<p><a href="https://www.apartments.com.au/developments/broadbeach-qld-4218">Broadbeach</a> offers plenty of reasons to live vertically, but moving from a substantial family home into an apartment can expose the compromises of high-density living. Privacy, room for guests and usable living space tend to matter more when an apartment is intended as a permanent home rather than an occasional coastal base.</p>

<p>A typical residential floor at <a href="https://www.apartments.com.au/new-apartments/the-eveleigh-broadbeach-7-9-surf-parade-broadbeach-qld-4218">The Eveleigh</a>, on Surf Parade,&nbsp;contains just four apartments. The 94-residence development by <a href="https://www.apartments.com.au/developers/hirsch-faigen">Hirsch &amp; Faigen</a> is predominantly made up of expansive three-bedroom homes, with a limited collection of half-floor penthouses above.</p>

<p>Across the apartment floors, <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> has used the relatively limited number of residences to give each home greater access to natural light and outlook. Living spaces extend towards full-height glazing, while a series of bay windows frame selected views across the Pacific Ocean, city and hinterland rather than treating the building edge as a continuous wall of glass.</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=149670 project_image_fid=360965]</p>

<p>“The apartment floors deliver a collection of homes that embrace controlled outlook via a series of bay windows deliberately framing moments of view,” Rothelowman Director Kim Lowman said.</p>

<p>From outside, those projecting forms contribute to the tower’s faceted profile. Strong horizontal and vertical elements establish its proportions, while the changing position of the sun alters the light, shadow and reflection across the façade throughout the day.</p>

<p>The same attention moves inside the apartments, where the material palette combines warm timber, natural stone, metallic detailing and softer curved forms. Kitchens sit within the main living zone, with stone island benches, integrated joinery and European appliances, before the living areas extend towards the glazing and the outlook.</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=149670 project_image_fid=360981]</p>

<p>Three genuine bedrooms provide room to accommodate family and guests, while two secure car spaces and storage address some of the practical considerations that can become more noticeable when moving from a larger home. Feedback from the display suite has centred on the warmth and restraint of the interiors, with buyers commenting that the residences feel like homes rather than conventional coastal apartments.</p>

<p>A limited collection of half-floor penthouses occupies the upper levels, increasing the scale of the living spaces and adding private balconies and elevated finishes. From this position, the outlook extends between the ocean and hinterland.</p>

<p>Outside the private residences, The Eveleigh separates its shared spaces between the podium and rooftop. The podium is centred on wellness, with subtropical landscaping surrounding a swimming pool and pool terrace, yoga garden, private gymnasium, sauna and hot and cold plunge facilities. Landscaped retreats and pavilions provide additional places to sit away from the main recreation areas.</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=149670 project_image_fid=360966]</p>

<p>Higher in the building, a rooftop pavilion and private dining suite sit alongside resident lounge, barbecue and outdoor dining areas, opening towards panoramic views across the ocean, city and hinterland.</p>

<p>“Buyers are no longer just looking for an apartment, but a lifestyle where they can relax, reset, and enjoy a balanced way of living,” Hirsch &amp; Faigen Director of Sales Matt George said.</p>

<p>Interest to date has come from established owner-occupiers and interstate lifestyle purchasers, including buyers planning a future move to the Gold Coast. Many are coming from larger homes and want to reduce ongoing maintenance without giving up space for family and guests, privacy, two car spaces or the ability to entertain at home.</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=149670 project_image_fid=360969]</p>

<p>Much of that daily life can also take place beyond the building without requiring a drive. Kurrawa Beach and Pratten Park are an easy walk from Surf Parade, while Pacific Fair, Oracle Boulevard, The Oasis, restaurants, cafés, entertainment and public transport are also within walking distance.</p>

<p data-end="8307" data-start="8063">The Eveleigh is Hirsch &amp; Faigen's fourth Gold Coast development since entering the market in 2021, following The Hemingway at Palm Beach, The Emerson at Kirra and Yves at Mermaid Beach. Each of the preceding projects sold out before completion.</p>

<p data-end="8543" data-start="8312">“Broadbeach had been on our radar throughout our time operating on the Gold Coast,” the developer said. “Following our projects in Palm Beach, Kirra and Mermaid Beach, Broadbeach represented the natural next step for the business.”</p>

<p data-end="8915" data-start="8548">The Surf Parade site brought together proximity to the beach, protected coastal outlooks and walkability to dining, shopping and recreation. Hirsch &amp; Faigen also identified the street as an emerging premium residential address, with enough separation from Broadbeach's busier destinations to retain a quieter environment at home.</p>

<p>The Eveleigh is now under construction by Maxcon, with completion forecast for mid-2028. Three-bedroom residences are currently available from $2.87 million.</p>

<p>[smartcode_project_cta:default project_id=149670]</p>


Joel Robinson

The Eveleigh brings house-like apartments to Broadbeach

<p>A long-stalled Campbelltown development site is back in play, with new plans for 139 apartments set to supersede a mixed-use scheme approved almost a decade ago but never built.</p>

<p>The new proposal for 28 Cordeaux Street would deliver 116 market and 23 affordable apartments in a part 14-storey building, bringing a substantial new project into a Campbelltown market where new apartment supply remains limited.</p>

<p>Plans have been filed over the 3,092 sqm corner site at Moore-Oxley Street, around 600 metres from Campbelltown Railway Station and the city-centre retail core.</p>

<p>The site already carries a mixed-use residential approval dating to 2016. Doroch Architects has now been engaged on a larger replacement scheme, which is progressing as a State Significant Development Application following a Housing Delivery Authority determination in August 2025.</p>

<p>The apartment mix comprises 39 one-bedroom, 72 two-bedroom and 28 three-bedroom residences. Two-bedroom apartments make up just over half of the project, while three-bedroom homes account for 20 per cent.</p>

<p><img alt="First look: New 139-apartment plans revive long-stalled Campbelltown city centre site" data-entity-type="file" data-entity-uuid="136dd5b9-3791-4da6-9e31-76f533f5b4de" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Campbelltown%20da2.png?VersionId=LgOSy9nwf5u.MGswBBwaGGxuX8QpHSl_" /></p>

<p>Of the 139 apartments, 23 will be delivered as affordable housing under the in-fill affordable housing provisions of the Housing SEPP. The affordable component represents 15 per cent of the residential gross floor area and will be managed by a registered Community Housing Provider.</p>

<p>Doroch has sought to break the scale of the building into two distinct elements, with a masonry podium of around four storeys establishing the street edge before the residential tower steps back above.</p>

<p>The corner position has shaped that approach. Cordeaux Street faces toward the commercial and civic centre, while Moore-Oxley Street leads into the lower-scale residential neighbourhood to the south, and the design verification report describes the site as "bridging the commercial core to the north and established residential areas to the south."</p>

<p>The podium will be expressed predominantly in face brick, while the upper levels shift to brushed and grooved concrete cladding with darker metal detailing. Recessed sections, deep balcony edges and landscaping break down the upper form, with an approximately 11.8-metre setback to the northern boundary addressing the adjoining St Peters Anglican School.</p>

<p><img alt="First look: New 139-apartment plans revive long-stalled Campbelltown city centre site" data-entity-type="file" data-entity-uuid="c8b3d2d3-c561-4bfc-a5d9-a68c0c10dac1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Campbelltown%20da1.png?VersionId=AeAEyJU02Gk2k5noUj2StziCvdQ7fW4B" /></p>

<p>Campbelltown has been starved of new residential developments in the last decade.</p>

<p>The only other notable development set to come to market this year is ALAND's Queen Square, a mixed-use precinct on over two hectares that will comprise apartments above a vibrant ground-level retail and hospitality dining precinct.</p>


First look: New 139-apartment plans revive long-stalled Campbelltown city centre site

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<p>A 60-apartment building nine storeys tall would be a rarity almost anywhere along this stretch of Moreton Bay, but that's exactly what's been lodged for a modest Deception Bay street better known for its single-storey weatherboard homes.</p>

<p><a href="https://www.apartments.com.au/developers/sherlock-construction-homes">Sherlock Construction Homes</a> is seeking to push Deception Bay’s emerging medium-density housing profile higher, lodging plans for a nine-storey apartment building near the suburb’s shopping centre and foreshore.</p>

<p>Dubbed Grosvenor Apartments, the proposal at 14-20 Grosvenor Terrace would replace two detached homes with a new building designed by&nbsp;<a href="https://www.apartments.com.au/architects/mode">Mode Design</a>&nbsp;which would&nbsp;reach nearly 30 metres, well above the site’s mapped 21-metre building height.</p>

<p><img alt="First Look: Sherlock Construction pitches 9-storey tower for low-rise Deception Bay" data-entity-type="file" data-entity-uuid="86c21a25-5a97-4ca7-a361-80757137ea5b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Deception%20da%20front.png?VersionId=aXIujfvEhH33sLHOEjHFv9Ii6qxSvAF4" /></p>

<p>The apartment mix is weighted toward larger homes, with 14 three-bedroom apartments, 31 two-bedroom apartments and 15 one-bedroom apartments. Six apartment types are spread across the floors, ranging from 66 sqm one-bedroom units through to three-bedroom apartments of 116 sqm, most with private balconies or terraces.</p>

<p>Levels one through seven follow a consistent layout of six to eight apartments per floor arranged around a central lift and stair core, with the top floor, level eight, trading one apartment for a landscaped community breakout space rather than repeating the standard layout below.</p>

<p>Ground floor is dedicated to arrival and services, with a lobby, mailroom and manager's office, alongside 91 car spaces.</p>

<p><img alt="First Look: Sherlock Construction pitches 9-storey tower for low-rise Deception Bay" data-entity-type="file" data-entity-uuid="b098bde0-5fe1-4e6c-9601-e5446612e5fc" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Deception%20podium.png?VersionId=A0hfENMNxSxkfh9Jl6D4WJ9XIraeOukA" /></p>

<p>Mode Design's brief describes a "serene coastal-inspired design blending soft curves, natural textures and light-filled spaces to reflect the relaxed Deception Bay lifestyle."&nbsp;</p>

<p>The material palette leans on white and grey render, timber-look aluminium screening and stacked-brick-look finishes, with hanging greenery and vine planting proposed across balcony edges and ground-level walls.&nbsp;</p>

<p>Balconies feature asymmetrical geometries intended to vary the building's rhythm rather than repeat a single module up the tower, while lush planting is concentrated over the entry and level one balconies to soften the building's base.</p>

<p><img alt="First Look: Sherlock Construction pitches 9-storey tower for low-rise Deception Bay" data-entity-type="file" data-entity-uuid="c05c5693-3e00-42d0-b075-55c36094f4db" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Deception%20da%201.png?VersionId=cMKJgBsBaaVCd2dA5O22SOT38OT_.BPA" /></p>

<p>The design evolved following an April 2025 prelodgement meeting with council. At that stage, the project was conceived as a seven-storey building containing 45 apartments. The subsequently lodged scheme increases the development to nine storeys and 60 apartments while introducing one-bedroom residences to the mix.</p>

<p>Zone Planning argues the additional scale reflects the site's position within an area earmarked for increased residential intensity. The planning report points to the North Lakes-Redcliffe-Moreton Bay Rail corridor strategy, which identifies Deception Bay as a district-level activity centre and supports greater housing choice within urban neighbourhoods.</p>

<p>Market Square Deception Bay, Deception Bay Sports Centre, Deception Bay State School, public transport, community facilities and the Moreton Bay foreshore are all identified within approximately one kilometre of the site, while the property falls within a 400-metre walking catchment of Market Square.</p>

First Look: Sherlock Construction pitches apartments for low-rise Deception Bay

<p data-end="587" data-start="368">Queensland builder-developer MAYD has revealed the first look at its major North Kirra beachfront development, lodging amended plans that reduce the number of apartments and increase the proportion of larger residences.</p>

<p data-end="778" data-start="589">The project is planned across a substantial 4,742 sqm amalgamated site spanning seven lots at <a href="https://www.apartments.com.au/new-apartments/2-6-pacific-parade-bilinga-qld-4225">2-6 Pacific Parade</a> and 27-33 Golden Four Drive in Bilin​ga, directly opposite Nor​th Kirra Beach.</p>

<p data-end="907" data-start="780"><a href="https://www.apartments.com.au/developers/mayd-group">MAYD</a> secured the site for $32.5 million in 2025, in what was one of the Gold Coast's largest property transactions of the year.</p>

<p data-end="1052" data-start="909">The development will be delivered across two stages, with the first stage carrying an estimated gross realisation value of around $360 million.</p>

<p data-end="1311" data-start="1054">The latest amendments seek to reduce the overall apartment count and shift the project further toward the owner-occupier market, with larger residences designed for buyers wanting considerably more space than traditionally offered in a beachfront apartment.</p>

<p data-end="1451" data-start="1313">The residential mix will include townhomes, oversized two-bedroom apartments, substantial three-bedroom residences and four-bedroom homes.</p>

<p data-end="1676" data-start="1453">MAYD has appointed Cera Stribley to lead the architecture and interiors, with the Melbourne-based design practice drawing on the beachfront setting through a series of ocean-facing terraces and heavily landscaped balconies.</p>

<p data-end="1908" data-start="1678">Strong horizontal forms and curved balconies will define the exterior, with subtropical landscaping integrated throughout the building to soften the built form and increase the connection between the residences and the beachfront.</p>

<p data-end="2142" data-start="1910">The project will also include an extensive collection of resident wellness and lifestyle facilities, continuing the broader shift across the Gold Coast's luxury apartment market toward larger homes supported by resort-style amenity.</p>

<p data-end="2142" data-start="1910"><img alt="MAYD" data-entity-type="file" data-entity-uuid="d1bcbb05-e659-4b47-8bd4-1e595315e2ad" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%202.05.03%E2%80%AFPM.png?VersionId=jj0XEud1X1DuLt7_KyElhjMdZGOXmLHP" /></p>

<p data-end="2308" data-start="2144">MAYD Founder Todd Mould said North Kirra was increasingly appealing to buyers attracted to the more established, lower-density character of the southern Gold Coast.</p>

<p data-end="2648" data-start="2310">"North Kirra presents one of the most compelling luxury residential opportunities currently emerging in Australia, combining absolute beachfront with the character and authenticity that buyers are increasingly seeking, and the same sense of tight-knit community that defined Burleigh and Currumbin perhaps 10 or 15 years ago," Mould said.</p>

<p data-end="2797" data-start="2650">"With Gold Coast Airport on its doorstep, it also offers a level of accessibility that broadens its appeal across almost every market demographic."</p>

<p data-end="2938" data-start="2799">The project comes as the southern Gold Coast continues to attract an increasing share of high-end apartment development and buyer activity.</p>

<p data-end="3216" data-start="2940">Kirra in particular has emerged as one of the region's more tightly held beachfront markets, with its relatively low-density character, established surf and hospitality scene and proximity to Gold Coast Airport differentiating it from the higher-density markets further north.</p>

<p data-end="3325" data-start="3218">Mould said those characteristics had informed the approach MAYD and Cera Stribley had taken to the project.</p>

<p data-end="3442" data-start="3327">"We've worked closely with Cera Stribley to create a vision that is deeply connected to its surroundings," he said.</p>

<p data-end="3662" data-start="3444">"Inspired by the coastline itself, the architecture has been shaped around space, privacy and resort-style living, creating a collection of homes that reflects the next generation of luxury on the southern Gold Coast."</p>

<p data-end="3818" data-start="3664">MOTIV Managing Director Carly Cottam, who has been appointed to market the project, said buyer attention had continued to move south along the Gold Coast.</p>

<p data-end="4076" data-start="3820">"Purchasers who may once have defaulted to Broadbeach, Main Beach or Surfers Paradise are increasingly recognising the value of a genuine beachfront location that offers lower density, strong amenity and a more established sense of community," Cottam said.</p>

<p data-end="4375" data-start="4078">"Kirra has a powerful combination of growing demand and genuine scarcity. Beachfront supply is inherently constrained, the area remains relatively low density, and buyers are increasingly placing a premium on locations that feel established, uncrowded and authentic rather than heavily developed."</p>

<p data-end="4503" data-start="4377">Cottam said the proximity to Gold Coast Airport was also proving increasingly important for interstate and second-home buyers.</p>

<p data-end="4741" data-start="4505">"Being minutes from Gold Coast Airport makes it particularly compelling for interstate buyers, frequent travellers and second-home purchasers who can access an authentic coastal lifestyle almost immediately after stepping off a flight."</p>

<p data-end="4910" data-start="4743">The acquisition takes MAYD's active development portfolio to more than $500 million, with the North Kirra project representing one of its largest undertakings to date.</p>

<p data-end="4951" data-start="4912">MAYD is targeting an early 2027 launch.</p>


First look at MAYD's North Kirra mixed-use precinct

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<p data-end="600" data-start="394">Castle Hill, the longtime hub of the Hills District, has been one of the major beneficiaries of Sydney's Metro expansion, with improved connectivity helping drive continued population growth, development and buyer demand across the Hills District.</p>

<p data-end="733" data-start="602">But despite that growth, the suburb has seen relatively few major new apartment projects brought to market over the past 18 months.</p>

<p data-end="970" data-start="735">Hills District developer Reve Group is looking to fill that gap with <a href="https://www.apartments.com.au/new-apartments/nova-r-ve-castle-hill-2-garthowen-crescent-castle-hill-nsw-2154">Nova Rêve</a>, a major new mixed-use precinct on the corner of Garthowen Crescent and Old Castle Hill Road, a short walk from Castle Hill Metro Station and Castle Towers.</p>

<p data-end="970" data-start="735">[smartcode_project:default project_id=152737 project_image_fid=377679]</p>

<p data-end="1159" data-start="972">The project will comprise three residential towers alongside a hotel, restaurants, cafes and a skybar, more than 1,600 sqm of ground-floor retail and almost an acre of landscaped gardens.</p>

<p data-end="1357" data-start="1161">It represents the largest project undertaken by Reve Group, the development arm of the Kassis family, which has been building across the Hills District for more than 30 years through Kassis Homes.</p>

<p data-end="3400" data-start="3216">[smartcode_project:default project_id=152737 project_image_fid=377675]</p>

<p data-end="3400" data-start="3216">Nova Rêve also represents a significant step up from the family's first apartment development, Grand Rêve, which was delivered nearby on Garthowen Crescent.</p>

<p data-end="1664" data-start="1517">Grand Rêve introduced larger, house-like apartment layouts and premium inclusions including Wolf and Sub-Zero appliances to the Castle Hill market.</p>

<p data-end="1826" data-start="1666">Nova Rêve takes that approach to a precinct scale, combining the residential component with hospitality, retail and substantial public and resident landscaping.</p>

<p data-end="1826" data-start="1666">[smartcode_project:default project_id=152737 project_image_fid=377685]</p>

<p data-end="2045" data-start="1828">Reve Group Managing Director Sam Kassis said the project reflected the family's three decades of building in the Hills, which has evolved from trophy homes on quarter-acre blocks to larger-scale apartment development.</p>

<p data-end="2269" data-start="2047">"Grand Rêve was our first apartment project here and it showed us what this pocket of Castle Hill could be. Nova Rêve is the refinement of that idea: not just apartments, but a place the whole suburb can use," Kassis said.</p>

<p data-end="2430" data-start="2271">A key part of that approach is the hotel, which has been designed to operate as an amenity for the wider Castle Hill community rather than solely hotel guests.</p>

<p data-end="2606" data-start="2432">It will include restaurants, cafes, skybars and all-day dining, alongside conference and event facilities catering to business functions, community groups and private events.</p>

<p data-end="2724" data-start="2608">At ground level, more than 1,600 sqm of shops and cafes will open onto the surrounding streets and landscaped areas.</p>

<p data-end="2892" data-start="2726">Almost an acre of gardens designed by Land and Form Studios will run through the precinct, incorporating pathways, seating, barbecue areas and children's play spaces.</p>

<p data-end="2892" data-start="2726">[smartcode_project:default project_id=152737 project_image_fid=377680]</p>

<p data-end="3004" data-start="2894">Reve Group's Romio Georges said creating an active ground plane had been central to the planning of Nova Rêve.</p>

<p data-end="3214" data-start="3006">"There are gardens with pathways, barbecues, seating and play areas, shops and cafes opening onto the street, and a hotel with restaurants and a skybar that anyone in Castle Hill can walk into," Georges said.</p>

<p data-end="3400" data-start="3216">The project's elevated position on one of Sydney's highest ridgelines will also provide apartments with outlooks toward the Sydney skyline, surrounding parkland and the Blue Mountains.</p>

<p data-end="3400" data-start="3216">More than 80 per cent of the apartments will occupy corner positions, with Turner responsible for both the architecture and interiors.</p>

<p data-end="3670" data-start="3538">&nbsp;</p>

<p data-end="3670" data-start="3538">[smartcode_project_cta:default project_id=152737]</p>

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Nova Rêve arrives as Reve Group bets on Castle Hill's next growth phase

Interest Rates

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<p>GUEST OBSERVER</p>
<p>The Westpac Melbourne Institute Index of Consumer Sentiment fell by 1.1 percent in November from 102.4 in October to 101.3 in November.</p>
<p>The Index continues to hold in a very tight band. Over the last six months the Index has held within the range of 99.1 to 102.4.</p>
<p>However if you compare the average level during this period with the average over the comparable six month period in 2015 there has been a clear lift in the Index of 4.7 percent.</p>
<p>Most of that improvement has been in the components of the Index that measure expectations which are up by an average of 7.3 percent on last year, whereas the components which measure current conditions have increased by only 1.2 percent.</p>
<p>Developments of note over the month have included weakness in the share market as investors dealt with the uncertainties around the US election (ASX down by 4.4 percent since the October survey); a spectacular surge in coking coal prices (spot prices are up around 150 percent since August); a disappointing jobs report (annual employment growth slowing to 1.4 percent); and an unchanged rate decision from the Reserve Bank.</p>
<p>Markets had been giving a decent chance to a November rate cut in earlier months so the fall in confidence amongst respondents holding a mortgage of 3.1 percent was somewhat understandable.</p>
<p>Although down 3.4 percent in the latest month the lift in confidence in Queensland – the ‘Sunshine and Coal’ state – over the year has been spectacular. The Queensland index has lifted by 15.9 percent since last November compared to falls in the other major states – NSW (–2.6 percent); Victoria (–5.4 percent) and WA (–7.2 percent).</p>
<p>Disappointment in the jobs market has been signalled in the Westpac Melbourne Institute Index of Unemployment Expectations. The Index rose by 1.4 percent from 138.2 to 140.2. It is now up by 2.9 percent over the last six months and slightly above the level a year ago. Recall that higher reads mean more consumers expect unemployment to rise over the next 12 months and hence mark a deterioration.</p>
<p>Four of the five components of the Index fell slightly in the month. Both measures of family finances were down a little – the sub- index tracking views on ‘family finances compared to year ago’ fell by 1.3 percent while the sub-index tracking expectations for finances over the next 12 months fell by 0.8 percent. ‘Economic conditions over the next 12 months’ increased by 0.6 percent but ‘economic conditions over the next 5 years’ fell by 1.4 percent.</p>
<p>In a slight disappointment for the outlook for Xmas spending there was a 2.4 percent fall in the ‘time to buy a major household item’ sub-index. </p>
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<p><span>In November we traditionally gauge respondents’ Christmas spending intentions. The question is “Do you think that you will spend less, about the same, or more on Christmas gifts compared to last year?” Last year we recorded a net balance – the proportion expecting to spend more minus the proportion expecting to spend less – of minus 13 percent. This year the net balance has declined to minus 20.1 percent. That is around the average since we started asking the question in 2009. That is a disappointing result given the promising improvement in spending plans in 2015. </span></p>
<p><span>Confidence in housing has also deteriorated. The ‘time to buy a dwelling’ index fell by 5.1 percent from 105.7 in October to 100.3 in November. We saw significant falls in NSW; Victoria; and Queensland. </span></p>
<p><span>Despite confidence in housing deteriorating house price expectations continue to rise. The Westpac Melbourne Institute Index of House Price Expectations increased by 1.3 percent to be up 23 percent on a year ago and reach its highest level since July 2015. </span></p>
<p><span>The Reserve Bank Board next meets on December 6. There is little chance of any change in rates at this meeting. The key issue is whether the Bank decides to further cut rates in 2017. Whereas lower than expected inflation was the driver of the two cuts in 2016 the decisions in 2017 will be determined </span>by developments in housing and labour markets.</p>
<p>Westpac is expecting economic growth and employment growth to lift in 2017 boosted by higher commodity prices; ongoing strong residential construction; and booming exports. While the pace of house price appreciation can be expected to slow the case for lower rates under those circumstances does not seem to be strong.</p>
<p><span>We expect rates to remain on hold in 2017. </span></p>
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<p><em>BILL EVANS</em><em> is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.</em></p>
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Consumer sentiment dips a little, Christmas spending plans disappoint: Westpac's Bill Evans

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<p>GUEST OBSERVER</p>
<p>As expected, the Reserve Bank Board decided to leave the cash rate unchanged at 1.5 percent.</p>
<p>It is significant that the Governor chose to retain the same language as used in October for the concluding paragraph which signals any bias. The neutral bias which we saw in October has been retained in November.</p>
<p>In recent speeches the Governor has highlighted his overall approach to policy. That entails a 2-3 percent target for inflation “over time”. He has pointed out that with inflation currently below the bottom of that band he eventually expects inflation to move within the band. However the pace at which that movement is expected will be dependent upon the state of the labour market and the housing market.</p>
<p>Over the last month we received key data on employment; housing; and inflation. As we anticipated, the inflation report printed broadly as the Board expected signalling no need to adjust the policy stance for the inflation update. Recall that the Bank’s forecasts for underlying inflation in 2016 are 1.5 percent and in 2017 2 percent. The September inflation report signalled that the 1.5 percent is likely to be achieved and our analysis indicated that there was some evidence that we have passed the low point in inflation although the pace of increase is likely to be moderate. That scenario fits with the 2 percent forecast for 2017.</p>
<p>The language around the labour market was almost identical to October although consistent with the disappointing September employment report the Governor noted that “employment growth overall has slowed”. However he did repeat the observation that “forward-looking indicators point to continued expansion”.</p>
<p>Commentary around the housing market was also broadly unchanged although the language describing the activity in Sydney and Melbourne was strengthened from “some markets have strengthened recently” to “some markets have been rising briskly”.</p>
<p>International commentary, specifically around China, has changed. In October the Governor noted that the “underlying pace of growth in China has been moderating”. He now recognises that recent data has improved but points out that “medium term risks to growth remain”. That sentiment is consistent with the detailed analysis in the Financial Stability Review of the risks emerging in the Chinese banking system as the small private sector banks grow rapidly with over reliance on short term funding and a generally increasing exposure to complex investment assets.</p>
<p><strong>Conclusion</strong></p>
<p>We are not surprised by this decision and Statement. It is entirely consistent with our view that rates will remain on hold for the remainder of this year and over the course of 2017.</p>
<p>As we have discussed in previous notes the inflation outlook is unlikely to be the source of any future policy adjustment.</p>
<p>The policy easing in 2016 has been in response to the inflation shock earlier in the year but now policy is likely to refocus on the real economy.</p>
<p>Our current forecast of 3.3 percent growth next year, supported by 1.6 percent growth in employment, is unlikely to signal the need for lower rates.</p>
<p>However, with inflation only likely to track along the bottom of the 2-3 percent target band next year there will be scope to ease further should growth, and the labour market in particular, profoundly disappoint.</p>
<p>That is not our forecast but we acknowledge that if rates are to move next year it will be down rather than up in 2017.</p>
<p><em>BILL EVANS</em><em> is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.</em></p>
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mick.cee-iDmgDDAmu8

Reserve Bank retains neutral bias, no significant change in commentary: Westpac's Bill Evans

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<p style="text-align: left;" align="center">GUEST OBSERVER</p>
<p>The Reserve Bank has left the cash rate unchanged despite a weaker than expected underlying inflation result last week.</p>
<p>Financial comparison site <a href="https://mozo.com.au/https://mozo.com.au/">Mozo.com.au</a> shares the five need-to-know numbers after the RBA’s Melbourne Cup Day rate decision:</p>
<p><img src="/images/2016/11/02/3.35.png" alt=""></p>
<p>With experts forecasting a rate cut as early as February after today’s decision, home borrowers shouldn’t rush to fix their home loan as they’re better off making the most of a competitive variable rate from as low as 3.35 percent.  </p>
<p><strong><img src="/images/2016/11/02/167.png" alt=""></strong></p>
<p>This is the difference in monthly repayments for a home borrower on the average variable rate compared to the most competitive rate on the market.<strong> </strong></p>
<p> <strong><img src="/images/2016/11/02/2996.png" alt=""></strong></p>
<p>If you’d rather haggle than refinance, Mozo’s annual mystery shop of the Big 4 banks reveals the average home borrower can save up to $2,996 in repayments annually simply by asking their lender for a better deal.</p>
<p><strong><img src="/images/2016/11/02/1.45.png" alt=""></strong></p>
<p>Investors claimed the largest discounts in Mozo’s annual mystery shop with lenders offering up to 1.45% off the standard variable rate compared to last year when no additional discounts were offered. This suggests the banks are now open to negotiating on investor rates again.</p>
<p> <strong><img src="/images/2016/11/02/87%20bps.png" alt=""></strong></p>
<p>The difference between the average one and two year term deposits and the average ongoing savings rate is sizeable - up to 87 bps. Savers should hedge their bets by putting extra cash away in a competitive term deposit before the next rate cut.</p>
<p><em>Kirsty Lamont is director, Mozo, and can be contacted <a href="https://mozo.com.au/" target="_blank">here</a>. <em><a href="https://mozo.com.au/" target="_blank"><br></a></em></em></p>
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jchancellor-FAypfDUnLy

Mozo's five numbers you need to know after the Cup Day RBA decision

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<p><span>GUEST OBSERVER</span></p>
<p><span>The RBA kept its cash rate steady at 1.50 percent, as expected.</span></p>
<p><span> Although underlying inflation is running at 1.5 percent y-o-y, which is below the RBA's 2-3 percent target band, the central bank noted that 'the September quarter inflation data were broadly as expected' and that 'inflation is expected to pick up gradually over the next two years'. </span></p>
<p><span>It's clear that although inflation is still below target the RBA is making use of the 'flexible' and 'medium-term' nature of the inflation targeting regime.</span></p>
<p><span> In short, the RBA decision-makers are not 'inflation nutters'. They backed this up with (lack of) action. Overall, the statement was little changed from last month. Somewhat surprisingly, there was no specific reference to the recent sharp rise in coal prices. We expect the RBA to be on hold at 1.50 percent in coming quarters. </span></p>
<p><span>Facts </span></p>
<p><span>The RBA held its cash rate steady at 1.50 percent, as expected by 22 of 28 economists in the Bloomberg survey, including HSBC. Just prior to the decision the market was pricing a 5 percent chance of a 25bp cut. </span></p>
<p><span>Implications </span></p>
<p><span>The RBA made use of the 'flexible' nature of its inflation targeting regime by choosing not to cut the cash rate, even though underlying inflation remains clearly below the bottom edge of its 2-3 percent target band (in both q-o-q and y-o-y terms). </span></p>
<p><span>Harking back to a famous comment by former Bank of England Governor, Mervyn King, in 1997; there are no 'inflation nutters' here. RBA Governor Phil Lowe recently repeated this view at a parliamentary testimony and today the RBA backed it up with (lack of) action. </span></p>
<p><span>The accompanying statement was very similar to last month, with only a few small tweaks to the text. On the exchange rate, they repeated that 'an appreciating exchange rate could complicate' the rebalancing of growth. </span></p>
<p><span>On the housing market, the statement re-iterated that 'the rate of increase in housing prices is also lower than it was a year ago', but also acknowledged that 'prices in some markets have been rising briskly over the past few months'. </span></p>
<p><span>Somewhat surprisingly, there was no specific reference to the recent sharp rise in coal prices. Keep in mind that coking coal prices are up 210 percent since May and thermal coal prices are 116 percent higher (iron ore prices are also up 63 percent since January). </span></p>
<p><span>To the extent that these price rises are sustained, this has the capacity to change the Australian growth story significantly, in our view. In not mentioning coal prices today, the RBA appears to be taking a (characteristically) cautious approach to not shifting the narrative until it is completely sure that the story has changed. </span></p>
<p><span>We will be looking out for more on commodity prices and the likely impact on growth and inflation in the RBA's detailed quarterly official statement due out on Friday 4 November. </span></p>
<p><span><em><a href="https://www.about.hsbc.com.au/hsbc-in-australia/management-team" target="_blank">PAUL BLOXHAM</a> IS CHIEF ECONOMIST (AUSTRALIA AND NEW ZEALAND) FOR HSBC. </em></span></p>
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No 'inflation nutters' here: HSBC's Paul Bloxham

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<p>RBA Governor Philip Lowe's November 2016 RBA statement.</p>
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<p>At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.</p>
<p>The global economy is continuing to grow, at a lower than average pace. Labour market conditions in the advanced economies have improved over the past year, but growth in global industrial production and trade remains subdued. Economic conditions in China have steadied recently, supported by growth in infrastructure and property construction, although medium-term risks to growth remain. Inflation remains below most central banks' targets.</p>
<p>Commodity prices have risen over recent months, following the very substantial declines over the past few years. The higher commodity prices have supported a rise in Australia's terms of trade, although they remain much lower than they have been in recent years.</p>
<p>Financial markets are functioning effectively. Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative. Government bond yields have risen, but are still low by historical standards.</p>
<p>In Australia, the economy is growing at a moderate rate. The large decline in mining investment is being offset by growth in other areas, including residential construction, public demand and exports. Household consumption has been growing at a reasonable pace, but appears to have slowed a little recently. Measures of household and business sentiment remain above average.</p>
<p>Labour market indicators continue to be somewhat mixed. The unemployment rate has declined this year, although there is considerable variation in employment growth across the country. Part-time employment has been growing strongly, but employment growth overall has slowed. The forward-looking indicators point to continued expansion in employment in the near term.</p>
<p>Inflation remains quite low. The September quarter inflation data were broadly as expected, with underlying inflation continuing to run at around 1½ per cent. Subdued growth in labour costs and very low cost pressures elsewhere in the world mean that inflation is expected to remain low for some time.</p>
<p>Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 has been helping the traded sector. Financial institutions are in a position to lend for worthwhile purposes. These factors are assisting the economy to make the necessary adjustments, though an appreciating exchange rate could complicate this.</p>
<p>The Bank's forecasts for output growth and inflation are little changed from those of three months ago. Over the next year, the economy is forecast to grow at close to its potential rate, before gradually strengthening. Inflation is expected to pick up gradually over the next two years.</p>
<p>In the housing market, supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments. Turnover in the housing market and growth in lending for housing have slowed over the past year. The rate of increase in housing prices is also lower than it was a year ago, although prices in some markets have been rising briskly over the past few months. Considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in rents is the slowest for some decades.</p>
<p>Taking account of the available information, and having eased monetary policy at its May and August meetings, the Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.</p>
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Rental growth slowest in decades: RBA Governor Philip Lowe's Cup Day November 2016 statement

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<p>The RBA cash rate decision came out at 2.30 today with the decision to hold rates at 1.5 percent.</p>
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<p>It noted inflation remains quite low. The September quarter inflation data were broadly as expected, with underlying inflation continuing to run at around 1½ per cent. Subdued growth in labour costs and very low cost pressures elsewhere in the world mean that inflation is expected to remain low for some time. </p>
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<p><span id="0.5879648576956242">CoreLogic</span> research director Tim Lawless said the decision to keep rates on hold was arguably one of the safer bets today, with the outcome widely anticipated by the market. </p>
<p>"The performance of the housing market was likely a key topic of discussion amongst RBA board members, with <span id="0.5741071035154164">CoreLogic</span>’s October results released today showing a further 0.5 percent rise in dwelling values across the capital cities," he said.</p>
<p>"Since the first rate cut this year in May, <span id="0.9664360415190458">CoreLogic</span>’s hedonic index has increased by 4 percent across the combined capitals, with more substantial rises reported in Sydney and Melbourne.  </p>
<p>"With the cash rate on hold, mortgage rates are likely to remain at the lowest level since the mid 1960’s.  </p>
<p>"It’s becoming more broadly accepted that such low mortgage rates have contributed to a renewed strengthening in housing market conditions despite lower transactional activity and rising affordability constraints, and policy makers would be reluctant to offer more stimulus to the already hot housing market performance."</p>
<p>Mortgage Choice chief executive officer John Flavell said he wouldn’t be surprised to see the cash rate remain on hold at 1.5% for some time yet.<br> <br>“If the domestic economic data remains strong, there would be no immediate reason for the Reserve Bank to change their current stance on monetary policy,” he said.<br><span> </span></p>
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jonathanchancellor-7SQnKwU6yx

RBA holds at November 2016 Cup Day meeting

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<p>CAMA RBA Shadow Board</p>
<p>This month has been quiet again, with little economic news to help guide CAMA’s RBA Shadow Board.</p>
<p>Employment numbers have again proved volatile, and business confidence rebounded somewhat, while consumer price inflation, at 1.0 percent year-on-year, remains well below the RBA’s 2-3 percent target band.</p>
<p>The CAMA RBA Shadow Board clearly believes that the cash rate should remain at its current level. The Shadow Board attaches a 64 percent probability to a rate hold being the appropriate policy setting. The confidence attached to a required rate cut equals 4 percent, while the confidence in a required rate hike equals 32 percent.</p>
<p>Australia’s unemployment rate remains unchanged at 5.6 percent, according to the Australian Bureau of Statistics. The participation rate, again, fell slightly, from 64.7 percent to 64.5 percent. And, once again, a large increase in part time employment (43,186) was accompanied by a slightly larger decrease in full time employment (53,000). Data on nominal wage growth will be released in mid-November but the forecast is for a paltry 2 percent, year-on-year.</p>
<p>The Aussie dollar, relative to the US dollar, continues to be range bound between 75 US¢ and 77 US¢. After a long secular decline, yields on Australian 10-year government bonds have firmly rebounded, to 2.34 percent. Domestic share prices showed no clear direction in the month of October.</p>
<p>Global markets appear to be in a holding loop, waiting for the outcome for the US Presidential election, held on 8 November. The Federal Reserve Bank in the US, too, is putting off its decision to raise interest rates, in spite of recent favourable economic data. Crude oil prices, after last month’s surprise announcement by the Organization of the Petroleum Exporting Countries (OPEC) to modestly cut oil output, have stabilized around US$ 50. There has been no significant economic news from other regions.</p>
<p>Consumer confidence, as measured by the Westpac-Melbourne Institute Consumer Sentiment Index, is virtually unchanged from the previous month. The manufacturing and services PMI, which measure the performances of the manufacturing and services sectors, have rebounded slightly, from 46.9 to 49.8 and from 45 to 48.9, respectively.</p>
<p>The AIG Performance of Construction Index (PCI) reversed its recent decline and rose from 46.6 in August to 51.4 in September, above the long-run average for the past 10 years. New numbers on building permits will be released on 2 November and, after the recent volatility in (the number of permits grew 12 percent in July and fell 1.8 percent in August), should provide a clearer picture of the state of the housing market.</p>
<p>The Shadow Board attaches a virtually unchanged probability of 64 percent (65 percent last month) that “no change” is the appropriate policy, a 4 percent probability (6 percent last month) that a rate cut is appropriate and a 32 percent probability (29 percent in the previous month) that a rate rise, to 1.75 percent or higher, is appropriate.</p>
<p>The probabilities at longer horizons are as follows: 6 months out, the estimated probability that the cash rate should remain at 1.50 percent equals 24 percent, three percentage points down from the previous month.</p>
<p>The estimated need for an interest rate decrease is unchanged at 13 percent, while the need for a rate increase equals 63 percent (61 percent in October). A year out, the Shadow Board members’ confidence that the cash rate should be held steady equals 18 percent (16 percent in October), while the confidence in a required cash rate decrease is unchanged at 10 percent and the confidence in a required cash rate increase equals 72 percent (73 percent in October).</p>
<p><a href="/images/2016/11/01/Screen%20Shot%202016-11-01%20at%2010.21.57%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/11/01/Screen%20Shot%202016-11-01%20at%2010.21.57%20AM.png" alt=""></p>
<p>For more information, <a href="https://cama.crawford.anu.edu.au" target="_blank">click here</a>.</p>
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No need for Melbourne Cup rate change: CAMA RBA Shadow Board

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<p>GUEST OBSERVER<img src="file:///page1image20256" alt="page1image20256" width="100.920000" height="0.959990"><img src="file:///page1image20680" alt="page1image20680" width="0.959990" height="0.959990"><img src="file:///page1image20840" alt="page1image20840" width="143.210000" height="0.959990"><img src="file:///page1image21000" alt="page1image21000" width="289.249990" height="0.959990"><img src="file:///page1image21760" alt="page1image21760" width="143.930000" height="0.959990"></p>
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<p><span>Total private credit posted another solid result in September, led by expansion in the housing sector. Of note is the pickup in investor credit, where growth has been accelerating over the past six months. </span></p>
<p><span>Click to enlarge</span></p>
<p><span><img src="/images/2016/11/01/Screen%20Shot%202016-11-01%20at%209.29.21%20AM.png" alt=""></span></p>
<p><span>Combined with strength in other indicators, this suggests the housing market remains in good shape.</span></p>
<p>Housing credit expanded a steady 0.5 percent m/m in September, in line with the trend so far this year. Investor credit rose a solid 0.6% reflecting the recent strength in investor finance approvals after last year’s regulatory-induced slowdown.</p>
<p><a href="/images/2016/11/01/Screen%20Shot%202016-11-01%20at%209.31.06%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/11/01/Screen%20Shot%202016-11-01%20at%209.31.06%20AM.png" alt=""></p>
<p>This is the strongest growth for the segment since August 2015, and provides further evidence (along with the recent pickup in house prices and auction results) that sentiment in the housing market remains positive.</p>
<p><a href="/images/2016/11/01/Screen%20Shot%202016-11-01%20at%209.32.09%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/11/01/Screen%20Shot%202016-11-01%20at%209.32.09%20AM.png" alt=""></p>
<p>Business credit posted a mild increase in September, but growth continues to slow. This is in line with the ongoing slowdown in new finance approvals (Figure 2), and is likely to remain the case in coming months. Meanwhile, personal credit contracted for the 10th month in succession, and now sits 1.3 percent lower than a year ago.</p>
<p><a href="/images/2016/11/01/Screen%20Shot%202016-11-01%20at%209.33.34%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/11/01/Screen%20Shot%202016-11-01%20at%209.33.34%20AM.png" alt=""></p>
<p>Although consumer confidence sits at elevated levels and household consumption is still ticking along, individuals appear cautious of taking on new (non-housing related) debt. </p>
<p><em>Felicity Emmett co-head of Australian economics, ANZ Research and can be contacted <a href="https://www.anz.com/corporate/research/" target="_blank">here</a>.</em></p>
<p><em>Daniel Gradwell is economist, ANZ and can be contacted <a href="https://www.anz.com/corporate/research/" target="_blank">here</a>.</em></p>
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Australian housing credit still rising, led by investors: ANZ

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<p>While Melbourne Cup day has traditionally been viewed as a popular day for the Reserve Bank to shift the cash rate, new research from comparison website finder.com.au suggests it’s unlikely to be the case this time around.</p>
<p>The majority (90 percent) of the 33 experts and economists from the monthly <a href="https://finder.us9.list-manage.com/track/click?u=cc5e9bce699fa1d71a67cf499&amp;id=e389997702&amp;e=58cd8ffd03" target="_blank">finder.com.au RBA survey</a> are betting on a cash rate hold at 1.5 percent at tomorrow’s board meeting (Tuesday 1 November, 2016). </p>
<p>A finder.com.au analysis has found the Bank has cut rates on the first Tuesday of November just four times in the past 26 years.</p>
<p>The last two instances were on Melbourne Cup days in 2011 and 2008. However prior to this, it was more than 20 years ago in 1996. </p>
<p>Graham Cooke, Insights Manager at finder.com.au, says that in recent times, Melbourne Cup Day has seen more rate rises than rate falls. </p>
<p>“For many Australians, the first Tuesday of November is synonymous with the race that stops a nation. But for mortgage holders, it’s also a day of worry that the Bank may up the cash rate while the limelight is on the track.”</p>
<p>The RBA has increased rates on four out of the last 10 Melbourne Cup days. </p>
<p>Interestingly, just three economists (Darryl Gobbett of Baillieu Holst Ltd, Janu Chan of St.George Bank and Stephen Koukoulas of Market Economics) are expecting the cash rate to plummet in November this year.</p>
<p>This follows inflation data released last week showing that inflation rose by 1.3% over the 12 months to the September quarter 2016. </p>
<p>Only three economists (12 percent) who forecasted beyond this month’s decision are expecting a rate cut in December this year. Most experts (69 percent), however, predict a rate cut in the first half of next year. </p>
<p>Four economists (15 percent) are now expecting the next rate movement to be in a positive direction, and are tipping an increase to occur next year.</p>
<p>However, when asked how low the rate will go before it starts to rise, only a third of the economists who responded (10, 34 percent) expect the rate to fall no lower than 1.5 percent.</p>
<p>Over half (14, 58 percent) believe at least one more cut is in the pipeline, forecasting the rate to bottom-out at either 1.25 percent or 1.00 percent. </p>
<p>Following ASIC’s call for Australian banks to introduce tracker mortgages, economists were asked if these products could potentially benefit Australian borrowers.</p>
<p>The vast majority of experts said they didn’t believe tracker mortgages would benefit the consumer, while 35 percent believe they could be useful.</p>
<p>Mr Cooke says while tracker mortgages are widely available in the UK and Ireland, it’s unlikely that they will have a place in the Australian market.</p>
<p>“Tracker mortgages are a type of variable rate mortgage that follows or ‘tracks’ a base rate, such as the RBA rate, and similar to a variable rate product, borrowers can benefit from lower repayments when interest rates fall. </p>
<p>“As they are tied to a central bank rate, they offer more predictable interest rates to consumers, so if there’s a rate change, borrowers don’t need to wait around to see when and if their lender will pass on a rate discount. </p>
<p>“However, banks may struggle to make a profit on these types of products, so it’s unlikely that they’ll be offered widely within Australia,” he says. </p>
<p>Interestingly, a separate survey by finder.com.au found that 30 percent of Australians would be interested in a tracker mortgage if they were offered locally.</p>
<p>In recent weeks, Auswide Bank introduced its RBA Rate Tracker Home Loan which is now available to borrowers. </p>
<p><strong>Here’s what our experts had to say:</strong></p>
<p><strong>Alan Oster, NAB:</strong> "Still looking to see impact of past cuts."</p>
<p><strong>Alison Booth, Australian National University: </strong>"Now the inflation figures and other economic indicators are out, there is no need to change the cash rate."</p>
<p><strong>Brian Parker, SUNSUPER:</strong> "The CPI data suggest that inflation may well have bottomed, and the RBA has signalled that it would very reluctant to cut rates at this point."</p>
<p><strong>Christine Williams, Smarter Property Investing:</strong> "With the latest figures out I believe the rates for November will stay on hold. I am still of the belief there will be a drop in December." </p>
<p><strong>Darryl Gobbett, Baillieu Holst Ltd (Decrease):</strong> "Sept Qtr CPI and other information points to underlying continuing well under 1.5 percent well through 2017. $A also continues higher than the RBA would see as desirable.”</p>
<p><strong>Dr Andrew Wilson, Domain Group:</strong> "Close call by the Bank - last real chance for the year to influence economic activity through a cut. Mixed news on economy with significant shedding of full time jobs, falling participation rates, record low and still falling underlying inflation, trend retail sales down and high dollar. But Sydney and Melbourne house prices booming with lower rates to add fuel to that inferno and intensify the political affordability debate."</p>
<p><strong>Emily Dabbs, Moody's Analytics: </strong>"Inflation has stabilised slightly and employment growth remains robust. The recent rise in house prices across Sydney and Melbourne will also play a role as the RBA keeps an eye on financial stability. " </p>
<p><strong>Garry Shilson-Josling, Australian Associated Press: </strong>"The economy is doing enough to allow the RBA to stay on the fence, and there are hints that inflation is bottoming out." </p>
<p><strong>Grant Harrod, LJ Hooker:</strong> "Strong East Coast property markets, combined with the diminishing impact of cutting already record-low interest rates, should see the RBA hold the cash rate over the short term. " </p>
<p><strong>Janu Chan, St.George Bank (Decrease): </strong>"Low inflation and little prospect that it will return to the RBA's 2 to 3% target band over the medium term. This has been reinforced by softer labour market conditions which suggests that spare capacity remains within the economy. The RBA also appears more relaxed on housing. Nonetheless, we view next week's decision a very close call as recent comments by Lowe suggest flexibility around the RBA's inflation target. "</p>
<p><strong>John Caelli, ME:</strong> "The CPI data remains weak but continued strength in house prices means the Bank can probably remain on hold for a while." </p>
<p><strong>John Hewson, ANU:</strong> "A safe bet on Cup Day. Vagueness on inflation, although core inflation consistent with RBA forecasts." </p>
<p><strong>Jonathan Chancellor, Property Observer:</strong> "All the economic stats lend themselves to a wait and see approach. The strong east coast spring housing market doesn't need any extra impetus." </p>
<p><strong>Jordan Eliseo, ABC Bullion:</strong> "The higher than expected CPI print guarantees a "hold" on Melbourne Cup Day, with the RBA happy to sit on the sidelines. But with core inflation still soft, the AUD far higher than they'd like to see it, and the employment picture deteriorating, it's still just a question of "when" not "if" they'll ease again "</p>
<p><strong>Leanne Pilkington, Laing+Simmons:</strong> "Because to announce another rate cut with such a spotlight on the housing market would be risky from a public perspective and they would prefer to be cautious.  Therefore the safest move is to leave them on hold."</p>
<p><strong>Lynne Jordan, Liberty: </strong>"“The odds are looking slim for a Melbourne Cup day rate cut, with the RBA set to hold the official cash rate again at 1.5 per cent. The latest inflation figures were always going to play a big part in the RBA’s decision, and with inflation creeping in a little stronger than expected, there is no need for any action yet. " </p>
<p><strong>Mark Brimble, Griffith Uni:</strong> "While headline inflation was slightly higher than expected, it is still outside the target band and underlying is weaker.  The AUD is stubbornly creeping up and housing is reasonably robust, despite emerging weakness in certain parts of the market.  Bias remains to further easing, but with November shaping up to be a big month (US elections for example) it likely they will hold for now." </p>
<p><strong>Matthew Peter, QIC: </strong>"With inflation within expectations, the RBA can afford to sit on 1.5% cash rate into 2017."</p>
<p><strong>Matthew Pollock, Master Builders Australia: </strong>"The Q3 CPI result was low but showed signs of improvement. on top of that commodity prices are on the improve and should give a much need boost to national income growth, and in turn lift price growth." </p>
<p><strong>Michael Witts, ING Bank: </strong>"Given the solid GDP data and no further weakening in the inflation rate, together with ongoing focus on housing prices, the RBA will sit tight in November."</p>
<p><strong>Michael Yardney, Metropole Property Strategists:</strong> "The RBA is looking for reasons not to cut rates further and the slight uptick in inflation, plus our generally softer property markets will allow the RBA to hold rates at the present level."</p>
<p><strong>Nicholas Gruen, Lateral Economics:</strong> "Because it's flying by the seat of its pants and thinks things are OK right now - even if it forecasts continuing slack in the economy."</p>
<p><strong>Noel Whittaker, QUT:</strong> "Inflation figures are OK  - no reason to move."</p>
<p><strong>Paul Bloxham, HSBC: </strong>"The inflation targeting regime is 'flexible' and the RBA has already cut by 50bps this year." </p>
<p><strong>Paul Dales, Capital Economics: </strong>"The weakness of underlying inflation in the third quarter means there is a greater chance than widely believed that the RBA will cut rates to 1.25 percent in November. However, the focus on the medium-term nature of the inflation target, concerns over housing and the recent rises in commodity prices mean the RBA is more likely to put up with low underlying inflation and keep rates at 1.5 percent for now."</p>
<p><strong>Peter Haller, Heritage Bank:</strong> "Quarter 3 inflation data was not sufficiently weak to justify a further cash rate cut at this time."</p>
<p><strong>Richard Holden, UNSW Business School:</strong> "Inflation data was not terrible."</p>
<p><strong>Robert Montgomery, Infrastructure Partnerships Australia:</strong> "Despite low underlying inflation recorded in the latest data release, the RBA will hold rates at 1.5 percent. However, continued low inflation could put pressure on the RBA to make a further cut in 2017."</p>
<p><strong>Saul Eslake (Independent):</strong> "(1) Latest inflation numbers don't warrant taking interest rates down to a new record low; (2) Other economic data released since last meeting will have done little to alter the RBA's assessment of or outlook for the Australian economy (although maintenance of upward trend in coal and iron ore prices might have made them marginally more optimistic); (3) growing prospect of Fed raising US rates means there could be some (welcome) downward movement in the A$ by year end"</p>
<p><strong>Savanth Sebastian, Commsec: </strong>"Modest lift in inflation is likely to result in policy makers holding off from cutting the cash rate. Debate on the benefit of further rate cuts will be a key reason for a no change decision." </p>
<p><strong>Scott Morgan, Greater Bank: </strong>"The economic data doesn’t support a cut at this time. Core Inflation is still  below target but in line with expectations. The US Fed decision on rates may be a key driver of any further Australian cash rate movements." </p>
<p><strong>Stephen Koukoulas, Market Economics (Decrease):</strong> "Inflation has been undershooting the RBA target for two years and shows no signs of lifting. The recent CPI saw the lowest quarterly and annual underlying inflation result on record. The RBA needs to cut rates to try to get inflation back to its target range."</p>
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Stephen Koukoulas tips November RBA rate cut decision

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<div class="column">GUEST OBSERVER</div>
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<div class="column">Inflation appears to be making a comeback. That certainly seems the conclusion on global bond markets with Australian 10-year bond yields hitting 2.38 percent – the highest yield in almost six months. The higher bond yields are serving to draw investors away from equities markets, causing the ASX 200 index to fall for the third day.</div>
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<br>There was some justification for the inflation fears in the latest data on producer prices. Manufacturing input costs rose 2.0 percent in the September quarter with domestic costs up 2.2 percent.</div>
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<div class="column">On top of the 0.9 percent lift in the June quarter, manufacturing input costs are experiencing the biggest gains in five years. The question is how much and how quickly prices flow through to final producer and consumer prices. </div>
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<br>The saving grace in the September quarter was the fact that the Aussie dollar rose, driving prices of imported goods lower. But if the US economy continues to lift, driving interest rates higher, the Aussie dollar may have a few headwinds to contend with over the next two months.</div>
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<br>What do the figures show?</div>
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<br>Producer prices</div>
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<br>The Producer Price Index (PPI), or final stage prices, rose by 0.3 percent in the September quarter to stand 0.5 percent higher than a year ago. Of final stage prices, domestic good prices rose by 0.5 percent while import good prices fell by 1.2 percent in the quarter.</div>
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<br>The Bureau of Statistics notes that the 0.3 percent lift in final stage prices was “mainly due to rises in the prices received for other agriculture which includes bananas, beans and tomatoes (+8.3 percent), sheep, beef cattle and grain farming; and dairy cattle farming (+11.9 percent) and electricity supply, gas supply and water supply, sewerage and drainage services (+1.7 percent).</div>
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<br>The lift in prices was “partly offset by falls in the prices received for petroleum refining and petroleum fuel manufacturing (-5.5 percent), computer and electronic equipment manufacturing (-1.9 percent) and cigarette and tobacco product manufacturing (-5.0 percent).”</div>
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<br>Prices of intermediate goods rose by 0.6 percent in the quarter to stand 0.2 percent higher over the year. Preliminary stage materials rose by 0.6 percent in the quarter to be up 0.1 percent over the year.</div>
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<br>Manufacturing input prices rose by 2.0 percent in the September quarter while output prices rose 0.9 percent. Domestic input costs rose by 2.2 percent in the September quarter. </div>
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<div class="column">ABS notes rises in prices paid by manufactures to the Agriculture (+5.1 percent), Metal ore mining (+5.3 percent) and Oil and gas extraction (+4.4 percent) industries drove the rise in the price index of Input to the Manufacturing industries. Products contributing to these rises were cattle &amp; calves, silver ores and crude oil.</div>
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<div class="column">Rises in prices received by manufactures for outputs of Meat processing (+6.5 percent), Basic non-ferrous metal manufacturing (+4.6 percent), Sugar manufacturing (+16.0 percent), Copper, silver, lead and zinc smelting (+6.4 percent) and Industrial gas manufacturing (+6.8 percent) industries drove the rises in the price index of Output of the Manufacturing industries. Products contributing to these rises were beef and veal, precious metal recovery, sugar and non-refinery LNG. </div>
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<div class="column">New home sales</div>
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<div class="column">Total seasonally-adjusted new home sales (houses and apartments) rose by 2.7 percent in September after a 6.1 percent rise in August. Detached house sales rose by 3.8 percent in September after a 2.9 percent rise in August.</div>
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<div class="column">Private sector seasonally adjusted multi-unit sales eased by 0.8 percent in September 2016 after rising by some 17.8 percent in August.</div>
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<div class="column">The Housing Industry Association reported: “In the month of September 2016, detached house sales fell in four out of the five states covered by the report, an exact reversal of the situation in August. During September 2016, the largest fall in sales was recorded in South Australia (-23.0 per cent), followed by Western Australia (-17.2 per cent), New South Wales (-12.9 per cent) and Queensland (-2.6 per cent). Victoria was the only state to record an increase in new home sales over this period with 14.0 per cent growth in sales over the past year.</div>
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<div class="column">What is the importance of the economic data?</div>
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<br>The producer price figures are important in flagging price pressures at an early stage. If business costs are rising, the risk is that these will be passed on in terms of higher prices of final consumer goods. The Consumer Price Index is regarded as the key gauge of economy-wide inflation.</div>
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<div class="column">The Housing Industry Association releases data on the sales of new homes each month. The HIA collects the data each month from a sample of Australia's largest 100 home builders. The survey covers around 14 percent of the home building industry.</div>
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<div class="column">What are the implications for interest rates and investors?</div>
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<div class="column">Is inflation making a comeback? There are some early signs, especially in agriculture and metal, but it is early days. While cost pressures are emerging, the $64 question is whether businesses will pass through the high costs to consumers.</div>
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<div class="column">Chances of a rate cut next Tuesday stand at just 4 percent. And those market views have been reinforced by recent data showing a big lift in the terms of trade and higher domestic manufacturing costs.</div>
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<br>The Australian sharemarket is exposed to higher bond yields because a high proportion of investor returns are provided by dividends as opposed to increases in share prices. As a result yield-hungry investors may seek to trim some exposures in the sharemarket, especially utilities and banks, to chase higher yields in fixed asset markets. The historic price-earnings ratio has been holding above long-term averages, suggesting that the market has been relatively dear rather than cheap. The historic PE was 16.65 in September, above the 15.0-15.5 long- term average. <br> <br> <em>Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</em>
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