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.

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;

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;

“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;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

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;

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;

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.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

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;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

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.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“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;

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.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

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;

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;

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”.

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;

Joel Robinson

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

<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.

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.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“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.”

<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" />

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.

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.

“We are DA approved now which is very exciting,” Sammut said.

“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.”

<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" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“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.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“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.”

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.

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.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

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.

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.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“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.”

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.

“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.”

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.

“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.”

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.

“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.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“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.

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.

&nbsp;

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

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.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

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.

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.

“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.

“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.”

<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" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“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.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<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" />

&nbsp;

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.

Green praised local policy settings.

“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.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

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

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.

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.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"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.

"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."

[smartcode_project:default project_id=134646 project_image_fid=6109]

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.

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.

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.

[smartcode_project:default project_id=134646 project_image_fid=6110]

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.

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.

[smartcode_project:default project_id=134646 project_image_fid=6116]

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.

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.

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.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

Interest Rates

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GUEST OBSERVER
As widely expected, the RBA left the official cash rate unchanged at 1.50 percent at its July meeting. The Governor’s decision statement was also largely the same as in June with no substantive changes to the key closing paragraphs and other tweaks mostly minor and even-handed in terms of policy implications.
Indeed, there are only really four changes between the June and July decisions statements:
On commodity prices, last month’s observation that “prices of iron ore and coal have declined over recent months as expected” is dropped with the July statement simply noting the “rise in commodity prices over the past year has boosted Australia’s national income”;
On the global inflation backdrop, the Governor has added a line noting that “wage growth remains subdued in most countries, as does core inflation”;
On growth domestically, the statement seems to take a less positive view: the slowdown in the March quarter which was previously viewed as “reflecting … quarter to quarter variation” now described as only “partly reflecting temporary factors”; consumption growth viewed as subdued and reflecting slow growth in real wages and high household debt; and the line reaffirming the Bank’s positive medium term outlook for growth to increase gradually to “a little above 3 per cent” was dropped (although this may simply reflect the fact that the Bank will be making a full reassessment of its forecasts leading into the August Statement on Monetary Policy).
On labour market conditions, the Governor’s statement removes last month’s observation that “growth in hours worked remains weak”.
The closing three paragraphs – on financial conditions (“outlook … supported by the low level of interest rates”; “an appreciating exchange rate would complicate” the transition following the mining investment boom”); housing markets (varying “considerably around the country”; “additional supply of apartments ... scheduled to come on stream”; “recent supervisory measures should help address risks”); and the policy view (no guidance) – are almost completely unchanged from June.
Notably absent from the Governor’s decision statement is any hawkishness around the medium term policy outlook. With several other developed economy central banks showing a surprisingly hawkish turn of rhetoric in recent weeks the market seemed to toy with the idea the RBA might say something similar – particularly given recent comments from an ex RBA Board member that a significant increase in the cash rate might be required over the medium term to return rates to ‘neutral’.
Also notable in our view is the absence of commentary around labour market slack – aside from solid gains in jobs and hours worked, the May labour force survey also showed a surprise fall in the unemployment rate to 5.5% and in wider measures of labour market slack that include underemployed workers. That suggests the Bank may be wary of making too much of these latest observations, particularly given the more uncertain link to wages growth.
Conclusion
Overall the July decision and Governor’s statement gives little additional information with only incremental changes in commentary. The minutes may provide some additional insight, particularly if medium term policy normalisation issues were discussed. However, we suspect the Bank will continue to hold a pointedly neutral stance on policy guidance.
The August meeting could see a more material review of its commentary, with a key update on CPI inflation due July 26 and the Bank reassessing its economic forecasts ahead of the August Statement on Monetary Policy (due out August 4).
However, even with some potential downgrade to 2018 growth forecasts (Westpac continues to expect growth of 2.5%, well below the Bank’s 3.25% mid-point forecast) none of this is likely to present enough of a case to establish an explicit policy bias. All up, we continue to see no reason to change our current view that the official cash rate will remain on hold throughout 2017 and 2018.
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/">Westpac</a>.
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Matthew_Hassan-HHWHptmrw4

Only minor changes to RBA Governor’s decision statement on housing: Matthew Hassan

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GUEST OBSERVER
As expected the RBA left the official cash rate on hold at 1.5 percent for the eleventh month in a row.
In fact, apart from acknowledging the soft March quarter GDP outcome the RBA made only minor changes to its post meeting statement: it continues to see a broad based pick up in global growth, expects Australian growth and inflation to gradually pick up while acknowledging the softness in consumer spending and sees signs that conditions in the Sydney and Melbourne property markets are starting to ease and notes that supervisory measures should help address the risks around household debt.
More importantly, the RBA retained a somewhat neutral bias in terms of the outlook for monetary policy. Contrary to the expectations of some, there was no attempt to adopt a hawkish tilt in line with recent comments from the ECB, Bank of England and Bank of Canada.
Not following other central banks down a premature hawkish tilt was a good move because it saw the $A dip around 1% after the RBA announcement. Quite clearly the RBA remains concerned that “an appreciating exchange rate would complicate” the adjustment in the economy post the mining investment boom and adopting a hawkish tilt now would only have added to this concern. 
Our view remains that the RBA will be on hold for the next year at least, with risks around the consumer and a housing slowdown preventing hikes but a fading in the drag from the mining investment slump and solid employment growth heading off cuts. Around our base case, for the next year we still see more risk of a cut than a hike but by late 2018 and 2019 the risks are likely to swing towards a hike.
<a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
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soliver-smf6LQXgW9

RBA on hold - no 'me too' hawkishness

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GUEST OBSERVER
The RBA held its cash rate steady at 1.50 percent, which was no surprise. However, for some, the neutral tone of the post-meeting statement, which was as we had expected, might have been a bit disappointing.
Unlike a number of other central banks that have turned hawkish in recent weeks (including Bank of Canada and Norges Bank), the RBA maintained a clear neutral stance.
The post-meeting statement was similar to last month and the RBA felt no need to give any forward guidance. This is classic RBA style. Despite the improving labour market numbers, the RBA stuck by its previous phrasing of 'indicators of the labour market remain mixed' and that wages growth remains low and 'that this is likely to continue for a while yet'. As a result, the AUD fell and short end pricing moved a few basis points lower. Our central view is that the RBA will lift its cash rate in Q1 2018.
Facts
- The RBA kept its cash rate steady at 1.50% as expected by all 29 economists in the Bloomberg survey. Just prior to the announcement the market was pricing an 8% chance of a 25bp hike by December 2017 and was fully priced for a 25bp cash rate rise by Q4 2018.
Implications
Observers that were looking for a hawkish tilt from the RBA today will have been disappointed. The statement provided no new forward guidance or hints that the RBA may consider lifting rates any time soon. This is typical RBA style. The RBA tends to provide less active forward guidance than many other central banks. Plus, although we think the RBA should now be completely re- affirmed that it will not need to cut further, given an improving labour market and business conditions, a hike is still likely to be some time away.
The statement was largely unchanged from last month, with some minor adjustments. In particular, it noted that GDP had slowed in Q1, but that this was 'as expected' and partly reflected 'temporary factors'. The statement also dropped the reference to growth being expected to lift to 'a little above 3%' in the next couple of years, but still noted that the 'Australian economy is expected to gradually strengthen'.
The RBA continued to note that the 'indicators of the labour market remain mixed' and that 'wages growth remains low ... and this is expected to continue for a while yet'. The reference to a still mixed labour market almost certainly refers to weak wages growth, rather their reading of the recent employment figures.
So, what is needed to get the RBA to think about lifting its cash rate? In our view, the answer is a pick-up in wages growth. Once there are signs that wages growth is past its trough, we expect that it won't be long before the RBA is lifting its cash rate. 
Indeed, we see the RBA as likely to be quite keen to lift its cash rate earlier, rather than later, because of its concerns about the housing market. Today's statement continued to note that 'housing prices have been rising briskly in some markets'.
It is clear that, although the RBA has deemed that they have needed a very low, 1.50% cash rate, to get the economy to rebalance at the end of the mining boom, low rates are also causing problems. Low mortgage rate have boosted housing prices and household debt in the major cities. So, although the low cash rate may be the right setting for the inflation outlook, it has been too low for the Sydney and Melbourne housing markets.
The solution to this problem has been to tighten up the prudential settings. That way, although risk is still building up on the household balance sheet, tighter lending standards are helping to ensure minimal misallocation of lending.
But this is a second best solution. A first best solution is to set the cash rate at an appropriate level for the overall economy and for the housing market. This is why, in our view, the RBA will be keen to start lifting its cash rate as soon as it deems that the macro-economy will allow it. And what does it need to see? A lift in wages growth.
We see wages growth picking up in the second half of 2017. As a result, our central view is that the RBA will begin to lift its cash rate in Q1 2018. 
Paul Bloxham is chief economist (ANZ) for HSBC. Daniel Smith is economist. They can be contacted <a href="https://www.about.hsbc.com.au/hsbc-in-australia/management-team" target="_blank">here</a>.
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jchancellor-FAypfDUnLy

RBA patient, but the next move is set to be up

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GUEST OBSERVER
The Reserve Bank has maintained its “neutral stance” – meaning that rate hikes are as likely as rate cuts in the period ahead.
In practice though no change in rates is likely.
What does it all mean?
The Reserve Bank Board is comfortably on the interest rate sidelines. Much would need to go wrong at home and/or abroad for the Reserve Bank to cut rates again. At the same time, rate hikes are off the agenda. In essence policymakers are giving households and business more time to work with record low interest rates, and forget about rate movement and get on with spending, hiring and investing.
There are signs that the economy is lifting from its early 2017 malaise. Retail activity is lifting, unemployment is at 4-year lows, job vacancies are at 61⁄2-year highs and importantly record home building and a large pipeline of infrastructure spending will support the economy over 2017.
The key is how business investment plans evolve over the coming year. And most of the indicators suggest that the future outlook is encouraging. Corporate Australia is being supported by strong business conditions, upbeat confidence, high capacity use, and healthy profits – all conducive to a lift in hiring and investment over the coming year.  
No surprises there are still a couple of ‘hot button’ issues to monitor at present: home prices; household debt levels, subdued wage growth and the Aussie dollar. And while policymakers remain upbeat about the medium term prospects for the economy there is a clear understanding that “consumption growth remains subdued” largely due to “slow growth in real wages and high levels of household debt”. 
Importantly the RBA reiterated its view that while the “growth in housing debt has outpaced the slow growth in household incomes. The recent supervisory measures should help address the risks associated with high and rising levels of household indebtedness”.
Perspectives on interest rates 
The Reserve Bank has left the cash rate at 1.50 per cent. The previous move was a rate cut in August 2016 (25 basis points). There have now been 12 rate cuts since November 2011, with the Reserve Bank cutting rates from 4.75 per cent to 1.50 per cent. 
The Reserve Bank had previously lifted rates seven times from October 2009 to November 2010 – a total of 1.75 percentage points, from 3.00 per cent to 4.75 per cent. 
What are the implications of today’s decision? 
<a href="https://www.propertyobserver.com.au/images/2017/07/05/Screen%20Shot%202017-07-05%20at%208.07.08%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/05/Screen%20Shot%202017-07-05%20at%208.07.08%20AM.png" alt="">
 
There is no urgency for rates to move in any direction. On the positive side of the ledger are record corporate profits; strong business conditions; a lift in infrastructure spending; firm home building; and the prospect of further job growth.
On the other side of the ledger, wage and price growth is low; consumer spending is fluky; home price growth is slowing; and the Aussie dollar remains firm.
The Reserve Bank is expected to maintain its neutral policy stance for an extended period.We expect the Reserve Bank to stay on the interest rate sidelines for the 2017 year.
Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/">CommSec</a> 
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Reserve Bank alert but not alarmed

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Statement by Philip Lowe, Governor: Monetary Policy Decision
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At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.
The broad-based pick-up in the global economy is continuing. Labour markets have tightened further in many countries and forecasts for global growth have been revised up since last year. Above-trend growth is expected in a number of advanced economies, although uncertainties remain. In China, growth is being supported by increased spending on infrastructure and property construction, with the high level of debt continuing to present a medium-term risk. The rise in commodity prices over the past year has boosted Australia's national income.
Headline inflation rates, having moved higher over the past year, have declined recently in response to lower oil prices. Wage growth remains subdued in most countries, as does core inflation. Further increases in US interest rates are expected and there is no longer an expectation of additional monetary easing in other major economies. Financial markets have been functioning effectively and volatility has been low.
As expected, GDP growth slowed in the March quarter, partly reflecting temporary factors. The Australian economy is expected to strengthen gradually, with the transition to lower levels of mining investment following the mining investment boom almost complete. Business conditions have improved and capacity utilisation has increased. Business investment has picked up in those parts of the country not directly affected by the decline in mining investment. At the same time, consumption growth remains subdued, reflecting slow growth in real wages and high levels of household debt.
Indicators of the labour market remain mixed. Employment growth has been stronger over recent months. The various forward-looking indicators point to continued growth in employment over the period ahead. Wage growth remains low, however, and this is likely to continue for a while yet. Inflation is expected to increase gradually as the economy strengthens.
The outlook continues to be supported by the low level of interest rates. The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment.
Conditions in the housing market vary considerably around the country. Housing prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease. In some other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases are the slowest for two decades. Growth in housing debt has outpaced the slow growth in household incomes. The recent supervisory measures should help address the risks associated with high and rising levels of household indebtedness. Lenders have also announced increases in mortgage rates for investor and interest-only loans.
Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
To go to the RBA website <a href="https://www.rba.gov.au/media-releases/2017/mr-17-13" target="_blank">click here</a>.
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Easing and declining property prices noted: RBA Governor Philip Lowe's July 2017 statement

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The RBA cash rate decision came out today with the rate unchanged at 1.5 percent.
The bank's last move saw it go to 1.5 percent at the August 2016 meeting.
It noted rising prices were easing and that some markets had declining prices.
Laing+Simmons Managing Director Leanne Pilkington said the RBA’s decision to leave rates on hold was the right one.
"A steady interest rate environment will continue to be crucial as the country – and mortgage holders – navigate various economic and political uncertainties.
“In the past week we’ve read reports that rates could move higher sooner rather than later, and that compounding rises over a relatively short period may materialise. This could jeopardise the safe landing that the Treasurer has prioritised,” Ms Pilkington says.
“Our forecast remains that there will be no further reduction to the Official Cash Rate (OCR) in 2017,” said HIA principal economist, Tim Reardon. 
“Comments issued by the Reserve Bank Governor today highlight that housing prices have been rising briskly in some markets and declining in others. 
“These patchy outcomes are consistent with the easing of conditions in the housing market. 
“The pressures on the RBA to respond to developments in the housing market have eased as the major mortgage lenders moved to increase interest rates on a number of riskier mortgage lending products. 
“Furthermore, the latest dwelling price figures showing that the market for established properties in the east coast capital cities may be cooling is likely to provide additional comfort," he said.
CoreLogic head of research Tim Lawless said it came as no surprise that the RBA has held the cash rate at 1.5 percent for its tenth consecutive meeting today.
"The decision comes on the back of upbeat labour market reports, with unemployment falling to 5.5 percent since the last meeting and a trend towards more job advertisements," he said.  
"While the jobs market appears to be strengthening, other factors remain subdued, with wages growth tracking along record lows at just 1.9 percent per annum and core inflation below the target range of 2-3 percent.
"Furthermore, a steady cash rate from the RBA against increasingly hawkish sentiments in Europe and the US stand to put downward pressure on the Australian dollar. This would serve as a welcome boost to Australian exports.
"Importantly, the housing market is showing signs of slowing, with CoreLogic’s home value indices reporting a 0.8 percent rise in dwelling values over the June quarter; the lowest quarterly growth rate since December 2015. 
"A controlled slowdown in housing market conditions would provide some comfort to policy makers that new macroprudential constraints are working to cool the high rate of capital gains in Sydney and Melbourne. 
"While the cash rate has remained on hold, the same can’t be said for mortgage rates, which have been edging higher since September last year. 
"Arguably, higher mortgage rates have done much of the heavy lifting in slowing down home value appreciation and cooling investment demand.  
"There is an expectation that mortgage rates will continue to rise, despite a steady cash rate setting, as lenders adjust their credit policies to accommodate the latest round of APRA mandates. 
"If this is the case, we expect investment activity will continue to moderate across the housing market, which could dampen housing market conditions further. 
"Slower housing market conditions and improvements in employment markets are certainly positive outcomes, however if wages growth and inflation remain subdued we can expect the cash rate to remain on hold over the short term."
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jonathanchancellor-7SQnKwU6yx

RBA holds again in July 

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Analysis by RateCity.com.au tips the Reserve Bank to leave the cash rate on hold at 1.50 per cent when it meets this afternoon.
RateCity.com.au’s analysis of over 20 domestic and international economic indicators found a rate change this month is unlikely. 
Paul Marshall, RateCity.com.au CEO said the RBA will continue their “wait and see” approach. 
“With inflation running at 2.1 percent, within the RBA’s target band of 2-3 percent and unemployment at 5.5 percent, our economy is stable," he said.
“We believe the Reserve Bank still needs more time to monitor the impact of APRA’s changes to lending requirements before making a decision to move on rates.
“APRA so far has done some of the Reserve’s heavy lifting. Over the last few months Australia’s big four banks have increased rates for investors paying interest-only. 
“The gap between those doing the right and paying down their principal and interest and those paying interest-only is now significant.
“Time will tell whether the rate hikes will be enough to deter property investors.  The latest market snapshot from Corelogic revealed prices in Sydney have rebounded by 2.2 per cent in June after falling in May. 
“However, even if the Reserve keeps rates on hold this month, the celebration could be short lived. As economies around the world continue to strengthen, we are likely to start seeing interest rates move in an upward direction. The days of cheap money could be numbered”, Mr Marshall said.
<a href="https://www.propertyobserver.com.au/images/2017/07/03/Screen%20Shot%202017-07-04%20at%208.01.12%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/03/Screen%20Shot%202017-07-04%20at%208.01.12%20AM.png" alt="">
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RBA predicted to leave rates on hold

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Finder.com.au’s RBA cash rate survey shows all 34 experts and economists (100%) are expecting the central bank to leave the cash rate at 1.5% for July 2017.
The vast majority of <a href="https://www.finder.com.au/rba-cash-rate" target="_blank">experts and economists surveyed</a> (88%, 28) believe the next cash rate move will be in a positive direction.
Only four experts (13%) are expecting a rate cut. Predictions for when a rise may occur, however, are spread across the board.
Interestingly, eight rate hikes over two years, as recently predicted by ex-RBA board member John Edwards, looks unlikely according to the panellists. Only three respondents (Nicholas Gruen of Lateral Economics, Saul Eslake and Steven Milch of Suncorp Group) are predicting two or more rate rises in 2018.
Graham Cooke, Insights Manager at finder.com.au, says mortgage holders should brace for rate increases.
“It’s no secret that rates will start rising soon, it’s just a matter of when.
“To minimise rate shock, think about fixing a portion of your interest rate or even switching to a provider that offers more competitive interest,” he says.
With falling clearance rates in Sydney, panellists were asked if this was a sign that property prices may fall. In response, a third of respondents said prices will fall by 5% by the end of the year, a third said prices will not fall, and a further third said there may be some cooling, but no major changes.
“Low auction clearance rates may signal less demand which could see house prices dip, so we may see a cooling period in some capital city markets, but it won’t be dramatic,” he says.   According to Census data released this week, 22% of Sydney households are spending more than a third of their monthly income on rent. When asked if rent and mortgage stress were increasing in Australia’s capital cities, 58% of respondents agreed with this statement, saying those in Sydney and Melbourne most likely to bear the brunt. Meanwhile, 42% disagreed with this view.    When asked about the NSW Government’s plan to remove stamp duty for first time buyers on homes valued under $650,000 (with discounts for homes up to $800,000), a slight majority (53%, 9) thought this was a good policy, while the remaining 47% (8) did not.   While there’s been criticism of the $650,000 limit being too low, most of the panellists (9, 53%) believe it shouldn’t be any higher. Interestingly, two economists, (Savanth Sebastian of CommSec, and Nicholas Gruen of Lateral Economics) think the limit should be lifted to $1,000,000.   “The initiative to remove the duty concession for some purchases will give first homebuyers a reprieve, but with house prices in some capital cities nearing $1 million, the $650,000 cap may not be generous enough,” he says.   “Removing stamp duty for some purchases will remove a barrier of entry for first home buyers which could stimulate demand and push up property prices,” Mr Cooke says.   Here’s what our experts had to say:   Jordan Eliseo, ABC Bullion (Hold): "The RBA will have been fairly encouraged by the recent run of economic data, which will (temporarily in my view) give them confidence that they have the appropriate cash rate in place for now."   Tim Nelson, AGL Energy (Hold): "No material change in conditions from previous month. Prudential regulation is doing the 'heavy lifting' in relation to residential property market pricing. "   Shane Oliver, AMP Capital (Hold): "While downside risks to the growth and inflation outlook have increased, the RBA remains upbeat that growth will pick up particularly after recent solid jobs data. It probably also remains wary as to whether the Sydney and Melbourne property markets have really started to cool or not."   Alison Booth, Australian National University (Hold): "Insufficient change to justify moving rates either up or down."   Darryl Gobbett, Baillieu Holst (Hold): "Future potential risks of increased household leverage from lower rates still out-way any expected benefits to growth of another cut."   Dr Kishti Sen, BIS Oxford Economics (Hold): "I don't think the interest rates will fall further because of: 1. The Reserve Bank is keen to limit the amplitude of the residential cycle amid concerns about household debt and financial stability risks. Hence, it would not want to reignite the housing boom. 2. A lower cash rate will reduce the dollar but it will have little effect on investment. Meanwhile, the Federal Reserve is on a tightening phase and rate rises in the United States will narrow the interest rate differential with Australia and put downward pressure on the A$. 3. The Reserve Bank is also concerned that the more they reduce rates now, the sooner they will have to raise interest rates. I therefore expect the cash rate to stay at 1.5% over calendar year 2017 and 2018."   Richard Robinson, BIS Oxford Economics (Hold): "Inflation is low, but the RBA doesn't want to cut rates as it fears pumping up the already overheated residential property sector"   Paul Dales, Capital Economics (Hold): "The RBA will almost certainly keep rates on hold at 1.50% at this meeting. And while the recent improvement in the labour market has quashed talk of further rate cuts, weak underlying inflation will prevent the RBA from hiking rates until 2019. "   Michael Blythe, CBA (Hold): "Economy is not in need of any extra interest rate assistance" Savanth Sebastian, CommSec (Hold): "Reserve Bank looks comfortable on the interest rate sidelines. Policymakers will keep a close eye on the property market."   Dr Andrew Wilson, Domain Group (Hold): "Better recent economic news supports clear recent steady bias by the Bank"   Saul Eslake, Economist (Hold): "Data releases and other evidence since the last meeting will not have prompted any material change in the RBA's assessment of the economic outlook or the appropriate stance for monetary policy"   Mark Brimble, Griffith University  (Hold): " Bias remains to the downside with the economy struggling to generate momentum.  With banks (and apra) tightening credit the markets and sentiment are softening. Further support is required, but the rba is likely to not be willing to provide this as this stage"   Paul Bloxham, HSBC (Hold): "Underlying inflation is still below its 2-3% target."   Michael Witts, ING Bank (Hold): "The slowdown in the housing  market is occurring via the adjustment to rates for investors and interest only loans. This enables the RBA to maintain the cash rate at 1.5% for the benefit of the broader economy."   Glen Hawke, Karis Communications (Hold): "The current economic data is inconclusive of a need for a shift."   Brendan Rynne, KPMG Economics (Hold): "Continuation of excess capacity in the labour market, and the maintenance of inflation below RBA target band."   Leanne Pilkington, Laing+Simmons (Hold): "There appears to be a growing consensus among economists that the next rate move will be up, especially if some of the RBA’s forecasts around economic growth come to fruition. However, we believe that current economic, employment, political and household debt scenarios support a status quo in fiscal policy in the near term."   Nicholas Gruen, Lateral Economics (Hold): "Because they've not signalled anything else and I think they won't have the confidence to raise the rate, even if they'd like to."   Matthew Tiller, LJ Hooker (Hold): "Little discernible change in the domestic economic environment over the past month."   John Caelli, ME (Hold): "The RBA won’t cut rates because it remains concerned about fuelling further increases in house prices and household debt."   Michael Yardney, Metropole Property Strategists (Hold): "Our property markets have slowed down over the last few months taking pressure of the RBA to raise interest rates. On the other hand the RBA can't afford to drop rates to bolster our bumbling economy and further fuel our property markets. So rates will remain on hold."   Mark Crosby, Monash University (Hold): "While globally rate movements are beginning the long path back to normalisation in some key economies, the strong exchange rate and economic fragility locally point to holding rather than raising rates at this meeting."   Jessica Darnbrough, Mortgage Choice (Hold): "There is no urgent reason for the Reserve Bank of Australia to adjust the current cash rate setting. All of the latest economic data is looking fairly positive at the moment, providing the RBA with no incentive to adjust their long-standing plan of attack."   Alan Oster, NAB (Hold): "Too early to see what is happening re the labour market v house prices."   Jonathan Chancellor, Property Observer (Hold): "There is no risk in holding this July."   Matthew Peter, QIC (Hold): "The holding pattern will continue, despite a weak growth and inflation outlook, until the housing market is clearly in retreat. "   Noel Whittaker, QUT (Hold): "There is no reason to lower – and no reason to raise."   Janu Chan, St.George Banking Group (Hold): "The RBA will be encouraged by the improvement in the labour market, but will still be of the view that there remains spare capacity in the economy. That would prevent any thought of raising rates. However, ongoing concerns regarding risks from the housing market and high household debt is preventing any cuts to rates. "   Steven Milch, Suncorp Group (Hold): "Labour market strengthening balances against sub target inflation.  Little case to ease yet too early to tighten."   Brian Parker, Sunsuper (Hold): "RBA has made it pretty clear that they'd be very reluctant to cut rates again, and their view probably hasn't changed over the month."
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j.ballantyne1990-6AQqhLzZaK

Experts tip July RBA rates to hold

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The Reserve Bank of Australia has kept its cash rate at a record low of 1.5% since last August 2016, but tighter regulatory measures, especially around the investment market, have forced lenders to go for out of cycle rates and rein in investor lending, says a loan comparison website.
RBA’s recent bulletin noted that in the aftermath of the GFC, a focus on more financial resilience has meant that Australian banks have had to increase capital requirements by strengthening their capital position, primarily through an increase in common equity. 
This has impacted banks’ return on equity, encouraging them to tweak their lending activities, Canstar said.
Banks have also repriced their loans, mostly housing loans, in response to higher capital requirements and also to rein-in interest-only lending because of the risks from high household debt, which the RBA has stated on quite a few occasions this year. 
Canstar came out with a monthly summary of mortgage rates split according to interest-only and principal and interest only loans. 
It reported that the average rate for the basic variable interest-only loan was 4.46% and the product had seen six increases in the recent past and no cuts.
All the assumption in the following charts have been on a loan amount of $350,000 and a loan-to-value ratio of 80%.
<a href="https://www.propertyobserver.com.au/images/2017/07/03/CanInterest1.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/03/CanInterest1.png" alt="">
The figures reveal the crackdown on interest-only loans for investment properties is even higher, with the average for the basic variate rate loan sitting at 4.87%, 41 basis points higher than only the interest-only loan on an owner occupied property. 
Recently, all the <a href="https://www.propertyobserver.com.au/Westpac%20has%20increased%20interest%20only%20rates%20for%20variable%20home%20loans%20for%20owner%20occupiers%20and%20investors." target="_blank">major banks raised their rates</a> for interest-only loans.
<a href="https://www.propertyobserver.com.au/images/2017/07/03/CanInvestorInterest2.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/03/CanInvestorInterest2.png" alt=""> 
Meanwhile, banks and lenders have been more rewarding of principal-and-interest only loans, with the average as at July 3 being 4.26%, according to Canstar.
Also, there have been three rate cuts and five increases compared to none for the interest-only segment.
<a href="https://www.propertyobserver.com.au/images/2017/07/03/CanPrincipalInt3.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/03/CanPrincipalInt3.png" alt="">
<a href="https://www.propertyobserver.com.au/images/2017/07/03/CanInvestPrinci4.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/03/CanInvestPrinci4.png" alt="">
 
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Rising gap between interest-only and interest and principal home loans: Canstar

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Interest rate hikes aimed at curbing Australia's property boom and surging household debt would likely be "very costly" to the broader economy, a leading US central banker has warned.
John Williams, president of the Federal Reserve Bank of San Francisco, says Australian house prices are "flashing red".
But he cautioned against trying to fix the problem by hiking rates.
He said they would have "very unfavourable trade-offs" - and especially high costs in terms of unemployment and inflation".
Dr Williams suggested the lack of a housing downturn, or a recession since 1991, may be making many Australians too complacent about the risks that have built up.
"A lot of our attitudes towards investment, economic phenomena, like inflation and things like that really are shaped by our lifetimes.
"If people think there's no risk, they'll take a lot of risk," he told The Australian Financial Review
"If you raise interest rates to try to maybe slow the house price build-up or debt build-up, that harms the economy, makes it harder to achieve your central bank goals of whatever your inflation target is."
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