital the major banks and Macquarie Bank were required to hold for their residential mortgage exposures, to take effect in 2016. A number of banks had also announced increases in the standard variable rate for investor-related housing loans for new and existing borrowers of at least 25 basis points, and there had also been a tightening in lending conditions in this sector.</p>
<p>Non-mining business investment was expected to remain subdued for some time. Although little new information had been received since the previous meeting, survey measures of business conditions, confidence and capacity utilisation had been more positive. Members observed that survey measures of business conditions had been strongest for household and business services, which were also the sectors that had experienced the strongest employment growth over recent years. In contrast, business conditions and employment had been weaker in those sectors of the economy mainly involved in goods production and distribution. Members also noted that, on average, household services used significantly lower amounts of capital per worker than goods-related sectors and were not as well represented in the capital expenditure survey, which by itself implied a weaker forecast profile for non-mining business investment for 2015/16. Members acknowledged that there remained considerable uncertainty around the timing and strength of the recovery in non-mining business investment.</p>
<p>Export volumes appeared to have declined in the June quarter following a strong increase in the previous quarter. The weakness in resource exports partly reflected some temporary factors affecting coal and liquefied natural gas production, but a moderation in demand from China may have contributed to lower iron ore exports. Net service exports had made a strong contribution to output growth over the past year, supported by the earlier depreciation of the exchange rate.</p>
<p>Inflation in the June quarter had been broadly as expected and domestic inflationary pressures had remained well contained. The consumer price index had increased by 0.8 per cent in the June quarter (in seasonally adjusted terms) and by 1.5 per cent over the year. The quarterly outcome reflected a rebound in the price of fuel, although it was still around 10 per cent lower than a year earlier. The various measures suggested that underlying inflation was around ½ per cent in the June quarter and 2¼ per cent over the year.</p>
<p>Members noted that spare capacity in the labour market and the low growth of labour costs were reflected in low inflation for market services, while inflation in the cost of new dwellings had remained strong, particularly in Sydney. Domestic cost pressures were expected to remain contained over the forecast period. The prices of tradable items (excluding volatile items and tobacco) had declined modestly in the June quarter and over the preceding year. However, members observed that the recent depreciation of the Australian dollar would place further upward pressure on the final prices of tradable items over the next few years, which had led to a slight upward revision to the inflation forecast. Underlying inflation was expected to be around 2½ per cent over the forecast period, consistent with the inflation target.</p>
<h3>Financial Markets</h3>
<p>The Board's discussion of financial markets commenced with a focus on the US Federal Reserve's monetary policy. While policy was unchanged at the July meeting of the Federal Open Market Committee, recent commentary from Fed officials continued to suggest that policy tightening could start at the September meeting, whereas financial markets had only fully priced in a rate increase by December. Members noted that when the Fed actually delivered its first interest rate increase in nine years, there was likely to be a sizeable market impact notwithstanding how well telegraphed the change in policy had been. It was likely that financial market volatility would increase and the US dollar could appreciate further, including against the Australian dollar and a number of other currencies in Asia.</p>
<p>The US dollar had appreciated over the past month, particularly against the currencies of commodity exporters, including those of Australia as well as Canada and New Zealand, where the central banks had eased policy in July. The Australian dollar had depreciated by 5 per cent against the US dollar and by 4 per cent on a trade-weighted basis over the past month, taking the exchange rate to around its lowest level since 2009 on both measures. The New Zealand dollar had also depreciated sharply against the US dollar to a level that was around 15 per cent lower than in late April.</p>
<p>In sharp contrast, the Chinese renmimbi had continued to be little changed against the US dollar. Chinese international reserves had declined by around 7 per cent in recent quarters to help achieve stability against the US dollar in the face of an outflow of capital. Chinese equity markets remained volatile, despite measures introduced by the Chinese Government in early July that had steadied the Chinese equity market for a time. Large falls in Chinese equity prices had occurred again more recently, resulting in cumulative falls from recent peaks being back around 30 per cent, although equity prices remained 70 per cent higher than a year earlier.</p>
<p>Equity prices in the advanced economies had generally been little changed over the past month. This included the euro area, where equity prices had been more volatile but had recovered their earlier falls when Greece had moved closer to an agreement with its creditors. Australian equity prices had risen since the end of June.</p>
<p>Turning to developments in Greece, members noted that the Greek Government and its official sector creditors had reached an agreement to start negotiations on a new three-year bailout program. Much of the program would be used to refinance existing obligations as they fell due, as well as to recapitalise the Greek banks. The Eurogroup had arranged a €7 billion bridging loan to enable Greece to meet its short-term commitments, including clearing its arrears at the International Monetary Fund and repaying a maturing bond held by the ECB. Greek banks had reopened on 20 July following the ECB's decision to increase its emergency lending assistance, but capital controls remained in place.</p>
<p>Government bond yields in the major economies had mostly fallen over the past month, mainly fluctuating alongside market concerns about Greece. Bond yields in Australia had largely tracked those in the United States over the past month. With state issuance of bonds projected at modest levels, spreads and yields on state government debt remained low.</p>
<p>Australian financial market pricing indicated no likelihood of an easing of monetary policy at the present meeting.</p>
<h3>Considerations for Monetary Policy</h3>
<p>Global economic conditions were expected to continue to be supported by the lower level of oil prices and accommodative global financial conditions. Global industrial production growth had eased further this year, particularly in the Asian region, and this had contributed to lower commodity prices. Growth of Australia's major trading partners was expected to be around its long-run average over the next two years. Members observed that the downside risks to the outlook for Chinese growth identified over the past year had receded somewhat, although the Government's policy response to the recent volatility in Chinese equity markets had clouded the medium-term economic outlook. Uncertainties arising from the expected start of monetary policy tightening in the United States had moved into sharper focus.</p>
<p>Domestically, economic activity had generally been more positive over recent months. Very low interest rates were continuing to support strong growth in dwelling investment and consumption, and the further depreciation of the Australian dollar was expected to impart stimulus to the economy through stronger net exports. Although surveys of business investment intentions and non-residential building approvals suggested that non-mining business investment would remain subdued for some time, members noted that non-mining business profits had increased, business conditions were clearly above average and businesses had been hiring more labour, partly encouraged by very low wage growth. As a result, employment had risen as a share of the working age population and the unemployment rate had been relatively stable, in contrast to earlier expectations of a further increase. The recent data on inflation were largely as expected.</p>
<p>Members noted that output growth was expected to pick up gradually from its below-average pace over the past year to exceed 3 per cent in 2017. The forecast for the unemployment rate had been revised lower since the previous forecasts had been presented. The further depreciation of the Australian dollar had resulted in a slight upward revision to the forecast for inflation. Nonetheless, inflation was expected to remain consistent with the target over the forecast period given that domestic cost pressures were likely to remain well contained.</p>
<p>Credit was growing moderately overall, with growth in lending to the housing market broadly steady over recent months. House prices continued to rise strongly in Sydney and Melbourne, but trends had been more varied in a number of other cities. Members observed that recent responses by banks to the suite of measures implemented by APRA in respect of lending to investors in housing, including a tightening in lending conditions, would be expected to reduce the risks relating to the housing market, although it was too early to gauge their full effects.</p>
<p>Members noted that an accommodative monetary policy setting remained appropriate given the forecasts, while observing that the Australian economy had been adjusting to the shift in activity in the resources sector from the investment to the production phase. This shift had been accompanied by significant declines in key commodity prices and was being assisted by the depreciation of the exchange rate over recent months.</p>
<p>In light of these considerations, the Board judged that it was appropriate to leave the cash rate unchanged. New information about economic and financial conditions would continue to inform the Board's assessment of the outlook and determine whether the current stance of policy remained appropriate to foster sustainable growth and inflation consistent with target. </p>
<h3>The Decision</h3>
<p>The Board decided to leave the cash rate unchanged at 2.0 per cent.</p>
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