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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<div class="column">GUEST OBSERVER</div>
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<div class="column">The past week has been a turning point in the economic cycle. A raft of strong indicators has confirmed that economic momentum is picking up, reducing the need for lower interest rates. Data this week has shown strong employment growth, increased consumer confidence and solid business conditions. And the latest figures out today show that lending has hit 71⁄2 year highs, underpinned by stronger borrowing by businesses. </div>
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 If businesses are borrowing and employing more staff then they are likely spending and investing. Businesses are clearly more confident and embracing opportunities again.
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 The Reserve Bank has patiently waited for businesses to get their mojos back. Well, it’s happening. A more stable political and economic environment has laid the groundwork for businesses to get back to business.
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 It’s taken some time but new loans are almost back to record levels. But while businesses are less fearful about taking on debt, consumers remain cautious. Credit card debt is still lower than a year ago and personal lending is falling in trend terms near the fastest pace in almost four years.
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 Aussie consumers are only really prepared to take on debt to buy cars (more generally, new cars) and homes. New loans to buy cars hit record highs over the year to September while new housing loans were also at historic highs over the same period. 
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What do the figures show? 
Credit card lending: 
Figures released from the Reserve Bank show that the average credit card balance rose by $5.20 (0.2%) to $3,135.70 in August. Compared with a year ago, the average credit card balance was down 1.5%. In smoothed terms (12 month average) the average balance was down by 0.7% – the biggest fall in 13 months.
Of credit cards attracting interest charges, the average outstanding balance fell by $11.80 in September to a near 10-year low of $1,979.00. The average balance accruing interest is down by 6.8% on a year ago. In smoothed terms (12 month average) the average balance was down by 5.0% on a year ago – an 11-month low.
The average credit card limit rose by $5.80 (or 0.1%) to $9,067.70 in September. The average credit card limit rose by 0.2% in the year to September. 
Usage of credit card limits lifted from a 14-year low of 34.5% in August (lowest since November 2001) to 34.6% in September.
The average repayment per credit card rose from $1,599.10 to $1,610.10 in September. On average, there were 11.8 transactions made per each credit card account in September, up from 11.6 a year ago. The average value of purchases was $128.01 in September with the rolling annual average up from a 101⁄2 year low of $130.96 to $131.29 in September.
The number of cash advances recorded a 1.3% annual fall in smoothed (12-month average) terms in September.
Debit card lending
The number of debit card accounts rose by 3.7% in the year to September to 41.0 million.
The number of purchases and cash-out transactions made with debit cards in August were up by 12.8% on a year ago. The annual growth rate has averaged 12.0% over the past two years.
On average there were 8.9 transactions made per debit card in September, up from 8.2 a year ago. The average value of a transaction was $53.26 with the rolling annual average at $53.91 – a record (12-year) low.
Lending finance
Total new loans (personal, business, housing &amp; lease) rose by 6.4% in September to a 71⁄2-year high of $75.3 billion. It was the biggest monthly rise in lending in eight months.
Housing finance: The seasonally adjusted measure of construction and new purchases rose by 3.0% in September while alterations &amp; additions rose by 0.9%. Home loans are up 22.9% on a year.
Commercial finance: The seasonally adjusted series for the value of total commercial finance commitments rose by 9.5% in September after falling by 4.1% in August and falling by 4.3% in July. Revolving credit commitments rose by 8.7% while fixed lending commitments rose by 9.8%. Business loans are up 14.1% over the year.
Personal finance: The seasonally adjusted series for the value of total personal finance commitments fell by 0.8% in September, the third straight fall. Revolving credit commitments rose by 3.0% and fixed lending commitments fell by 3.2%. Personal loans are down 3.4% over the year. Within personal fixed finance commitments, finance for used cars was down 1.8% on a year earlier while loans for new cars were up by 12.4%. Loans for residential blocks of land were down by 14.8% on a year ago – the 11th consecutive annual decline.
Lease finance: Lending fell by 0.5% in September. Lease finance rose by 8.8% over the year. 
<a href="/images/2015/11/13/Screen%20Shot%202015-11-13%20at%202.32.31%20PM.png" target="_blank">Click to enlarge</a>
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What is the importance of the economic data? The Reserve Bank releases data on credit and debit card transactions each month. The credit card figures are useful in highlighting consumer borrowing and spending trends.
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?
Businesses are borrowing again – but they are taking on debt quietly and with purpose. Consumers are also thoughtful when it comes to debt – there is clearly an inherent degree of conservatism involved.
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 The latest lending data is encouraging for investors of banks and other finance providers.
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<div class="column">The latest data confirms that the Reserve Bank can stay on the interest rate sidelines. </div>
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<div class="column">Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.</div>
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cjames-5S2v74qSNK

New lending hits 71⁄2-year highs: CommSec's Craig James

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ING DIRECT will increase interest rates by 0.18% p.a. across its variable owner occupier and investor residential loan portfolio, effective 15 January 2016. 
As at 15 January 2016, the variable interest rate on the Orange Advantage offset home loan for residential owner occupier borrowers will be 5.02% p.a. (5.21% p.a. comparison rate).
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jonathanchancellor-7SQnKwU6yx

ING DIRECT to increase variable home loan rates

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Today’s super‑sized 58.6k rise in jobs was well above market expectations which were centred on a rise of 15k (CBA f/c +20k). To keep it in perspective, there is a pattern that the last few episodes of monthly falls in jobs have been followed by very large rises. It is likely that the next few monthly outcomes are lowish and will bring the three month average back to 17k.
Full‑time jobs growth of 40k in October means that annual growth is 159k or 2%. Part‑time jobs rose by 18.6k to be 104k, or 2.9%, higher over the past year.
The unemployment rate fell to 5.9%, the lowest since May, from 6.2%. We expect to see the unemployment rate oscillate around the 6% level over the next 6 months.
<a href="/images/2015/11/12/Screen%20Shot%202015-11-12%20at%203.22.13%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/11/12/Screen%20Shot%202015-11-12%20at%203.22.13%20PM.png" alt="">
Forward indicators of the jobs market, such as job ads and employer intentions, indicate that monthly average jobs growth should be in the 17 to 20k range, or 200k annually. It implies that the national unemployment rate will stay around the 6% level, depending on the wobbles in the participation rate.
Over the past 3 years around 277k extra jobs have been added to the workforce, with about two thirds of those in part‑time positions. The new jobs are a net outcome of significantly higher job gains netted off against large job losses. The chart on the next page shows the restructuring across sectors.
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<img src="/images/2015/11/12/Screen%20Shot%202015-11-12%20at%203.23.57%20PM.png" alt="">
The extra jobs over the past 3 years are in health, construction, retail, education and transport. They can be generally grouped as services sector positions, which also tend to have a greater part‑time component. The lower AUD will hasten the jobs growth in sectors like tourism, accommodation and education over the coming year. It will more than offset the losses in the mining and related sectors.
There is also a clear economic growth transition going on in the States.  VIC and NSW recorded the largest increase in jobs growth (+26.1K and +18.7K respectively). 
The NSW unemployment rate, at 5.5% is now sitting at the lowest level across the States. It is followed closely by VIC at 5.6%. The residential construction boom, focussed in these two States, is one of the key drivers of employment growth.  The mining states also recorded good outcomes in October with QLD up 12.1K and WA up 14.8K.  SA jobs rose by 5.6K and jobs fell by 1.4K in TAS.
The next major economic release is the September quarter Capex which will be examined to see if there is any small improvement in the outlook for non‑mining investment. Next week’s RBA minutes are likely to show that the Board discussed a rate cut at the November meeting which could weaken the AUD.
<a href="/images/2015/11/12/Screen%20Shot%202015-11-12%20at%203.25.45%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/11/12/Screen%20Shot%202015-11-12%20at%203.25.45%20PM.png" alt="" width="379" height="70">
 
Michael Workman is senior economist, <a href="https://www.commbank.com.au/corporate/research?ei=mv_research" target="_blank">Commonwealth Bank</a>.
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jchancellor-FAypfDUnLy

Who needs a rate cut? CBA's Michael Workman

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GUEST OBSERVER
It is hard to believe that almost 60,000 jobs were created in one month with 40,000 of these jobs in full-time positions. 
Still, economic momentum continues to pick up, underpinned by strong home building. Home building approvals are at record highs together with tourist arrivals and car sales. 
But in the past job gains of this magnitude are generally followed by downward corrections in the following month.
While the monthly data bobs around from month to month, it’s important to note that 197,500 jobs were created over the past year – the biggest annual job gain recorded in 4½ years. Employment has only fallen three times in the past year and there have been some strong job gains in this period with six monthly increases of greater than 30,000 jobs. So the October figures are hardly an outlier.   
Clearly the Reserve Bank got the call right by leaving interest rates unchanged earlier this month, identifying an improvement in the economy. And clearly there won’t be another rate cut in 2015.
It is possible that the last rate cut has occurred in this cycle. 
CommSec still expects rates to remain on hold for the foreseeable future.
We would put down the strong lift in employment to improved confidence levels, low interest rates, stimulus to the small business sector and strong home building. 
Unemployment in NSW has hit 5.5%– which in the past has been identified as the “natural” jobless rate – a rate that could spark a lift in wages should unemployment fall further towards 5% and below.
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx">CommSec</a>.
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Jobs data shows RBA was right to leave cash rate: CommSec's Craig James

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A survey of property valuers, financiers and market analysts has predicted property prices in Sydney and Melbourne will continue to increase for the next six to twelve months.
44% of respondents to The Property Directions Survey, released by the Australian Property Institute, found an upward trend will continue for a further six months in Sydney, while 50% think the same of the Melbourne market with 33% of respondents believing the upward trend will last a further 12 months in both Sydney and Melbourne.
API NSW President, George Vallas, said the responses were received prior to several financial institutions raising interest rates, which may have changed some views. 
"50% of respondents indicating Sydney residential property is in or is entering a bubble, while 50% indicate it is not in a bubble," he said.
"For Melbourne, 56% of respondents believe residential property is in or is entering a bubble, while 44% believe it is not in a bubble. For Brisbane, 70% of respondents indicate that residential property is not in a bubble, 24% indicate that it is in or is entering a bubble and 6% are unsure.
Low interest rates were seen as a significant to very significant driver of the Sydney residential property market, with 88% seeing foreign investment as significant to very significant. 
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Sydney, Melbourne residential property prices to continue upward

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<div class="column">GUEST OBSERVER</div>
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<div class="column">Housing finance commitments fell in September, driven by a sharp drop in investor lending. </div>
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While today’s report also showed an increase in upgrader lending, the impact of the changes to investor lending standards in recent months is clearly net negative for housing market sales activity and housing construction. Slower auction market sales, weaker house price growth and higher mortgage rates in recent weeks point to a soft housing market outlook in 2016.
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 Investor finance fell a sharp 8.5% m/m in September, and has now fallen for five consecutive months (Figure 1). APRA will be satisfied that their measures are indeed having the desired effect of slowing annual investor credit growth down towards sub-10%. However, the sharp loss in housing market momentum in recent months presents a soft outlook, not just for house price growth and mortgage lending, but also for the contribution to economic growth from housing. 
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<div class="column">Slower price growth and higher mortgage rates in recent weeks are expected to weigh on planned housing construction (Figure 1) and provide less of a boost to consumer confidence and retail spending.</div>
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 In contrast to weaker investor finance, owner-occupier mortgage lending increased 1.7% m/m (excluding refinance) in September. While growth in owner-occupier lending has offset weaker investor finance in recent months, today’s net negative impact is likely to continue in the coming months as the combined impact of slower house price growth, the recent increases in mortgage lending rates and weak household income growth provide a headwind to owner-occupier sales. 
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David Cannington is senior economist, ANZ Research and can be contacted <a href="https://www.anz.com/corporate/research/" target="_blank">here</a>.
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Australian mortgage lending confirms soft housing market outlook: ANZ Research

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GUEST OBSERVER
Were Aussie consumers disappointed that rates weren’t cut? No. Were consumers worried about talk of a higher consumption tax? No. Consumers seem resigned to the fact that tax reform has to occur. 
And presumably Aussie consumers are aware that if the consumption tax goes up, then other taxes will be cut or reduced such as income tax rates. The reason why governments are talking about a higher consumption tax is because the population is ageing and thus changes to the tax system will be necessary. It is encouraging that Aussie consumers are taking a pragmatic, forward-looking view of future economic challenges.
Business conditions remain favourable with a smoothed measure of conditions (rolling annual average) near 5- year highs. Importantly, capacity use is near 4-year highs but inflation is still contained. There is the issue of ‘pass-through’ though – purchase costs are increasing at a faster rate than final retail prices. Businesses are likely to pass-through higher costs (higher import costs as a result of a lower Aussie dollar) at some point.
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Heat is quickly coming out of the investment housing market. The 8.5 % slump in investor loans was the biggest drop in seven years. Regulators will be satisfied that their measures are working to slow demand.
Aussie consumers are sensing that rates are near their lows with refinancing up the most in six months.
What do the figures show?
National Australia Bank Business Survey:
The NAB business conditions index was unchanged at +8.9 points in October. The rolling annual average eased from a 5-year high of +7.2 to +7.0. The business confidence index eased from +5.3 points to +2.1 points. The survey was conducted from October 26 to 30.
NAB noted: “The notable dispersion in business conditions across industries continued into October, with 3 of the 8 major industry groups (mining, manufacturing and wholesale) reporting negative conditions. Services industries continue to outperform, while the mining industry trails well behind. A majority of industries improved in the month, but recreation &amp; personal services and construction both saw sizable falls in their conditions index.”
“There was a notable deterioration in both conditions and confidence in Western Australia, consistent with ongoing drag from mining – confidence also fell considerably in South Australia. In contrast, Queensland recorded sizable improvements in the month (especially in business conditions). Looking through the monthly volatility, conditions were still strongest in NSW and Victoria (of the mainland states). Business confidence showed similar trends, although Queensland remains the highest of the mainland states (in trend terms).
Components 
The index of trading conditions rose from +14.7 to +16.4; employment eased from +3.1 points to +2.8 points; profitability eased from +8.6 points to +7.6 points; forward orders fell from +2.8 points to minus 1.8 points.
Inflationary indicators were generally softer in October. The monthly reading of labour costs rose at a 0.3 % quarterly rate in October, down from +0.6 % in September. Purchase costs rose at a 0.9 % quarterly rate in October, after a 0.9 % rise in September. Final product prices were up 0.3 % in October (+0.3 % in September). And retail prices were up by 0.5 % in October after a 1.1 % rise in September.
Capacity utilisation rose from 81.3 to a near 4-year high (highest in 45 months) of 81.4 %. Capacity use is above the long-term average of 81.0 %.
The proportion of firms reporting that they did not require credit improved from a record high of 79 % to 65 % in October.
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Consumer sentiment
The weekly ANZ/Roy Morgan consumer confidence rating rose by 1.4 points (1.2 %) to 116.6 in the week to November 8. Confidence is up 1.6 % over the year and above the average of 111.4 since 2014.
Two of the five components of the index rose in the latest week:
The estimate of family finances compared with a year ago was unchanged at +11;
The estimate of family finances over the next year was down from +27 to +25;
Economic conditions over the next 12 months was up from +2 to +5;
Economic conditions over the next 5 years was up from +6 to +14;
The measure of whether it was a good time to buy a major household item was down from +30 points to +28 points.
Housing finance - number
The number of new owner-occupier housing loans (commitments) rose by 2.0 % in September. Excluding the refinancing of dwellings, the number of loans was up by 0.7 %.
Loans by owner-occupiers for the construction of homes rose by 1.8 % in September; loans to buy newly-erected dwellings rose by 5.4 % and loans for the purchase of established dwellings (excluding refinancing) was unchanged. The number of refinancing transactions rose by 4.7 %.
Housing finance - value
The value of new housing commitments (owner occupier and investment) fell by 1.6 % in September. Owner-occupier loans rose by 3.0 % while investment loans fell by 8.5 %.
The value of loans by owner-occupiers and investors to build new homes fell by 4.1 % in September after falling 6.8 % in August. The value of loans to build stood at $2.43 billion, the lowest level in 14 months.
Housing finance – other statistics
The proportion of first-time buyers in the home loan market eased from 15.8 % to 15.4 % in September. (However the figures take into account refinancing loans and as such the figures may be skewed). Fixed rate loans as a share of all loans were steady at a four-year low of 9.5 %. And the average home loan across Australia stood at $379,400 in September, up 15.4 % on a year ago and equalling the fastest pace of growth in 12 years.
Chinese inflation
Chinese consumer prices fell by 0.3% in October to be up 1.3% over the year – the lowest annual rate in five months. Food prices fell by 1.0% in the month to be up 1.9% over the year. Non-food prices rose by 0.1% to be up 1.0% over the year.
In September pork prices fell by 1.9% (15.8% over the year); eggs fell by 6.9% and vegetables fell by 5.6%. Transport &amp; communications prices were unchanged in the month; Clothing lifted 0.6%; Health Care rose 0.2%; Household equipment and maintenance services was unchanged; Tobacco and liquor rose by 0.1%; Entertainment &amp; Education fell by 0.3% with travel services down by 1.8%.
Chinese producer prices fell by 0.4% in October after falling 0.4% in September. Prices fell 5.9% in the year to October, the same as September and equalling the biggest fall in six years. Prices in petroleum processing, coking and the nuclear fuel processing industry fell by 22.5% over the year.
What is the importance of the economic data?
The monthly National Australia Bank business survey is valuable in providing a timely reading about the health of Corporate Australia. Key indicators of business conditions such as orders, employment, profitability and capacity use are covered together with a gauge on confidence levels.
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
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 on the housing market.
China’s National Bureau of Statistics releases its monthly economic statistics around mid-month. Quarterly GDP data is released around the 16th of January, April, July and October. China’s Customs Office releases trade data, and the People’s Bank of China releases financial statistics, around the 10th of each month. China is Australia’s largest trading partner and changes in the Chinese economic have major implications for the Aussie economy.
What are the implications for interest rates and investors?
The latest data supports the Reserve Bank’s upbeat view on the economic state of play. CommSec expects interest rates to remain unchanged over the next year.
Owner-occupiers are still entering the home loan market – presumably some sense bargains now that heat is coming out of the market, supply has lifted and fewer investors are to be found. The Reserve Bank would be happy at the mix of lending in the housing market.
Reuters: “China is confident of achieving economic growth of around 7 % in 2015, Vice Finance Minister Zhu Guangyao told a press conference in Beijing on Tuesday.” 
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Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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Consumers upbeat; Investment loans slump: CommSec's Craig James

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GUEST OBSERVER
Inflation-targeting central banks usually benefit from what some economists have labelled a “divine coincidence”.
This is when the best policy response to inflation also turns out to be the best response to unemployment. A central bank should raise its policy rate when inflation is high and the unemployment rate is low — and vice versa. All else equal, the effect of such a policy response is that inflation and unemployment will return to their long-run levels.
An absence of a trade-off in achieving an inflation target and stabilising unemployment makes the lives of central bankers relatively easy — most of the time. But, alas, this divine coincidence doesn’t always hold.
The stagflating ‘70s
In the 1970s, central bankers faced a dilemma due to massive spikes in oil prices that resulted in less-than-divine sounding “stagflation” - that is, simultaneously high inflation and unemployment. If central banks pushed interest rates high enough to put a lid on inflation, they would increase unemployment further. But if they tried to hold interest rates down, they risked inflation spiralling out of control.
Most economists believe that central banks were too timid in the 1970sand inflation targeting was developed in the late 1980s and early 1990s as a way to make sure central bankers would keep their eye on the inflation ball whenever the divine coincidence failed again.
A surprising downside to the divine coincidence
The divine coincidence hasn’t really failed since the 1970s. For example, the recent global financial crisis led to lower inflation and higher unemployment in most countries. In this case, central bankers faced no dilemma in pushing interest rates downwards. Their only dilemma was what to do after their policy rates hit the zero lower bound.
But there is a surprising downside to the divine coincidence holding over the past quarter century. It seems to have lulled most everyone into thinking central bankers are miracle workers who can hit two targets with one arrow.
Worse yet, if central bankers can hit two targets, why not ask for more? Shouldn’t they also keep house prices under control? Stock prices? The exchange rate? Bank lending rates?
This idea of targeting bank lending rates has received much attention over the past few weeks in Australia, where the major banks have raised their mortgage rates, supposedly to cover increased costs related to changing capital requirements from Basel III.
Following this increase in bank lending rates, there were public calls for the Reserve Bank of Australia (RBA) to cut its policy rate to help bring mortgage rates back down. The RBA wisely chose not to listen.
But it is notable how easily the (implicit) idea that the RBA should target mortgage rate spreads could become such a focus of the public discussion surrounding monetary policy.
What’s the problem?
Public officials should want to cool an overheating housing market. They should want to minimise anti-competitive practices in the banking industry. And surely they should want a low and stable rate of inflation.
But they just can’t use one instrument - that is, the policy rate — to achieve all of these wonderful outcomes at the same time.
In the absence of more widespread divine coincidences, different desired outcomes will always require different policy instruments. And most practical tools to achieve outcomes other than just low and stable inflation have big distributional consequences.
For example, if policymakers really want to prevent an overheated housing market, they need to design tax and planning policies that influence demand and supply of housing. These have very different effects on homeowners and renters and are clearly more the domain of governments (national and local), rather than a central bank.
Likewise, if policymakers really want to make the banking system more competitive, they should do so via the regulatory environment. To be sure, any policy changes along these lines ought to involve consultation with the central bank given that there is a likely trade-off between a more competitive banking system and greater systemic risks, at least if the recent experience of the global financial crisis is any indication.
But the point is that such policy should not be conducted by a central bank alone. And it definitely shouldn’t be done by adjustments to the policy rate. This would be a misguided “duct tape” solution to a more serious architectural flaw.
Who is steering the ship?
Inflation targeting central bankers need to focus on their main objective of stabilising inflation and not be sidetracked into trying to correct all other macroeconomic and financial problems. They are not miracle workers — although they have generally delivered on their inflation targets.
To the extent the divine coincidence has held, inflation targeting central bankers have been lucky enough to also help stabilise unemployment. But they should not be expected to offset the effects of an uncompetitive banking system — or ill-conceived fiscal policy, for that matter. Their objective of low and stable inflation should always guide their decisions, not a response to the decisions of others with different objectives.
We should expect central banks to be focused on the inflation horizon, not to be divine.
 
 
James Morley is professor of economics and Associate Dean (Research), UNSW Australia and author for The Conversation.
He can be contacted <a href="https://theconversation.com/profiles/james-morley-9918" target="_blank">here</a>.
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RBA Governor Glenn Stevens is a not a miracle worker

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GUET OBSERVER
In its November Statement on Monetary Policy (SoMP), the Reserve Bank maintained its key forecast that growth in the economy would be 3.00% in the year to December 2016.
We believe this is 0.25% above where the Bank currently estimates trend growth. Therefore, at this stage, the Bank expects there will be no need to cut rates further in 2016. If it had for instance decided to cut rates in November, or was signalling an intention to cut at the December board meeting, it is likely to have forecast growth in 2016 at 2.50% – 0.25% below trend.
The growth forecast for the year to December 2015 has been lowered to 2.25% from 2.50% in the August SoMP. This largely reflects the soft 0.2% of Q2, but also indicates that the Bank is expecting growth in the final two quarters of 2015 to average around 0.60% (slightly below trend, unchanged from the August view). It has lowered its forecast for growth to the year ending December 2017, from 3.75% to 3.50%. Importantly, that is not a downgrade on the outlook for domestic demand, but simply reflects a revision to the expected contribution to net exports from LNG.
Overall, the Bank’s growth forecasts are little changed since the August SoMP.
There were also changes to the inflation outlook. Underlying inflation to December 2015 has been lowered from 2.50% to 2.00%. With 1.30% coming in the first half of 2015, and the surprisingly low 0.3% read of the September quarter, the implied assumption is for another low number in the December quarter – around 0.40–0.50%.
Underlying inflation through the year ended June 2016 is also forecast at 2.00%, indicating an expectation that these measures will resume a “normal pace” of around 0.60% per quarter in the first half of 2016. Consistent with that view, underlying inflation is expected to print 2.50% in the year to December 2016 – back to the middle of the target range. That forecast is maintained for the year to December 2017.
The discussion around inflation highlights that the lagged effect of the fall in the Australian dollar is expected to add around 0.50% to underlying inflation in both 2016 and 2017. That means the drag on inflation from domestic factors, particularly weak wages growth, is expected to be sustained in 2016 and 2017.
Assumptions
In February this year, the Bank adopted a new assumption around the interest rates being used to drive their forecasts. That assumption was to move away from “rates unchanged” to “rates to move broadly in line with market pricing”, although that is qualified with “does not represent a commitment by the Board to any particular path or policy”.
In August for instance, market pricing implied a 40% probability of a rate cut by November, rising to a 60% probability of a cut by February. Today’s market pricing is more aggressive, with a 75% probability of a cut by February, and a 100% probability of a cut by May. Clearly the Bank is in an awkward position and probably values stability in communications rather than changing its model unexpectedly.
With growth forecast at 3.00% next year, we expect that, even with a no rate change forecast, the growth forecast in 2016 would still have been at or above trend, and therefore this assumption does not imply that the rate cut is necessary to achieve at or above trend growth.
It is also important that the assumptions around bank interest rates are noted. The assumption here is that banks will increase interest rates on variable rate mortgages by up to 20bps. This assumption implies that no further increases by the banks are considered likely.
Other assumptions around the AUD and oil prices are broadly the same as in the August SoMP. The AUD is forecast to remains steady at USD0.72 (USD0.74 in August). And the oil price at USD52 per barrel, compared to USD53 per barrel in August.
Commentary
Because the Bank does not consistently provide forecasts for the unemployment rate, the commentary around the labour market is always important. In that regard, the Bank notes “employment growth is expected to be a bit stronger than had been forecast earlier”. Leading indicators around the business surveys, job advertisements and vacancies are pointing to an uptrend in employment. On the other hand, there is no marked upgrading of the outlook for the unemployment rate. In August, the Bank expected it to remain steady and to decline gradually in 2016 H2 and 2017. However, this lift in employment growth is expected to be offset by a more than expected increase in labour supply, due to the increase in the participation rate – overall, a marginally more positive assessment of the labour market since August, and significantly more positive than seen in May, when the Bank expected that the unemployment rate would continue to rise.
The Household Sector
The key to the expected lift in growth between 2015 (2.25%) and 2016 (3.00%) is the view on household consumption. The Bank expects household consumption growth to be a bit above average in 2016 (that is broadly 3.00%+ compared to 2.00–2.50% in 2015). That is expected to be driven by the stronger employment growth and falls in the savings rate, although it is recognised that weak wages growth will continue to weigh on income growth. From our perspective, this is a key assumption. Evidence that
the household sector is not gaining momentum will be the key trigger for the bank to revise down its growth outlook.
Housing
Views on house prices remain cautious, with risks that excess demand could continue to pressure prices, particularly in Sydney. The forecasts also indicate that the Bank expects residential investment to add to growth in 2016 given the strong pipeline – a forecast that we do not share.
Business Investment
The Bank continues to forecast an overall fall in business investment, with the downturn in mining investment swamping improving non-mining investment. The commentary on non-mining investment is more upbeat than we have seen in recent SoMP’s. For example, in August, the Bank further revised down its forecasts for non-mining investment. Whereas, in this SoMP, it notes that “the preconditions for a pick-up in investment are in place”.
The Outlook
We continue to expect that rates will remain on hold over the course of 2016. The Bank’s forecasts in this statement are consistent with it expecting that to be the outcome as well. However, the fact that it is using a “rate cut profile” for its forecasts and appears to expect that the December quarter underlying inflation print will be a soft circa 0.40–0.50% signals that the risks to our outlook are to the downside.
The key appears to be an ongoing improvement in employment growth which will boost consumer confidence and lift the pace of household spending. Our forecasts for household spending and GDP growth are slightly more modest than indicated in the SoMP, but are still consistent with steady rates. Surprises for the Bank might always be a further substantial deterioration in the terms of trade, associated with a weaker than expected world environment which would threaten incomes, and the all important profile for household spending and employment.
The really key events in the lead up to the February Board meeting will be the Q3 national accounts, printing on December 2, and the December quarter inflation report printing on January 27. Further, any major shocks to the global economy which significantly lower our terms of trade will also be very important.
As discussed however, the Bank will need to assess all of these factors as pointing to a downward revision to growth in 2016, from its current 3.00% to a below trend 2.50%, to trigger lower rates.
Bill Evans is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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RBA Statement on Monetary Policy consistent with rates on hold in 2016: Westpac's Bill Evans

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Six years back when RBA governor Glenn Stevens spoke at the Economic and Social Outlook Conference in Melbourne, the title was the ‘Road to Recovery’, which focussed on managing the downturn in the Australian economy in the backdrop of the global slowdown.
This time, Stevens was addressing the 'Path to Prosperity', and noted that the path didn't seem much different today from six years ago. Macroeconomic policies provide a measure of counter-cyclical stabilisation, but they couldn't serve as a magic bullet to achieve sustained growth in living standards, he said.
In the six years, the Australian economy's exposure to China had increased, so China's prospects mattered more, he said.
"The current rate of growth of the Chinese economy is uncertain, as is its future growth rate. It is likely that the marginal steel intensity of China's growth will be lower in future than in the past. At the same time, the marginal propensity of the Chinese people to consume services is rising noticeably.
"So the challenge for Australian resource producers to be the most efficient suppliers in a world of slower growth in demand for resources will co-exist with greater opportunities for other firms to offer value added in services."
He said the decline in resources sector capital spending was now roughly at the halfway stage, but nonetheless over the past year the non-mining side of the economy had generated a good number of jobs.
"The rebalancing is occurring. It isn't as seamless as it would be in an ideal world, but we don't live in such a world," he said.
"Monetary policy is contributing to that rebalancing, consistent with its mandate, with a very accommodative stance. It seems likely that an accommodative stance will be appropriate for some time yet. Were a change to monetary policy to be required in the near term, it would almost certainly be an easing, not a tightening. The rate of CPI inflation is clearly no impediment to easing.
"The housing market may be calming, lessening risks from that source, though by how much and how persistently we cannot yet know."
He said the Reserve Bank Board was faced with the question that whether the recent changes in mortgage rates result in an effective set of financial conditions that is too tight for the economy.
Over the course of 2014 and 2015, effective rates on most loans tended to decline by more than the cash rate, reflecting both declining funding costs and increased competition to lend.
"For fixed rate mortgages and many business loan rates the fall was quite marked. The average rate on outstanding business loans, for example, fell by over 90 basis points during a period in which the cash rate fell by 50 basis points. Even for floating rate mortgages, rates had fallen a bit more than the cash rate.
"The actions of those banks that have lifted mortgage rates over recent weeks reverse a little under half of this year's decline for floating rate mortgages for owner-occupiers and have no effect, at this stage, on the 15 percent of loans with fixed rates.
"For investors in housing, these actions and those a month or two earlier reverse the effects of this year's monetary policy easing but, of course, this was the lending that had been growing most quickly. 
He also said a significant proportion of owner occupier households was ahead of schedule on mortgage repayments – in large part because these households did not lower their payments as interest rates fell. Most of these households are unlikely to need to part with extra cash each month as a result of the recent interest rate changes. 
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