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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The Commonwealth Bank is the latest lender to lift interest rates for homebuyers looking to fix their home loan.
The country’s biggest lender lifted the rate of its popular 3-year fixed rate by 0.20 percentage points to 4.24 percent on Friday.
It also lifted its longer-term 5-year fixed rate by 0.60 percentage points to 4.74 percent.
CBA was the second major bank in a fortnight to lift fixed rates following Westpac.
A RateCity.com.au analysis shows that a further 20 lenders have lifted rates 268 fixed products since November 1.  
Peter Arnold, data insights director at RateCity.com.au said fixed rates are based on market expectations of future rates and "are the best indicator that we’ve got that a variable rate hike on the way.".
“Previously, banks were betting on lower rates in the future but we’re seeing those expectations change by the day.
"Shorter-term fixed rates are still sitting below variable rates, which tells us rates will stay steady when the RBA meets on Tuesday.  
“But longer-term fixed rates, such as 5 years fixed, are sitting higher than variable rates and rising by the biggest margins, which tells us that they don’t expect low rates will last forever.”
But he added it’s always a gamble when deciding whether or not to fix your home loan.
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"Our research shows that over the past 20 years, people who stuck with variable rates came out ahead 63 percent of the time,” he said.
“People often fix in panic, for instance in the lead up to the GFC fixing became progressively more popular as rates increased to the point where one quarter of new loans were fixed at over 9 percent in March 2008.
“There are now 240, 3-year fixed rates under 4 per cent and you can even lock in a rate as low as 3.8 percent until Christmas 2021.
"So if you’re someone who prefers the certainty of knowing your repayments, then now might not be the worst time to consider fixing.”
According to Canstar, in monthly repayment terms, CBA’s rate increase will mean a rise of more than $355 for a borrower with a 30-year fixed loan paying the new rate of 4.74 percent.
It was a time of growing uncertainty in the lending market, reflected last week when Australian Broker reported on the growing gap between the most expensive and the most affordable loan rates for residential property has widened to nearly 240 basis points.
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jchancellor-FAypfDUnLy

Commonwealth Bank lifts fixed rates

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The Australian Bureau of Statistics has released the annual State Accounts. These provide annual estimates of output growth by state, Gross State Product. Quarterly estimates are not available. 
The accounts for the 2015/16 financial year (July to June) confirm that the growth transition is continuing. The mining states of the north-west, Qld and WA, have slowed as construction work on major projects is progressively completed. The southern states have generally improved, benefitting from lower interest rates and a lower dollar.
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The two most populous states, NSW and Victoria, topped the growth table in 2015/16, with both expanding at an above trend pace. NSW grew by 3.5%, strengthening from 2.6%, a result closely matched by Victoria, 3.3%, up from 2.6%. 
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In South Australia, output growth of 1.9% is a little below trend, while in Tasmania growth was a modest 1.3%. 
Western Australia slowed further, moderating to 1.9%, down from 3.6% and well below the 5.8% result of two years earlier. Queensland managed a partial rebound, expanding by 2.0%, up from 1.2% in 2014/15 but still down on the 3.3% outcome for 2013/14. 
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NSW 
The NSW economy grew by 3.5% in 2015/16, up from 2.6%, the strongest result in 16 years, since 1999/00 - just prior to the Sydney Olympics. The outcome was well above the state's long-run average of 2.5% and exceeded the state government's forecast of 2.75%.
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Construction, real estate and financing together added 1.5ppts to growth in 2015/16, up from 0.9ppts the year prior. Positive spill-over effects contributed to stronger performances across a number of industries, including: public services (with state government revenue boosted by the housing boom); transport; wholesale; manufacturing; and communications. Service exports, benefitting from the sharply lower dollar, were also a growth engine, increasing by 12.5% in 2015/16 and adding 0.6ppts to growth, the strongest result since 1992/93 (excluding the Olympics year of 2000/01).
Victoria 
The Victorian economy expanding by 3.3%, up from 2.6%, the fastest pace since 2007/08, before the GFC. That is above trend of 2.8% and exceeded the state government forecast of 3.0%.
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Construction, real estate and finance together added 1.5ppts to growth in the year, up from 0.9ppts. A strengthening of conditions was evident across: retail; communications; transport; wholesale; and public services. Agriculture and manufacturing were areas of softness, both subtracting 0.2ppts. Service exports, having surged 15.4% in 2014/15, advanced by 4.0%. 
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Western Australia 
In the West, conditions continue to moderate. Output grew by 1.9% in the past year, slowing from 3.6%. That is below trend, 4.3%, but above the state government forecast of 1.0%. 
Construction subtracted 0.4ppts from growth, following a drag of 0.3ppts the year prior, as work on major gas projects is progressively completed. Negative spill-over effects contributed to contractions across a number of industries: transport; wholesale; professional services; admin services; and manufacturing. Mining added 1.9ppts to growth, although that was down from 2.5ppts the year prior and 2.9ppts in 2013/14. 
Queensland 
The Qld economy managed a partial rebound in 2015/16, with output growth recovering to 2.0%, up from 1.0% in 2014/15. The result was still below par, of 4.1%, and fell short of the state government forecast of 3.5%. 
Construction fell at a slower rate with much of the work on gas projects already completed, subtracting 0.4ppts from growth after a chunky 1.7ppts drag in 2014/15. Manufacturing and professional services were areas of weakness, both subtracting 0.2ppts, in part due to negative spill-over effects from the mining downturn. Mining output added 0.6ppts to growth, up from 0.5ppts the previous year, as gas exports expand. Real estate was a bright spot, strengthening to add 0.3ppts to growth as the housing sector responded to lower rates. Public services experienced a strong year, adding 0.4ppts to growth, as the state increased public servant numbers. 
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South Australia 
The South Australian notched up back-to-back years of moderate growth, expanding by 2.0% in 2014/15 and 1.9% in 2015/16. That is a little below the long-run average of 2.3% but above the state government forecast of 1.5%. 
Construction, finance and real estate together made a solid contribution of 0.6ppts, up from 0.4ppts the year prior. 
Mining bounced back, adding 0.2ppts, after a neutral impact in 2014/15. The rate of decline in manufacturing slowed, subtracting 0.1ppts, well below the peak drag of 0.6ptps in 2013/14. Household services added 0.4ppts to growth, broadly matching the 0.5ppts contribution in 2014/15, following a flat 2013/14. Public services had a strong year, added 0.4ppts. 
Tasmania 
Tasmanian output grew for a third year, expanding by 1.3%, after results of 1.2% and 1.5%. While this is still below average, of 2.0%, conditions have improved from the four challenging years 2009/10 to 2012/13 when output contracted by 0.4ppts. 
International exports, after a period of structural adjustment and benefitting from a lower dollar, surged 20%, adding 2.8ppts to growth. Areas of weakness were agriculture and utilities, both subtracting 0.4ppts from growth. There were record low inflows into the hydo system and the unprecedented prolonged outage of the Basslink interconnector with mainland Australia. The 'balancing item', including inter-state trade, subtracted 4.0ppts from growth.  
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Andrew Hanlan is senior economist for Westpac and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/andrew-hanlan/3/222/430" target="_blank">here</a>. 
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Lower interest rates boost southern states: Westpac's Andrew Hanlan

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Westpac are set to increase interest rates for foreign mortgage customers, writes the Australian Financial Review.
The bank is reported to be introducing a new loan category next month, a 'Non-Resident Reference Rate'.
Off-shore based customers who currently have loans with the bank will have to pay a 0.5% higher standard variable rate.
A Westpac spokesperson told the Australian Financial Review that the higher rates took into account the bank's "risk settings, the economic landscape, and expected changes in capital requirements for that segment of the mortgage market”. 
The decision comes after a long crackdown by the major banks on foreign lending.
Westpac announced, as of April 26. it would no longer loan money to foreign home buyers seeking to purchase residential property.
The bank has not settled any new mortgages from offshore-based clients since then.
Other major banks such as NAB and ANZ have also introduced similar policies halting new loans to foreign buyers.
Westpac has also dropped its loan to valuation ratios (LVRs) from 80% to 70% for local applications that include foreign income.
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j.ballantyne1990-6AQqhLzZaK

Major bank continues foreign loan clampdown

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The six month annualised growth rate in the Westpac- Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, fell from +0.63 percent in September to +0.43 percent in October. 
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The October reading is the third consecutive above trend result and follows fifteen months of persistent below trend reads. Although the growth rate has slowed a little, it is still a clear positive signal for the near term economic outlook. That signal is broadly consistent with Westpac’s forecast for growth to hold around a 3 percent pace over the course of this year and to lift to 3.3 percent in 2017.
Westpac has recently lifted its growth forecast for 2017 from 3 percent to 3.3 percent. That reflects the recent improvement in the terms of trade following the sustained boost in bulk commodity prices; a more confident assessment of the sustainability of the residential construction cycle and continuing evidence of a strong outlook for growth in both resource and services exports.
The Leading Index growth rate has lifted over the last six months from a 0.34 percent below trend reading in May to the current 0.43% above trend result. 
Offshore factors continue to dominate the sources of improvement in the Index. Of the net 77 basis points in improvement over the last six months, three of the four externally driven components contributed 90 basis points – commodity prices (45 basis points); US industrial production (25 basis points); and a steepening yield curve (25 basis points). The other component of the Index which is heavily influenced by global forces (ASX 200) actually subtracted 8 basis points from the overall movement over the six months. Of course we can expect another story in November following the post-election boom in the share market.
<a href="/images/2016/11/16/Screen%20Shot%202016-11-16%20at%2010.42.39%20AM.png" target="_blank">Click to enlarge</a>
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Contributions from the domestic components of the Index were mixed over the six month period. Aggregate hours worked have improved, contributing 31 basis points to the lift. However, confidence measures have weighed on the Index. The Westpac-MI Consumer Expectations Index subtracted 14 basis points and the Westpac-MI Unemployment Expectations Index subtracted 13 basis points. A slowdown in dwelling approvals has also seen this component subtract 13 basis points.
The Reserve Bank Board next meets on December 6. There is virtually no chance of a policy move coming from that meeting. 
The minutes from the November meeting signalled that the Bank is in a ‘wait and see’ mode. There was an air of uncertainty around both the housing market and the labour market. Considerable time will be required before the picture around both becomes clearer. From our perspective we expect stability in the housing market and some gradual pick-up in labour market conditions as stronger overall growth lifts it out of the current ‘slow patch’. 
Consequently, we expect that a central bank, which must be questioning the effectiveness of yet more monetary stimulus, will be unlikely to see the need to adjust policy throughout the entire run of 2017. 
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BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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No chance of a policy move from RBA in December: Westpac's Bill Evans

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The nation's biggest non-bank lender, Firstmac, and nine other lenders are raising fixed rate mortgages in a move known as the 'Trump effect,' according to lenders and market analysts.
These mortgages are being raised by up to 45 basis points.
Firstmac's rates for owner-occupiers and investors on one to three-year mortgages by 13 basis points.
Owner-occupied rates have increased to 4.09 percent and investor rates to 4.34 percent.
"International funding costs are rising, which is the fallout from the 'Trump effect'," Martin North, principal of Digital Finance Analytics, told The Australian Financial Review.
"Other lenders are likely to follow," he said.  
"I am expecting rises in mortgage rates over the summer."
"If the US do turn on the debt tap to fund infrastructure builds, this is likely to drive rates up.
"I know the banks have more deposit funding now, but they are still caught in the draft of international rate movements." 
Marnie Mortimer, managing director of loans.com.au said that global markets are set to change.
"There is no doubt global markets are pricing in a rise in rates in the medium-term and that has now been aggravated by expectations of higher inflation if Mr Trump implements his election promises," she to the Australian Financial Review.
It comes as for the first time in two years, the markets are betting that the RBA is more likely to lift rates than lower them next year.
Index swaps are pricing in an about 8 per cent chance that over the next 12 months the cash rate will rise from its current record low of 1.5 per cent, according to Credit Suisse data.
Loans.com.au had cut its three year fixed-rate home loan by 32 basis point to 3.67 percent in June.
This week the lender increased its three-year rate to 3.89 percent.  
P&amp;N Bank, the largest member-owned bank in Western Australia, has raised rates on its products by 10 basis points.
Catalyst Money increased its fixed rates by up to 30 basis points, Bank of Queensland's three-year owner-occupied and investment loans went up by up to 20 basis points and Beyond Bank by 10 basis point.
Westpac, which has about $380 billion in mortgages, is cutting the introductory discount rate on its popular "flexi first" owner-occupier and investment products by 10 basis points. 
Loans.com.au, the nation's largest online lender, has raised rates by up to 13 basis point on investor and owner-occupied fixed rates.
 
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'Trump effect' begins to bite borrowers as fixed-rate mortgages increase

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GUEST OBSERVER
The minutes from the November Board meeting were broadly consistent with the narrative from the recent Statement on Monetary Policy, as expected.</div>
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 The RBA continues to monitor the risks around the labour market, housing market, China, and private consumption, and continues to think that the “appreciating exchange rate could complicate this adjustment”.</div>
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 Importantly, the assessment of risks around the inflation outlook appears more balanced, with the minutes suggesting to us emerging confidence that the disinflationary pulse has peaked.</div>
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 We continue to see the RBA on hold with the cash rate steady at 1.5% over our forecast horizon (to end 2018). Governor Lowe is speaking later today (7:15pm AEDT) on ‘Buffers and Options’ at the annual CEDA dinner.
The minutes from the November RBA Board meeting were broadly consistent with the narrative from the recent Statement on Monetary Policy, as expected. The overall tone is quite positive, with economic growth forecast to be around potential in the coming quarters and then “a little above potential growth thereafter”.
The outlook is not without risks and the minutes again highlighted concerns around:
the medium-term risks to the outlook for China’s economic growth given high and rising debt levels (notwithstanding better near-term growth prospects) ; and, as a result, uncertainty about the outlook for the terms of trade (which had been revised higher given the recent rise in prices); excess capacity in the labour market and the impact on wages; uncertainty about “households’ expectations of their income growth” and how this impacts spending and saving decisions; and the housing market, where “members noted that assessing conditions in the housing market had become more complicated” and that “while overall conditions had eased relative to 2015, some indicators had strengthened over the previous few months”.</div>
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<div class="column">Importantly, the minutes suggest the RBA may be more comfortable with the inflation outlook and perhaps increasingly confident that disinflationary pressures have peaked. Indeed, the minutes repeated the assessment in the SoMP that the risks to global inflation are “more balanced” but also judged the risks to domestic inflation as “broadly balanced”, supported by “evidence that wage growth in Australia had stabilised”.
A stabilisation in wage growth is important for the outlook for inflation, particularly given already weak rental growth and the large volume of apartment supply coming on stream.
While the policy framework can accommodate periods of undershoot, rising confidence that inflation has stabilised – even if it is expected to rise only gradually – would be a welcome development.
We continue to see the RBA on hold with the cash rate steady at 1.5 percent. While the RBA’s forecasts for persistently low inflation implies an easing bias, this is tempered by a more balanced assessment of the inflation risks and ongoing financial stability concerns. 
Jo Masters is senior economist, ANZ and can be contacted <a href="https://www.anz.com/personal/" target="_blank">here</a>.
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RBA's more balanced risks around the inflation outlook: ANZ's Jo Masters

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GUEST OBSERVER
The ANZ/Roy Morgan consumer confidence rating rose by 0.3 percent to a 7-week high of 118.2 in the week to November 13.
Confidence remains above the average of 113.0 since 2014.
The minutes from the November 1 Board meeting shows that the Reserve Bank has become more alert to inflation risks. 
The consumer confidence figures have implications for finance providers, retailers, and companies dependent on consumer and business spending. The Reserve Bank Board minutes provides guidance on interest rate settings. 
What does it all mean?
Aussie consumers are unfazed by the US election result. Consumer confidence edged to 7-week highs in the latest week, no doubt boosted by strong gains on the Australian sharemarket late in the week. Interestingly respondents believe that the economic outlook over the medium term has improved.
There is a clear change in the Reserve Bank’s attitude to inflation. The latest Board minutes highlight the recent lift in commodity prices as well as perceptions that economic growth for advanced nations could exceed “potential growth”. As such the Reserve Bank concludes that “risks to the global inflation outlook were more balanced than they had been for some time.” Similarly Board members believe that Australian underlying inflation is “expected to return to more normal levels over time.”
Admittedly the Reserve Bank isn’t flashing warning signs on growth and inflation. But it should also be noted that in the period since the Reserve Bank Board meeting there has been the election of a new US President with growth-focussed economic policies. Metal and mining prices and bond yields have soared.
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Simply interest rate settings are likely to remain stable until well into 2017.
What do the figures show?
Consumer confidence
The ANZ/Roy Morgan consumer confidence rating rose by 0.3 percent to 118.2 in the week to November 13.
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Confidence is up 2.0 percent over the year and above the average of 113.0 since 2014. 
Two of five components of the index rose in the latest week.
<ul>
<li> The estimate of family finances compared with a year ago was down from +11 to +10; </li>
<li> The estimate of family finances over the next year was down from +28 to +27;</li>
<li> Economic conditions over the next 12 months was up from +5 to+6;</li>
<li> Economic conditions over the next 5 years was up from +10 to +13;</li>
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The measure of whether it was a good time to buy a major household item was steady at +35. In addition the inflation expectation 2 years ahead rose from 3.8 percent to 3.9 percent.
Reserve Bank Board minutes:
“Members noted that assessing conditions in the housing market had become more complicated. While overall conditions had eased relative to 2015, some indicators had strengthened over the previous few months. In particular, housing price growth had picked up noticeably in Sydney and Melbourne. However, housing turnover and growth in housing credit both remained lower than a year earlier, consistent with the supervisory measures that had been taken to tighten lending standards and the more cautious attitude to lending in certain segments. In addition, a considerable supply of apartments is scheduled to come on stream over the next few years, particularly in the eastern capital cities, and growth in rents in the September quarter was the slowest for some decades.”
“Considerable uncertainty remained about the strength of labour market conditions and the implications for labour cost growth.”
 “Members observed that some indicators of domestic inflation cost pressures, such as growth in the wage price index, had stabilised, albeit at low levels, and that underlying inflation was expected to return to more normal levels over time. The overall assessment was that the risks around the inflation forecast were broadly balanced.”
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<div class="column">“Higher commodity prices and expectations that growth in the major advanced economies would exceed potential growth suggested that the risks to the global inflation outlook were more balanced than they had been for some time.”</div>
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<div class="column">“Members commenced their discussion of the domestic economy by considering how outcomes over recent years had differed from earlier forecasts, noting that the differences for key variables, including inflation, the unemployment rate and GDP growth, had been modest by historical standards.”</div>
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<div class="column">“Members noted that there was significant uncertainty about the outlook for consumption growth given uncertainty about households' expectations of their income growth and the influence of these expectations on their spending and saving decisions. This was particularly pronounced for households with significant debt.”</div>
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<div class="column">What is the importance of the economic data?</div>
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<div class="column">The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank. The Reserve Bank releases minutes of its monthly Board meeting a fortnight after the event. The minutes give a guide to Reserve Bank thinking on interest rate settings.
What are the implications for interest rates and investors?
CommSec expects the Reserve Bank to remain on the interest rate sidelines for an extended period.</div>
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<div class="column">Could the next move in interest rates be a rate hike rather than a rate cut? It’s important not to get too far ahead of ourselves. Inflation is still historically low. And while there is speculation of growth-focussed policies in the US, they haven’t been fleshed out. However you get a sense that inflation has reached an inflexion point. </div>
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<div class="column">Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</div>
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Happy Aussies, Reserve Bank on inflation watch: CommSec's Craig James

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GUEST OBSERVER
The minutes of the November monetary policy meeting of the Reserve Bank Board provided no real surprises. 
This is to be expected given that we have seen the Statement on Monetary Policy only a week or so ago.
The three areas worthy of attention in the minutes are: the Bank’s take on the recent lift in bulk commodity prices; its assessment of the trends in the labour market; and any update on its sentiment towards the housing market.
The commentary around the commodity story appears to be more positive – “the terms of trade had risen for the first time in two and a half years and had been revised higher over the forecast period.” As with most observers of this recent development the minutes emphasise “uncertainty” about the outlook for the terms of trade. However the Board offers no speculation as to the sustainability of these increases.
There is a much longer than normal discussion around the labour market. The Board noted that “the current experience of relatively strong growth in part time employment (compared to full time employment) was unusual insofar as such a pattern was typically associated with rising unemployment rates." The discussion also clarified the Board’s view on the state of spare capacity in the labour market emphasising that it depended up “how many additional hours workers were seeking” which they concluded was not readily available data. The minutes confirmed that the unemployment rate is expected to edge lower although forecasts incorporated a small downward revision to the outlook for employment growth and more than compensated by a fall in the participation rate.
Just as there is uncertainty around the outlook for the labour market, the Board has become more ambivalent around the housing market: “Members noted that assessing conditions in the housing market had become more complicated.… housing price growth had picked up notably in Sydney and Melbourne but turnover had slowed.” The Bank continues to make the statement of fact: “A considerable supply of apartments is scheduled to come on stream in the next few years” but provides no guidance as to its view on the implications for both prices and the medium term outlook for activity. We are, at least, pleased however that the Board recognises that building activity is likely to support growth “for some time yet.”
The views on inflation are more confident. The forecast that underlying inflation will lift from 1½% in 2016 to 2% in 2017 is supported by the key assertions that firstly that the slowdown in labour costs has bottomed out and secondly that the disinflationary effect of retail competition is expected to dissipate. On the other hand, low rental inflation is expected to persist while the inflationary effect of the fall in the AUD appears to have run its course.
Internationally, the turning point in government bond rates is recognised partly because expectations of further increases in asset purchases by the ECB and BoJ have been toned down. (The Board meeting occurred before the US election had taken place).
On the growth front downside risks to the near term outlook for China have diminished although the Board continues to note that longer term risks to China’s economy associated with high and rising debt remain.
The conclusion in the key “Considerations for Monetary Policy” section emphasises the ongoing neutral policy bias.
Conclusion
Westpac has consistently argued that, following the rate cut in August, the Bank was likely to keep rates on hold through-out the course of 2016 and 2017. The risk to that view remains to the downside associated with an unexpected extended deterioration in the labour market. As discussed, the Board is not confident about the outlook for the labour market. The forecast that the unemployment rate will remain steady is qualified by a number of conditions particularly around the assessment that the data for the best measure of spare capacity is “not readily available.”
Our view on the growth and employment outlook is more positive and we expect that the probability of the type of adverse development in the labour market that would trigger a further policy response remains quite low.
While markets have substantially priced out the prospect of rate cuts next year, in line with our view, there is some evidence that they are flirting with the possibility of a tightening in the second half of 2017. From our perspective that prospect is extremely remote, particularly given the inflation outlook and given our own forecasts for economic growth.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Reserve Bank minutes highlight uncertainty around the labour market, housing: Westpac's Bill Evans

Housing markets getting more complicated: minutes of the November 2016 RBA meeting

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Australia’s largest online lender loans.com.au says that fixed mortgage interest rates will soon increase across the board.
This follows rises in key swap rates driven by the election of Donald Trump as president of the United States.
Managing director Marie Mortimer said 3, 4, and 5-year swap rates had been drifting up for six weeks. 
It really jumped after Mr Trump’s victory in the expectation that his promised tax cuts and infrastructure spending would drive up prices.
“There is no doubt that global markets were pricing in a rise in rates in the medium-term and that has now been aggravated by expectations of higher inflation if Mr Trump implements his election promises,” Ms Mortimer said.
“These higher rates are now being reflected in the fixed rates that lenders can offer homebuyers with at least six Australian lenders raising their fixed-rates in the last three weeks and many more to follow shortly.”
According to Bloomberg, since mid-September this year, 3-year swap rates have risen from 1.69 percent to 1.99 percent, while 5-year swaps have risen from 1.97 percent to 2.40 percent.
In June, loans.com.au slashed its 3-year fixed rate home loan by 32 basis points to a record low of 3.67 percent (3.88 comparison rate).
However it warns that at the time that it probably represented the bottom of the cycle for fixed rates.
This week, loans.com.au increased its 3-year fixed rate to 3.89 percent, while cutting selected variable rates.
The largest variable rate cuts included its Offset (interest only) loan for homebuyers which was reduced by 19 basis points to 3.87 percent and its Essentials (principal and interest) loan for refinancers which fell by 30 basis points to just 3.79 percent. Other key rate cuts are shown below.
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