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

<html><body>
Property enthusiasts are no doubt gearing up for the results of the RBA meeting at 2.30pm today.
In the meantime, we look at the things that you should know about interest rates and the current environment.
Here are 10 things you should know:
<ol>
<li>The current interest rate is 2.5%. 
</li>
<li>It’s at a historical low. 
</li>
<li>The low interest rate is being called one of the primary reasons that <a href="/expert-insights/finance/thanks-to-low-interest-rates-affordability-at-highest-level-for-over-a-decade-hia-cba-index">affordability was recently recorded at the highest level in a decade</a>, according to the HIA-CBA Housing Affordability Index. <a href="/expert-insights/finance/thanks-to-low-interest-rates-affordability-at-highest-level-for-over-a-decade-hia-cba-index"> </a>
</li>
<li>Interest rates haven’t been changed by the Reserve Bank since this time last year, August 2013, when it was reduced by 0.25%. 
</li>
<li>Prior to this, the historical low was 3% in April 2009, which lasted until a 0.25% hike in their October 2009 meeting. 
</li>
<li>In August 2012, the rate was set at 3.5%. In August 2011, it was 4.5%. 
</li>
<li>In the last 25 meetings where changes were seen (taking us to 8 August 2007), 11 were increases of 25 basis points, nine were decreases of 25 basis points, three were decreases of 100 basis points, one was a 75 basis point decrease and one was a 50 basis point decrease. 
</li>
<li>In RBA governor <a href="/expert-insights/finance/strong-expansion-in-housing-construction-underway-glenn-stevens-july-statement">Glenn Stevens’ last meeting minutes (July)</a> he noted that the most prudent course of action is a period of interest rate stability. HSBC's Paul Bloxham has said that <a href="/expert-insights/investing/rates-will-go-up-but-not-this-time-around-hsbcs-bloxham">a change in language in upcoming minutes is the factor to keep an eye out for</a>. <a href="/expert-insights/finance/strong-expansion-in-housing-construction-underway-glenn-stevens-july-statement"> </a>
</li>
<li>Low interest rates and rising property prices have seen<a href="/expert-insights/investing/economists-warn-of-a-property-bust-if-interest-rates-stay-too-low"> international economists predicting a ‘property bust’</a>. <a href="/expert-insights/investing/economists-warn-of-a-property-bust-if-interest-rates-stay-too-low"> </a>
</li>
<li>Just two experts in a recent panel from Finder.com.au expect interest rates to increase by the end of the year… however, the majority expect increases next year with a “new normal” of 4% expected.</li>
</ol>
YOU MAY ALSO WANT TO READ
Interest rates crash course: <a href="/expert-insights/finance/interest-rates-crash-course-whats-the-relationship-to-the-property-market">What’s the relationship to the property market?</a>
</body></html>

jduke-EHk3XBmHkn

10 things to know about the current interest rate

<html><body>
A new report from HSBC Global Research’s chief economist Peter Bloxham said that the RBA is expected to keep rates on hold next week with the next movement expected to be up.
While this has been expected for the last couple of months, Bloxham made an interesting observation of what must be watched in the next statement from RBA governor Glenn Stevens.
It’s all in the wording.
“A key thing to watch out for will be a possible language change in the statements,” Bloxham explained.
“For the past six months, the RBA has been stating that a 'period of stability' in rates was likely; however, with rates now having been stable for almost a year that language may change, simply because there has already been a long period of stable rates.”
He noted that Stevens had warned about a forthcoming language change, but said that it was not necessarily an indication that rate hikes were being considered.
Next week, Bloxham expects the RBA to reiterated that the Australian dollar remains higher than they would like it to be, and to revise down CPI forecasts.
Sentiment was also noted to be improving.
{module When do you think the next RBA movement will be?}
</body></html>

RBA expected to keep rates on hold, next movement up: HSBC

<html><body>
<h1><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/55198/width668/h3p45kff-1406675366.jpg" alt="" style="color: #333333; font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12px; line-height: 1.3em;"></h1>
<img src="https://counter.theconversation.edu.au/content/29843/count.gif" alt="The Conversation" width="1" height="1">
Charis Palmer is deputy business editor and Emil Jeyaratnam multimedia editor at <a href="https://theconversation.com">The Conversation</a>.
This article was originally published on <a href="https://theconversation.com">The Conversation</a>.
</body></html>

po-LsXgBTHBmX

Australia’s housing debt: The infographic that shows why we should be cautious

<html><body>
The Reserve Bank has been giving a rolling seminar on why economists don’t get real estate.
This has taken the form of speeches by the Guv, Glenn Stevens, and press releases on RBA research and opinions.
The RBA view of residential real estate is a bible for economists, containing various commandments with which most economists comply. They include:
<ul>
<li>There is just one property market in Australia;</li>
<li>Sydney is Australia;</li>
<li>Australians are naughty because they like to invest in real estate;</li>
<li>They’re even naughtier when they borrow to do it;</li>
<li>When property prices rise we’re all very naughty and deserve a smack;</li>
<li>We’re all stupid because we think property prices always rise;</li>
<li>Buying a home is, or should be, a financial decision and emotion or culture shouldn’t intrude;</li>
<li>Financially it’s smarter to rent so how come we all don’t want to rent; and</li>
<li>We’re not building enough houses because that’s what our charts say.</li>
</ul>
Stevens has been getting out and about delivering his core message, which I suspect he lifted from the pages of Real Estate for Dummies. This is - wait for it, drum roll please -“property prices don’t always go up”!
Many media outlets have breathlessly reported that Stevens “has warned home buyers that people should not assume that prices always rise”. Just in case we haven’t got it, he drives home the message with this thunderbolt of wisdom: “Sometimes they fall!”
This is why Stevens earns the big money. He understands things the masses do not.
Seriously, is there anyone in Australia above the age of 11 who doesn’t know that property prices sometimes fall? Maybe someone who’s been meditating in a cave in the Himalayas might have missed the general decline in prices from 2010 to 2012. In my experience, most Australians have a hyper awareness of the value of their home, especially when it’s in reverse.
These days we have not only quarterly and monthly price monitors, we have attention-seekers claiming they can chart weekly price changes, even daily. Pretty soon we’ll have minute-by-minute price barometers.
And all these sporadic movements in prices, both up and down, have been reported ad nauseum by a gullible media.
According to some sources, prices have dropped three times in the past six or seven months.
Why does Stevens think none of us have noticed? He has intoned the “prices don’t always rise” sermon several times recently. Obviously he doesn’t get the emails I get, from people who bought five years ago on the Gold Coast and watched their investment steadily decline in value. Or from people who own Noosa apartments. Or from people who bought during the Gladstone boom and are now dismayed at the drop in values. Or from those who own real estate in Mackay, Moranbah, the Hunter Valley, Port Hedland, Karratha and Broome.
Or people who own a home in Canberra, where values in some areas are now going south.
Another offering of economist-centric advice from the RBA is that we might all be better off renting than investing. According to an RBA research paper, it’s only if prices rise 2.9% or more annually that it may be worth owning your home.
I wonder why they bothered with this research. Nothing better to do? It’s only when you understand that this is the work of economists that it makes any sort of sense.
This really is at the heart of why economists struggle to understand real estate. They think it’s about economics. They get a tad vexed when it doesn’t behave.
Most households don’t give a damn whether home ownership makes economic sense or not. It’s not about economics. It’s about culture. It’s about how they want to live.
According to the logic of the RBA research, unless values are rising around 3% a year on average it’s not worth owning. On this basis, nobody should own a home in Sydney, because it’s capital growth rate over 10 years has barely managed that level. How have so many people got it so wrong?
The RBA paper speculates that price growth in the future will be less than in the recent past, in which case we ‘d all be better off financially if we rented.
One question: price growth where? Everywhere in Australia? Price growth everywhere will be too low to justify home ownership?
This brings us back to one of my original points - that one of the great weaknesses of the RBA and economists generally is that they see Australia as one homogeneous market. That’s why they’ve looked at the national average price growth figure - not for Australia, mind you, but for the eight capital cities - and concluded that because the city average is 10% Australia has been having a real estate boom, oblivious to the reality - that only one city has had growth that big.
They really don’t get it.
You can contact Terry via <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email</a> or on <a href="https://www.twitter.com/hotspotting" target="_blank">Twitter</a>.
</body></html>

terryryder-YECXbqmri2

The RBA just doesn't get the housing market

<html><body>
The Reserve Bank of Australia’s meeting minutes for the July monetary policy meeting that saw the interest rate held at 2.5% has made particular note of the increase in dwelling investment.
Pointing to the noticeable increase in the March quarter, and mentioning that over the six months to March investment levels are running close to the fastest pace seen in a decade, it doesn’t appear that the RBA is as yet concerned.
"Dwelling investment increased noticeably in the March quarter and, over the six months to March, was running at close to the fastest pace seen in around a decade," the minutes explained.
“Residential building approvals had declined somewhat in recent months, but they remained at relatively high levels and both work yet to be done and loan approvals for new dwellings pointed to further strong growth in dwelling investment in coming quarters.
“At the same time, there had been signs of a tempering in conditions in the established housing market.
Members were said to have particularly observed that looking past the monthly volatility, housing price inflation was recorded as slowing in recent months, auction clearance rates had fallen from their last year highs and loan approvals were little changed over the past six months.
Overall, they noted that GDP growth was above trend in the March quarter, and resource exports were expected to expand in coming quarters, even if not at such a rapid pace as previously.
A gradual improvement in the non-resource sector, and growth in residential construction was a prospect, “despite some easing of conditions in the established housing market over recent months”.
The exchange rate was also noted as high when compared to historical rates, and therefore offering less assistance in achieving economic growth than might be otherwise expected.
It appears the factors they will are now keeping under close watch is the extent to which the low interest rates offset the decline in mining investment that is anticipated, and the effect of planned fiscal consolidation.
A period of interest rate stability was noted as the most prudent course given current indications.
</body></html>

Dwelling investment close to fastest pace seen in a decade: RBA meeting minutes

<html><body>
While current market pricing points to around a 50% chance of further easing by the end of the year, ANZ modelling puts the prospect at less than 10% chance of occurring. 
"The results of our probit model are consistent with ANZ’s view of how the economy is evolving and suggests that the market is too complacent about prospects of monetary policy nominalisation," the report by ANZ Research economists Dylan Eades, Savita Singh, and Felicity Emmett said.
The bank said while momentum in the domestic economy has softened recently, most indicators are continuing to point to a gradual improvement in the non-mining sectors of the economy. 
"As such, we continue to expect the RBA to be on hold for some time, before commencing a gradual hiking cycle in early 2015. 
"While we think that the hurdle for further rate cuts is high, we remain cognisant that a number of risks remain that could push out the start of the RBA’s tightening cycle.
"Indeed, the ongoing strength in the Australian dollar combined with a moderation in domestic dataflow suggests that the risks, at this stage, are tilted towards a slightly later start to the tightening cycle, rather than the risk being that the next move in rates is down."
After testing a number of indicators, ANZ found that the indicators which had the best power to predict a cut in the cash rate were:
<ul>
<li>
The NAB business survey’s index of profitability (with a five month lag),
</li>
<li>Three-month ended growth in retail sales (with a six month lag),</li>
<li>The level of building approvals (with a six month lag),</li>
<li>
A subseries in Westpac-Melbourne-Institute’s consumer confidence survey that is more correlated with household consumption growth, ‘family finances compared to a year ago’ (with a five month lag),
</li>
<li>The spread between the Australian 10-year bond yield and 90-day bank bill (with a six month lag), and</li>
<li>The level of the cash rate</li>
</ul>
 
 
 
 
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jchancellor-FAypfDUnLy

Forget 50/50: Rate cut prospect less than 10%: ANZ

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Reserve Bank of Australia research has suggested that house prices would have to continue to rise at the same rate as over the last six decades for property owners to be as well off financially as renters.
Home ownership is more attractive the longer a house is owned, because transactions costs are amortised over a longer period, it concluded.
Assuming real house prices increased at the historical 2.4%, after inflation, buying beats renting when the owner held for more than eight years.
But with the 1.7% rate, after inflation, experienced over just the past 10 years, owning only beat renting over an ownership period longer than 30 years.
“Consistent with conventional wisdom, households expecting to move again in a few years’ time are better off renting, unless they believe they can sell the property for an unusually large capital gain,” the 45 page research paper said.
"We find that if real house prices grow at their historical average pace, then owning a home is about as expensive as renting.
"If prices grow more slowly, as some forecasters predict, the framework used in this paper suggests that the average home buyer would be financially better off renting.
"We decompose house prices into contributions from rents, interest rates and expected capital gains, which may help policy makers in the detection of housing bubbles.
"Recent data do not show signs of a bubble," the RBA researchers Ryan Fox and Peter Tulip suggested.
Given that individual circumstances vary, the paper noted that no-one should base personal investment decisions solely on the estimates. 
The key limitation within the paper, the RBA noted was that it focused on owner-occupied purchases, as investors in housing may be better off because of tax reasons.
The RBA also noted non-financial benefits such as security of tenure, pride of ownership and freedom to renovate.
Real house prices have increased at an average annual rate of slightly less than 21⁄2 per cent since 1955.
"If this rate of appreciation is expected to continue then our estimates suggest that houses are fairly valued.
"Forecasting house price growth is subject to considerable uncertainty.
"That said, many observers have suggested that future house price growth is likely to be somewhat less than this historic average.
"In that case, at current prices, rents, interest rates and so on, the average household is probably financially better off renting than buying."
It noted overfall prices were overvalued in the early 2000s, becoming undervalued in the second half of the decade, then switching back to overvalued following the global financial crisis. 
The discussion paper series is intended to make the results of the current economic research within the Reserve Bank available to other economists. Its aim is to present preliminary results of research so as to encourage discussion and comment. 
The views expressed are those of the authors and not necessarily those of the Reserve Bank. 
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No property bubble, but RBA pinpoints the possible future wisdom in renting

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Raine &amp; Horne chief, Angus Raine, has said that the Reserve Bank of Australia should take a lead from Europe and meet every six weeks rather than once a month.
With a recent meeting of the Governing Council of the European Central Bank committing to the change, Raine said that it would be sensible for the Reserve Bank to follow their lead and move to this new six week cycle. The European Central Bank will be taking this step from January 2015, although their non-monetary policies will continue as usual.
Raine said that in the past, RBA decisions take a few months to wash through the system and to affect consumer confidence, business activity and the real estate market, however they continue to meet and make decisions on a monthly basis.
“Moreover, we've seen how the lead up to an RBA board meeting can be front page news and the hype and speculation leaves buyers and sellers holding their breath in the weeks before and after the outcome is announced, which stymies real estate activity,” said Raine.
“To be fair, the impact of the monthly meetings is not as emphatic in a bull run like we've enjoyed over the past two years but I'm more concerned about the effect when the RBA starts tightening monetary policy with a series of hikes, which is expected to begin later this year or early next.”
He noted that even if changes cause mortgage repayments to increase by as little as $50, it will take home owners a fortnight to calculate what they can afford.
“Longer intervals between meetings could give the RBA more time for its decisions to work their magic and minimise the impact that the meetings have on business and investment activity,” he said.
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RBA should turn to meetings every six weeks: Angus Raine

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ANZ refrained from changing its variable interest rates for its home loans in its hastened July monthly review.
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Its standard variable home loan rate remains at 5.88% per annum (5.98% per annum comparison rate). 
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But the ANZ has announced, while sticking to a formal monthly review, that it will now come quicker - by the Friday following the Reserve Bank of Australia’s board meeting, not the second Friday.
“The change to the timing of our monthly review follows consistent customer feedback that they would like to understand the outcome of our interest rate review process earlier in the month in line with our competitors,” the ANZ chief Philip Chronican said.
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“Given the more predictable international economic environment and the greater stability that exists in offshore funding markets we are now in a position to assess the impact of any RBA decision along with the other drivers of funding costs in a more timely way,” Mr Chronican said.
The ANZ went solo in late 2011 with its second Friday monthly review following a statement in December 2011 that the bank would announce any changes to variable mortgage rates for retail mortgages and small business lending on the second Friday of each month
The other big banks have stuck to erratically making announcements without any formal timetable following official RBA cash rate announcements that come on the first Tuesday of the month. 
The latest ANZ interest rate change was announced last August lowering interest rates for variable rate mortgages by 0.25% per annum following its monthly interest rate review.
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ANZ will be quicker to announce any rate change

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The Reserve Bank of Australia (RBA) has again chosen to keep the overnight cash rate at its record low level of 2.5%. The cash rate has not moved since August 2013.
The decision was widely anticipated by property industry commentators, with 18 surveyed industry experts recently <a href="/expert-insights/finance/experts-predict-rba-will-keep-rates-on-hold-for-july-finder">predicting the cash rate would stay on hold</a>.
RP Data’s research director Tim Lawless says that the cash rate is likely to stay on hold for the rest of the year.
“The RBA interest rate decision came at a time when value growth across the housing market continues to trend higher, albeit at a lower rate than in the recent past and the Australian dollar has remained stubbornly high around the ninety four cent mark,” said Lawless.      
“RP Data recently reported that dwelling values were down 0.2% over the June quarter, dragged down by a very weak May result and a partial recovery of values in June.  Policy makers, including the RBA, are likely to be reassured by the slowdown in housing market conditions, where the rate of growth earlier in the year was increasingly viewed as unsustainable.
“It is looking increasingly like the official cash rate will remain at its low setting, at least for the remainder of this year, which should continue to support housing demand.  Capital gains over the past financial year were recorded at 10.1% across the combined capital cities, however we are expecting growth rates to wind down over the coming financial year as natural affordability constraints and low rental yields in the largest capital cities work to slow the rate of capital gains.
LJ Hooker chief executive Grant Harrod said that a future increase is expected.
“The continued stability of rates will give buyers extra confidence, even with speculation an increase will eventually come,’’ said Harrod.
“We have seen property price growth soften as the market heads into winter but, even still, demand is strong as seen in the volume of sales and auction clearance rates around Australia’s various markets.’’
LJ Hooker national research manager Mathew Tiller said unemployment levels remain at a stable 5.8%, in spite of concerns over the retail and mining sectors, while inflation is within the RBA’s target band.
However, he said that international markets could affect local interest rates offered by banks.
“In the US and EU, rates are set at close to zero and are not expected to move till mid-2015, while the risk of deflation in Europe has seen the European Central Bank introduce negative interest rates for bank deposits,” said Tiller.
“Major lenders here may look to tap into this cheap source of debt.”
Photo courtesy of Newtown grafitti/<a href="https://creativecommons.org/licenses/by/2.0/" target="_blank">Creative Commons</a>.
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