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

Joel Robinson

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

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

Sammut secures approval for debut Brisbane apartment development in Toowong

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

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

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

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

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

WM Residences fills gap in Mordialloc townhouse market

Interest Rates

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GUEST OBSERVER
Lending: Total new loans (personal, business, housing &amp; lease) rose by 0.7 percent in March after a 3 percent rise in February. Lending was just 3.9 percent shy of the 7½-year high recorded in November 2015.
Total lending is up 1.6 percent on a year ago.
Within personal fixed finance commitments, loans for new cars were up by 20.4 percent on a year earlier while loans for used cars were up 15.5 percent. Loans for residential blocks of land were up by 9.1 percent on a year ago.
<a href="/images/2016/05/13/Screen%20Shot%202016-05-13%20at%2012.53.10%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/13/Screen%20Shot%202016-05-13%20at%2012.53.10%20PM.png" alt=""> 
The lending figures have implications for finance providers, retailers, and companies dependent on consumer and business spending.
What does it all mean?
Similar to the housing finance data early this week, the lending statistics is essentially old news – pre Reserve Bank interest rate cut. In fact the shift in Reserve Bank commentary to a lower inflation profile suggests that further interest rate cuts are on the cards. And in that context very likely to support further lending not just in housing but across the business sector as well.
The lift in borrowing across the economy in March is encouraging coming of the back of solid gains in February.
Overall, total lending is just shy of 7½-year highs recorded in late 2015. While lending remains healthy the hope would be that business borrowings lift from here - driving investment and supporting medium term growth.
The generational low interest rates will be supportive of further borrowing – but there is no guarantee. While Reserve Bank policymakers would be hoping that the latest rate cut spurs another round of activity, they would be well aware that borrowers are cautious about taking on more debt. And lower interest rates compress bank margins, affecting profits and potentially investment, employment and shareholder returns.
Unfortunately elections cause consumers and businesses to hold back on spending, employment and investment plans, and that is the risk to the positive momentum that has built up in recent months. CommSec expects that the low inflation outlook will result in further cuts to the cash rate. Rate cuts have been pencilled in for August and November.
What do the figures show?
Lending Finance
Total new loans  (personal, business, housing &amp; lease) rose by 0.7 percent in March after a 3 percent rise in February. Lending was just 3.9 percent shy of the 7½-year high recorded in November. Total lending is up 1.6 percent on a year ago.
Housing finance:  The seasonally adjusted measure of construction and new purchases fell by 1.2 percent in March while alterations &amp; additions rose by 0.4 per cent. Home loans are up 11.9 percent on a year.
Commercial finance : The seasonally adjusted series for the value of total commercial finance commitments rose by 0.9 percent in March after rising by 4.8 per cent in February. Revolving credit commitments rose by 2.3 percent. Fixed lending commitments rose by 0.4 percent. Business loans are down 2.2 percent over the year.
Personal finance : The seasonally adjusted series for the value of total personal finance commitments rose by 6.3 percent in March after falling by 2.9 percent in February. Revolving credit commitments rose by 11.9 percent and fixed lending commitments rose by 3 per cent. Personal loans are down 1.9 percent over the year.
Within personal fixed finance commitments, loans for new cars were up by 20.4 percent on a year earlier while loans for used cars were up 15.5 percent. Loans for residential blocks of land were up by 9.1 percent on a year ago.
Lease finance : Lending fell by 7.7 percent in March and was up 0.8 percent over the year.
What is the importance of the economic data?
Lending Finance  is released monthly by the Bureau of Statistics and contains figures on new housing, personal, commercial and lease finance commitments. The importance of the data lies in what it reveals about the appropriateness of interest rate settings, confidence and spending levels in the economy.
What are the implications for interest rates and investors?
At present the national economy is tracking ok. Economic growth is healthy and more encouragingly unemployment is at a 2½-year low. However the concern for policymakers is that the deflationary environment becomes more firmly entrenched in coming quarters. A sustained super low inflation landscape will lead to low inflationary expectations over time and in turn a shift in asset allocation.
The bottom line is that underlying inflation is undershooting the 2-3 percent target band and that suggests little risk in cutting rates a little further. CommSec believes there is a strong chance the Reserve Bank will cut interest rates twice more this year, taking the cash rate to a historical low of 1.25 percent by in November.
<a href="/images/2016/05/13/Screen%20Shot%202016-05-13%20at%2012.56.43%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/13/Screen%20Shot%202016-05-13%20at%2012.56.43%20PM.png" alt="">
Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>.
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jchancellor-FAypfDUnLy

Personal loans drive lift in lending: CommSec's Savanth Sebastian

<html><body>
The Commonwealth Bank of Australia predicts another two official Reserve Bank of Australia interest rate cuts will occur in 2016.
It would take the cash rate to 1.25 percent.
CBA's chief economist Michael Blythe said he felt obliged to add another cut to our cash rate profile in November following the one already pencilled for August.
In a note to investors he said there was also a risk that those two cuts come earlier, he said.
The CBA is alone among the big four in tipping a 1.25 percent cash rate by November.
NAB expects the Reserve Bank to hold at 1.75 percent for the rest of 2016.
Westpac and ANZ Bank economists expect one more cut in August.
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CBA's Michael Blythe predicts 1.25 percent cash rate

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GUEST OBSERVER
Property buyers should be wary of the high-risk investment temptation created by record low interest rates and an influx of apartment and housing developments across Australia.
The combination of last week’s rate cut and an oversupply of off-the- plan developments in many capital city locations just increases the risk of this type of speculative investment.
On the eve of the 2016 Federal Budget, the Reserve Bank of Australia lowered interest rates to 1.75 percent – the lowest in Australia’s history.
With any off-the-plan property purchases, investors should understand that they were buying a speculative investment that carries with it associated risks.
Anything that you buy with a delayed settlement is a risk and the longer the settlement the greater that risk becomes.
You’re punting on the fact that the market will go up.
If it goes down and it’s worth less at completion than the price you paid, then, when you go to finance that property at settlement you’re in negative equity.
If you end up in this situation it’s much harder to get the finance and if you can’t secure it then you will lose your 10% deposit.
On top of this you need to be aware that if the developer then on-sells the property for less, they could also sue you for the difference for non-performance.
Off-the-plan contracts also heavily favour the developer and most include shrinkage clauses, sunset clauses, like for like clauses and many others that keep you tied to purchasing the property even though they can have a detrimental impact on the end value of the apartment.
Investors are better off buying established real estate as it offers a much lower overall risk.
Established real estate is usually in a better location and provides a more secure investment opportunity when compared to off-the-plan property.
You’re less likely to be competing with cashed up foreign buyers who don’t understand current market values and often overpay.
In addition, you can rent out established property immediately after purchase and receive a return on your money straight away rather than hoping to secure a return in a year or two.
Often off-the-plan properties, especially those built over the last decade, have been designed more as investment products for developers who want to sell quickly with a high margin rather than a quality product built to a high standard.
In comparison, I find apartments that were built in the 60s to 90s are generally in better locations and have more focus on space and outlook.
Patrick Bright is buyer's agent for EPS Property Search and can be contacted <a href="https://www.epspropertysearch.com.au" target="_blank">here.</a>
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pbright-aNtgvRfvJN

Investors warned against lure of buying off-the-plan: Patrick Bright

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GUEST OBSERVER
Home loans: The number of loans (commitments) for people who are buying or building homes to live in (owner-occupiers) fell by 0.9 per cent in March after rising by 0.9 per cent in February. The number of refinancing transactions rose by 8 per cent.
The value of loans by owner-occupiers and investors to build new homes rose by 1.7 percent in March after a rise of 2.7 per cent in February. The value of loans to build new homes stood at a record high $3.59 billion.
The average home loan cross Australia stood at $357,500 in March, up 5.9 per cent on a year ago, but down 7.4 per cent in the past four months.
Consumer sentiment:The Westpac/Melbourne Institute index of consumer confidence rose by 8.5 per cent in May to 103.2 after sliding by 4 per cent in April. The confidence index is up 0.8 per cent on a year ago. A reading of 100 is the dividing line separating optimism from pessimism.
The housing finance data has implications for banks, building material suppliers and retailers. The consumer confidence data is important for retailers and consumer-facing businesses. Building &amp; building material companies are affected by dwelling starts including Boral, James Hardie, Adelaide Brighton, Brickworks, AV Jennings Limited, Devine Limited and Beacon Lighting.
What does it all mean?
The latest data onthe housing sector could be classified as somewhat old news given that it predates the Reserve Bank interest rate cut last week. What it does do is provide a useful barometer for housing activity earlier this year. And in that context housing activity remains solid. The value of loans to build new homes stood at a record high $3.59 billion. There is a healthy pipeline of work, with owner occupiers likely to dominate home building and buying.
Interestingly the number of home loan refinancing transactions lifted sharply up by 8 per cent in March. And the proportion of fixed rate loans jumped to 14.9 per cent - the highest reading in 16 months. The intense competition by lenders has resulted in home owners shopping around for the best rates on offer and more are locking in those cheaper rates. The lift in refinancing will provide additional savings to household budgets – injecting fresh spending power into the economy. No doubt the latest interest rate cut will spur another round of refinancing although the increasing likelihood of further cuts to the cash rate may result in less fixed rates being taken up.
<a href="/images/2016/05/12/Screen%20Shot%202016-05-12%20at%2010.43.09%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/12/Screen%20Shot%202016-05-12%20at%2010.43.09%20AM.png" alt="">
The monthly consumer confidence data is now merely useful as a check against the timelier weekly survey. The ANZ-Roy Morgan survey has the same number of survey respondents as the monthly series, has been running over the same number of years and covers the same questions but is conducted each week. And what is clear from both surveys is that confidence levels are a little higher than where they were a month ago.
Importantly the weekly consumer confidence survey provides a better picture of the shifting landscape in regards to the Federal budget, latest interest rate cut and movement in the Australian dollar. And in that regard confidence levels are healthy although it is unlikely to translate through a substantial lift in spending. The weekly confidence data will be analysed more closely given the Federal Election campaign currently underway.
What do the figures show?
Housing finance - number
The number of new owner-occupier housing loans (commitments) fell by 0.9 percent in March after rising by 0.9 percent in February. Excluding therefinancing of dwellings, the number of loans was up by 6.7 percent.
Loans by owner-occupiers for the construction of homes fell by 2 percent in March; loans to buy newly-erected dwellings fell by 5.2 percent; and loans for the purchase of established dwellings (excluding refinancing) fell by 0.5 percent. The number of refinancing transactions rose by 8 percent.
Housing finance - value
The value of new housing commitments (owner occupier and investment) fell by 0.2 percent in March after a 2.2 percent increase in February. Owner-occupier loans fell by 1.2 percent while investment loans rose by 1.5 percent.
The value of loans by owner-occupiers and investors to build new homes rose by 1.7 percent in March after a rise of 2.7 percent in February. The value of loans to build new homes stood at a record high $3.59 billion.
Housing finance – other statistics
The proportion of first-time buyers in the home loan market fell from 14.6 percent to 14.2 percent in March – a 12 year low. (However the figures take into account refinancing loans and as such the figures may misrepresent the true situation). The proportion of fixed rate loans rose from 13.2 percent to 14.9 percent in March. And the average home loan across Australia stood at $357,500 in March, up 5.9 percent on a year ago, but down 7.4 percent in the past four months.
Consumer sentiment:
The Westpac/Melbourne Institute index of consumer confidence rose by 8.5 percent in May to 103.2 after sliding by 4 percent in April. The confidence index is up 0.8 percent on a year ago.
The current conditions index rose by 4.2 percent while the expectations index rose by 11.6 percent.
All five components of the index rose in May:
The estimate of family finances compared with a year ago was up by 3.2 percent;
The estimate of family finances over the next year was up by 7.2 percent;
Economic conditions over the next 12 months was up by 13.2 percent;
Economic conditions over the next 5 years was up by 14.8 percent;
The measure on whether it was a good time to buy a major household item was up by 4.9 percent.
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<img src="/images/2016/05/12/Screen%20Shot%202016-05-12%20at%2010.48.23%20AM.png" alt="">
Gender &amp; demographics: Men (index reading of 107.8, up 8.6 percent) were more optimistic than Women 98.8, up 8.3 percent). The sentiment index for young people fell by 3.4 percent to 105.9 in May. Across the other demographics: 25-44 years (index 110.4, up by 11.1 percent); 45 years plus (index 97.5, up 9.9 per cent).
Housing outlook: A good time to buy a dwelling? – Index up 12.1 percent in the month but down 6.4 per cent on the year.
What is the importance of the economic data?
Housing Finance data is produced monthly by the Bureau of Statistics and shows commitments by lenders, such as banks, to provide finance for housing purposes. The lending figures relate to those looking to buy or build homes to live in as well as those seeking to buy or build homes for investment purposes. Generally people get their finance organised first, so the figures are regarded as a leading indicator onthe housing market.
Westpac and the Melbourne Institute release the Index of Consumer Sentiment each month. According to Melbourne Institute: “The survey of consumer sentiment was first undertaken in 1973 and was conducted on a quarterly basis until 1976, a six-weekly basis from 1976 to 1986, and has been conducted monthly ever since.” Confident consumers may be more inclined to spend, especially on major items.
What are the implications for interest rates and investors?
It’s important not to ‘over-think’ consumer confidence. For most punters, the Aussie dollar, interest rates, petrol prices, home prices and the job market are the key factors determining whether someone is positive or negative on supposedly ‘economic’ issues
The Reserve Bank will look to next week’s jobs data to gauge how the labour market is tracking. CommSec expects a further rate cut in coming months.
Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>
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Refinancing on the rise, confidence “Ok”: CommSec's Savanth Sebastian

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Australia's largest non-bank mortgage lender Firstmac will pass the full cut to its customers following the RBA's 0.25 percent cut to the official cash rate.
Almost half of Australia's lenders are continuing to stall on revealing their response, but Firstmac have announced their cut will be effective from May 23.
The cut will apply to all variable rate loans including owner occupier and investment loans.
Firstmac Managing Director Kim Cannon said Firstmac was pleased to be in the minority of lenders who had promptly committed to pass on the full benefit to borrowers.
“It is disappointing that nearly two thirds of Australian lenders have either failed to pass on last week’s RBA rate cut in full, or have not yet announced their response, leaving mortgage brokers in an awkward situation with their customers,” he said.
“There is plenty of competition in the home loan market, and bank customers can see they could be saving money on interest if they chose another lender as well as getting straight answers about how much they will be paying.”
“Bank customers who switch to a Firstmac home loan can save themselves tens of thousands of dollars, and years off their home loan.”
Comparison site finder.com.au found that 49 percent of the 74 lenders on its database have still not announced their rate changes, a full week after the RBA announcement.
Only 26 lenders have passed on the cut in full, while 12 lenders have kept some of the cut for themselves.
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j.ballantyne1990-6AQqhLzZaK

Firstmac to pass on May rate cut in full

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<div class="section">GUEST OBSERVER</div>
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The Westpac Melbourne Institute Index of Consumer Sentiment jumped by 8.5 percent in May from 95.1 in April to 103.2 in May. <div class="layoutArea">
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The Index has now reached its highest level since January 2014. 
This result would have been affected by two very significant events: the Commonwealth Budget and the Reserve Bank’s decision to cut the overnight cash rate from 2 percent to 1.75 percent. 
Our analysis indicates that the dominant driver of the boost to confidence has been the rate cut.
<a href="/images/2016/05/11/Screen%20Shot%202016-05-11%20at%203.52.03%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/11/Screen%20Shot%202016-05-11%20at%203.52.03%20PM.png" alt="">
 
Sharp increases in the Index in response to rate cuts are fairly common, although they depend somewhat on other events at the time and whether moves were expected. The last four rate cuts have seen the Index rise on average 6.6%, with gains ranging from 3.5% to 8.5%. 
Supporting this view has been a stunning 15% increase in the confidence of those respondents in the survey who currently have a mortgage. 
On the other hand we were able to gauge respondents’ specific assessments of the Budget by asking the special question: “What impact do you expect the Federal Budget to have on your family finances over the next 12 months?” The net percentage was -22.4% compared with -22.5% in 2015 and -56.1% in 2014 (a negative means respondents saying ‘deteriorate’ outnumber those saying ‘improve’). 
Since we started asking this question in 2010 all net responses have been negative and the 2016 response is the second highest over that period (the highest being –17.1% in 2010). But this result is hardly the sort of glowing response that would explain an 8.5% jump in the Sentiment Index. 
Other aspects of the survey were also encouraging. Both Westpac and the Government are forecasting the unemployment rate to fall further to 5.5% by mid- 2017. Consistent with this view was a 5.8% fall in the Westpac Melbourne Institute Index of Unemployment Expectations to its second lowest level since January 2012. If sustained, this fall in the Index will be consistent with our expected steady improvement in labour market conditions. 
All components of the Index improved in May. The sub-index tracking respondents’ assessments of their family finances compared to a year ago increased by 3.2% while the sub-index tracking the one year outlook for family finances lifted by 7.2%. 
The economic outlook also improved. The sub-index tracking the one year outlook jumped by 13.2% and the sub-index tracking the 5 year outlook rose by 14.8%. 
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The ‘time to buy a major household item’ sub-index increased by 4.9%. 
A word of caution is appropriate at this juncture. The Reserve Bank strongly favours the ‘family finances vs a year ago’ sub- index as an indicator of future spending patterns. This component increased the least in the survey and is still below its level of two months ago. 
Consumers’ assessments of housing conditions improved, although there was a fall in confidence around the outlook for house prices. The ‘time to buy a dwelling’ lifted by 12.1%, although it is still 6.4% below its level a year ago. The strongest gains were in the most volatile state – New South Wales. 
On the other hand, we saw a more subdued outlook for house prices with a 2.6% fall in the Westpac Melbourne Institute Index of House Price Expectations. This Index is now 15.9% below its level of a year ago. 
The Reserve Bank board next meets on June 7. We expect the Board to keep rates on hold at that meeting although we are expecting a further rate cut at the August meeting. 
The Reserve Bank targets inflation and its latest forecasts point to the underlying inflation rate holding at 1.5% in 2016 – below the bottom of the 2-3% target band. That is uncomfortable but nevertheless acceptable if the forecast is for inflation to move back comfortably within the band in 2017. Current forecasts are for underlying inflation to only move to the bottom of the band in 2017, despite the Bank including a follow up rate cut in its forecast assumptions (due to its practice of adopting market pricing for its interest rate assumptions for the forecast). 
It seems likely that it will have to deliver that cut in August after it has had time to further analyse the inflation trends in the June quarter and the March quarter national accounts.
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<img src="/images/2016/05/11/Screen%20Shot%202016-05-11%20at%203.53.57%20PM.png" alt="" width="834" height="273">
 
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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mick.cee-iDmgDDAmu8

Consumer sentiment responds to rate cut: Westpac's Bill Evans

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With interest rates at record lows, more self-managed funds are snapping up commercial assets between $2 million and $5 million in Western Sydney, although owner-occupiers remain the dominant force.
The strength of the commercial market in Sydney was illustrated through a recent deal by Raine &amp; Horne Commercial, which sold a building at <a href="https://www.realcommercial.com.au/property-industrial+warehouse-nsw-lidcombe-501743026" target="_blank">211 John Street, Lidcombe</a> for $4.3 million to a Honda Motor dealer. The dealership is using the freestanding 2,000 square metre industrial building, which includes a warehouse/showroom factory, as a future service centre.
The dealership beat a number of investors and developers for the property. The building has direct access to Parramatta Road and is close to Lidcombe Railway Station and the M4 Motorway.
Raine &amp; Horne Commercial director, Industrial Services, Duarte Figueira said lower interest rates were driving up owner-occupier activity.
“Many small to medium businesses are weighing up paying a mortgage against a lease. With rates at historic lows, repaying a commercial loan and ultimately owning an asset is making plenty of sense at present,” said Figueira.
“This is a sought-after precinct and Larke Hoskins Honda will join Bunnings, Reading Cinemas, Anaconda, Costco, Woolworths, ALDI and many other retailers who have decided to set up shop here.
“We’re seeing a stream of businesses operating in flat pack furniture and flat pack bathrooms looking to secure properties in our region. They are usually businesses with 30 staff or less – although we are seeing some bigger businesses buying commercial space too.”
Apart from low interest rates, western Sydney’s improved infrastructure is attracting businesses out of CBDs such as Sydney, Parramatta, and even North Sydney according to Duarte.
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prateek24-ezbwHMbNAk

Business owners driving Western Sydney commercial sales market: Raine & Horne

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Ratecity.com.au has provided five of the lowest advertised ongoing variable rates as at May 9.
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The five lowest variable home loans: Ratecity.com.au 

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Over a third of all lenders have now confirmed they will be cutting their variable rates for Australian home owners, with some of the smaller lenders offering up never before seen rates as low as 3.61 percent, according to ratecity.com.au.
Homestar Finance has reduced its lowest variable rate to just 3.61 percent (comparison rate of 3.65 percent) while Reduce Home Loans’ lowest offering is now 3.65 per cent (comparison rate of 3.66 percent).
Sally Tindall, money editor at RateCity.com.au, says that rates under 4 percent would become increasingly more common.
“Right now there are around 20 lenders offering rates for owner-occupiers under 4 percent, with some reducing their lowest variables to never seen before lows,” she said.
“Any owner-occupier paying over the 4.5 percent mark would have to seriously question the product they are on.”
While a number of lenders were making history with their record-busting rates, there are almost 70 lenders yet to declare their hand.
“Some lenders are still being extremely tight-lipped about whether or not they’ll pass on this cut,” she said.
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<img src="/images/2016/05/10/Screen%20Shot%202016-05-10%20at%209.10.58%20AM.png" alt="">
Source Ratecity.com.au 
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Which home lenders have cut since the May RBA decision?

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GUEST OBSERVER
The Reserve Bank has released its latest quarterly Statement on Monetary Policy (SoMP) for May.
While its growth and unemployment forecasts were left unchanged compared to February, the Banks’ inflation forecasts are more dovish than we had expected.
There is always considerable interest in the Bank’s SoMP forecasts as they offer the clearest guidance to its policy inclinations. That is even more the case this month given the May rate cut and the somewhat limited guidance in the Governor’s statement accompanying the move.
Note that an important consideration is how the Bank’s forecasts are framed by its assumptions on the exchange rate and interest rates. For May, these are for an AUD of USD 0.75 and 62.5 in TWI terms, and for ‘market pricing’ that has the cash rate falling 15bps by August and to 1.50% by February next year. That compares with forecasts in the February SoMP that assumed an AUD at  USD 0.72 and 62.0 in TWI terms, and ‘market pricing’ that had a full rate cut (from 2% to 1.75%) by September. Noting that the RBA favours the TWI for its forecasting, the assumptions around the AUD will not have significantly affected the forecasts. However, the May forecasts are based on a cash rate that is 0.25% lower across the entire forecast period.
Growth forecasts
Recall that in the last SoMP, on February 4, the RBA had growth forecast to run at 3.0% in the year to December 2016; 3.0% for the year to December 2017; and 3.5% for the year to June 2018 (all figures are mid-points of 1ppt forecast ranges).
The May SoMP forecasts for growth are unchanged. This implies that if the Bank had not cut rates by 0.25% earlier this week then the growth rate for 2017 would have been revised down.
Inflation forecasts
In February the Bank forecast underlying inflation at 2.0 percent to June 2016; 2.5 percent to December 2016; and 2.5 percent to December 2017 (again all mid-points of 1ppt forecast ranges).
The Bank is now forecasting underlying inflation to come in at 1.5 perch t to June 2016 (implying a June quarter print of 0.5 percent qtr).
Beyond that it is forecasting inflation of 1-2 percent for the year to December 2016 and 1.5-2.5 percent for the year to December 2017 and the year to June 2018, i.e. a mid-point forecast of 1.5 percent for December 2016 lifting to 2 percent thereafter.
These forecasts are at the lower end of our expectations and can therefore be interpreted as clearly more dovish than we had expected.
They are saying that even after taking into account the latest rate cut and market pricing which anticipates a further cut by early 2017, underlying inflation is most likely to remain 0.5% below the bottom of the RBA’s 2-3 percent target band in 2016 and at the very bottom of the band in 2017, staying there even out to the end of the forecast period (June 2018).
Key to understanding the outlook for policy is the discussion on inflation
The downward revisions to the RBA’s inflation forecasts reflect a structural change in its view on domestic inflation and wages growth.
The reassessment is specifically attributed to: “the broad-based” nature of the weakness in non-tradables inflation and the fact that wage outcomes were lower than expected over 2015”. 
On wages, the Bank notes that wages growth has been “much lower than the historical relationship with measures of spare capacity, such as the unemployment rate”. They suggest several factors may account for the divergence including: declining inflation expectations; the falling terms of trade; and a more flexible labour market. They also note that the phenomenon of “surprisingly low wage growth for given labour market conditions which has been apparent across a number of advanced economies” and particularly, the breakdown of the relationship between the unemployment rate and wages growth. They also, sensibly, observe the impact on wages of the movement of workers from highly paid mining related jobs to other employment. 
Accordingly the Bank has revised down its outlook for wage growth: “will remain around current low levels for longer than previously forecast and pick up only very gradually over the forecast period”. More generally, unit labour costs are expected to be much slower to pick up than in previous cycles (historically, they have tended to pick up once the unemployment rate starts to decline).
Other factors seen as contributing to weak domestic cost pressures include: heightened retail competition (also affecting tradables, softer conditions in rental and housing construction markets and declines in the costs of business inputs such as fuel and utilities.
Also notable in the discussion of uncertainties around the forecast is the comment that “it is possible that inflation expectations will be persistently lower for longer than currently anticipated”. While that is placed alongside a range of other upside and downside risks, the risks around expectations are clearly skewed to the downside.
While clearly more downbeat on the outlook for non tradables inflation, the Bank has broadly retained its view that the gradual pass-through from the fall in the AUD since 2013 can be expected to add “a bit less than half a percentage point to underlying inflation over each year of the forecast period.”
This observation is ‘hedged’ a little with both the size and timing of the effect described as “inevitably imprecise”. The Bank also sees the impact being limited by heightened retail competition.
However, the discussion still implies that the bulk of the downward adjustment in the forecasts (from 2.5% to 1.5% in 2016 and from 2.5% to 2.0% in 2017) is due to the impact from lower non-tradable inflation.
Other points of interest
While the main message is clearly around the outlook for inflation and wages growth there were some other notable comments in the May SoMP.
On the global backdrop, the RBA has lowered its forecast for growth in Australia’s major trading partners “a little” with this now seen tracking 0.5% below its 10yr average. In particular, growth momentum was assessed as slower in Asia although within the region, expectations for China were unchanged since February, the soft March quarter outcome offset by a near term boost from policy measures. China remains a standout risk for Australia with the RBA voicing concerns that these recent stimulus measures appear to run counter to the Chinese authorities’ medium term goals of deleveraging and reducing dependence on investment and heavy industry and could see problems emerge if progress towards these medium term goals is delayed.
There is also an important sidenote on commodity prices. These have rallied strongly since the February SoMP. However, the Bank makes an explicit assumption that “prices for bulk commodities will not be sustained at current levels” with iron ore and coal prices after 2016 unchanged from the February SoMP. Oil prices are assumed to sustain at US$/47bbl but these have a mixed impact on Australia due to our high imports – the net effect is to leave the Bank’s terms of trade forecast largely unchanged compared to February. This is an important assumption as the rise over the last three months, if it had been assumed to continue, would likely have led to some (albeit minor) upward revisions to its growth and inflation forecasts.
Finally, there were some notable ‘absences’ in the SoMP overview. The closing paragraphs in the overview often take a similar form to those in the Governor’s decision statement and the ‘Considerations for policy’ section. Hence it can sometimes provide a bit more guidance around the Bank’s policy views, e.g. wording that sets out a clearer view on where the Bank would like the AUD to go or gives a framework implying a clear ‘policy bias’ going forward. Neither were offered in the May SoMP although the significance of the Banks’ forecast revisions is clearly the dominant policy ‘message’ this time around.
Conclusion
The changes to the forecasts for underlying inflation in this SoMP are, for a central bank like the RBA, nothing short of spectacular. This is particularly so given the new forecasts are based on a profile for interest rates that is 0.25% lower.
The revisions entirely support our expectation of a further rate cut in August. With inflation now driving the policy decision and rates so low, we would be surprised if the Bank chose to move any earlier.
For now, we think they will stick with a plan to re-assess the inflation outlook after the next inflation report (due July 27) and deliver a further rate cut at the Bank’s August meeting.
Updates on wage inflation (May 18), unit labour costs (with the Q1 national accounts release on June 1, a week prior to the RBA’s June meeting), and a wide range of inflation expectations measures will also be of keen interest.
On face value we have to ask ourselves whether the forecasts in the Statement, being based on the expected rate cut, are acceptable for an inflation targeting central bank.
Will the Board be comfortable with a forecast that inflation only rises to the bottom of the target range by the ‘policy year’? (i.e. 2017, the 12-18mth horizon over which current monetary policy settings and assumed near term adjustments are expected to have fully worked through to the wider economy).
We cannot entirely dismiss the prospect that reaching the bottom of the zone is unacceptable to the Board and, in due course, it will assess that even further action is required.
It will certainly be a challenging introduction for the new Governor when he takes over in September. 
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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