Roseville is poised for a wave of new apartment development following the NSW Government's rezoning of land around Roseville Station under its Transport Oriented Development program.

The new planning controls have unlocked significant development potential within walking distance of the station, with a number of sites expected to be amalgamated and redeveloped in the coming years as developers seek to take advantage of the increased density allowances.

One of the more restrained developments in the precinct, and set among the first to be delivered having commenced well before the recent changes, is Hyecorp's Juliet. The boutique apartment project is already well under construction and remains on track to welcome residents by the end of the year, offering a markedly different proposition to many of the larger-scale developments now likely to emerge across the suburb.

[smartcode_project:default project_id=7395 project_image_fid=278194]

<a href="https://www.apartments.com.au/new-apartments/juliet-roseville-64-pacific-highway-roseville-nsw-2069">Juliet</a> will comprise just&nbsp;34 one-, two-, and three-bedroom apartments opposite Roseville Station. For Hyecorp, which has delivered projects across Sydney's Lower North Shore for more than three decades, Roseville presented a rare opportunity to address a growing gap in the market.

"<a href="https://www.apartments.com.au/developments/roseville-nsw-2069">Roseville</a> has long been one of the North Shore's most tightly held and desirable suburbs, offering a unique combination of village charm, established greenery, excellent transport connections, and proximity to some of Sydney's best schools and lifestyle amenities," Hyecorp said.

"We recognised a growing demand from local homeowners seeking to downsize without leaving the community they have built their lives around. The location presented a rare opportunity to create homes that cater specifically to that buyer profile."

[smartcode_project:default project_id=7395 project_image_fid=278196]

The six-level development has been designed by <a href="https://www.apartments.com.au/architects/pbd-architects">PBD Architects</a> as a collection of residences that feel more like homes than apartments. The brief centred generous floorplans, abundant natural light, quality finishes, and strong connections to outdoor space.

PBD Architects drew inspiration from Roseville's established garden suburb character, creating a building that sits comfortably within its surroundings rather than dominating them. The architecture incorporates natural materials, soft forms, layered landscaping, expansive balconies, and generous setbacks to strengthen the connection between residents and the suburb's leafy environment.

"The focus was on designing spacious, house-like residences for discerning owner-occupiers and downsizers who wanted to remain on the North Shore without compromising on comfort, privacy, or design," PBD said.&nbsp;

"Every apartment was to feel considered, timeless, and highly functional."

[smartcode_project:default project_id=7395 project_image_fid=278195]

Inside, residences feature engineered timber flooring, stone kitchen benchtops and splashbacks, integrated Fisher &amp; Paykel appliances, ducted air conditioning, and large outdoor entertaining areas designed to take advantage of district and treetop views.

Residents will also have access to a rooftop barbecue and lounge area, alongside practical amenities including parcel lockers, EV charging capability, bicycle storage, a dog wash bay, and a basement car wash facility.

The majority of purchasers so far have been local owner-occupiers from Roseville, Lindfield, Chatswood, Killara, and the broader Upper North Shore, many of whom are transitioning from larger family homes.

"Buyers are looking for spacious, house-like apartments that allow them to downsize without feeling like they are sacrificing comfort or functionality," Hyecorp noted.

"They value large kitchens, generous living areas, ample storage, quality finishes, secure parking, lift access, and low-maintenance living."

[smartcode_project:default project_id=7395 project_image_fid=278204]

Juliet sits directly opposite Roseville Train Station and within walking distance of Roseville Village, while Chatswood's retail and dining precinct is only minutes away. The development is also surrounded by some of Sydney's most established schools, including Roseville College, Ravenswood, Pymble Ladies' College, and Knox Grammar, as well as nearby parklands and golf courses.

Juliet is currently more than 75 per cent sold ahead of its anticipated completion in late 2026.

[smartcode_project_cta:default project_id=7395]

Joel Robinson

Juliet to sit quietly amid Roseville apartment boom

Sherpa Property Group has unveiled the third instalment of its Flourish series, securing full approval for the two-tower, $500 million Flourish Soleira development in Palm Beach.

<a href="https://www.apartments.com.au/new-apartments/flourish-soleira-1150-1154-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> will rise from a prominent site in the commercial heart of Palm Beach, the long-time home of Cash Converters and a range of local retailers.

The project will introduce a new retail and dining precinct at ground level, beneath 286 apartments.

[smartcode_project:default project_id=150017 project_image_fid=370959]

“We’re very committed to not only providing affordable residential offerings that are much needed in Palm Beach, but also delivering a vibrant new commercial heart that complements the extraordinary growth of the southern Gold Coast,” Sherpa Property Group founder Christie Leet said.

The development will sit under Sherpa's Flourish brand, which is aimed at providing a pathway into the beachside suburb for locals, first-home buyers and downsizers. In a move designed to assist first-home buyers entering the market, Sherpa has reserved all one and two-bedroom, one-bathroom apartments exclusively for eligible first-home buyers.

[smartcode_project:default project_id=150017 project_image_fid=370964]

“Our vision through Flourish is to create a vibrant retail and lifestyle focal point within the Palm Beach centre zone, delivering thriving communities underpinned by lifestyle-rich locations,” Leet said.

“So far, Flourish has been an incredible success, and we hope to carry this momentum as we progress the next two Flourish projects in Palm Beach.”

[smartcode_project:default project_id=150017 project_image_fid=371430]

Located across 1150-1164 Gold Coast Highway and 3 Sixth Avenue, the development will comprise two towers. The northern tower will deliver 154 apartments, while the southern tower will add a further 132 residences, helping address ongoing demand for new apartments in the tightly held coastal suburb.

Flourish Soleira will also feature the most extensive rooftop amenity offering ever delivered in Palm Beach.

The two towers will be connected by a skybridge, with residents gaining access to a rooftop recreation deck featuring a full-width swimming pool, hot and cold plunge pools, wellness spaces, a gymnasium, private dining facilities, massage treatment rooms, barbecue areas, a basketball court, golf simulator, indoor and outdoor dining spaces, sun lounges and extensive landscaping.

LPS Group is expected to start construction later this year.

Sherpa is already well advanced on construction of its debut Flourish project, Flourish Amargo, located just around the corner from Soleira. Meanwhile, Flourish Oasis, positioned opposite Amargo, recently commenced construction and has nearly sold out its collection of 47 apartments.

[smartcode_project_cta:default project_id=150017]

Sherpa unveils $500m mixed-use Palm Beach precinct, Flourish Soleira

Are mortgage holders set to get a reprieve from the RBA in 2026?

Big Four bank NAB believes so. They are now expecting the next move from the RBA to be a cut, rather than a hike, which they had pencilled in for August. They are unsure of the timing of the cut however, they note in their latest&nbsp;NAB Economics RBA Watch.

NAB Chief Economist, Dr Sally Auld, said recent data suggests the economy has lost momentum and the outlook for rates has shifted, noting that the broader economic backdrop has changed since earlier in the year.

“The next move in the cash rate is likely to be down, but the timing is uncertain," Dr Auld said.

"In February, growth was above trend, the economy was operating above capacity and there was uncertainty over the restrictiveness of rates. None of these conditions exist today,” she outlined.

Dr Auld said recent data pointed to softer momentum across the economy while acknowledging that at the same time, uncertainty remains a key feature of the outlook.

“Both Q1 GDP data and the NAB business survey suggest momentum in the economy has slowed, meaning that growth has likely peaked for the cycle. That said, we are cognisant there is still considerable uncertainty around the outlook, both with respect to activity and inflation.”

Dr Auld said inflation risks and labour market outcomes would be important to watch.

“On the prices side, we are still forecasting above target core inflation through to mid-2027. Margins will compress and weaker labour market outcomes are a risk.”

She said tighter financial conditions are expected to weigh on housing and activity.

“Tighter financial conditions will be reflected in a slowing in house price growth and housing credit growth. In summary, we have greater conviction that the next move in rates is down, but less conviction on the timing.”

Mortgage relief? NAB forecasts RBA rate cut, not hike, after softer economic conditions

A local downsizer has splashed $6.5 million on a penthouse in Perifa's Alex &amp; Willow development in Crows Nest. 
&nbsp; 
The purchaser sold their long-held family home in the area before embarking on a six-month search for the right apartment. After inspecting a range of options across the Lower North Shore, the buyer returned to <a href="https://www.apartments.com.au/new-apartments/alex-willow-crows-nest-82-90-alexander-street-crows-nest-nsw-2065">Alex &amp; Willow</a>. 
&nbsp; 
The buyer profile reflects the project’s broader purchaser mix. <a>Alex &amp; Willow</a> has attracted predominantly local downsizers looking to transition from larger homes without compromising on space or quality, alongside a smaller cohort of upsizers and investors drawn to the project’s location and design credentials. 
&nbsp; 
The milestone sale comes as the project, developed by&nbsp;<a href="https://www.apartments.com.au/developers/perifa">Perifa</a>&nbsp;and delivered by <a href="https://www.apartments.com.au/builders/versatile-made-construction">Versatile Construction</a>, both part of Versatile Group, reaches 60 per cent sold.

[smartcode_project:default project_id=6680 project_image_fid=371325] 
&nbsp; 
Eddie Mansour, Managing Partner of <a href="https://www.apartments.com.au/project-marketer/ray-white-projects">Ray White Projects</a>, said the result demonstrates not only a headline price but also depth of demand. 
&nbsp; 
“This is an exceptional outcome and a clear reflection of sustained buyer demand for premium, well-located downsizer product,” Mansour said.

“We’re seeing a consistent pattern of local homeowners selling family residences and reinvesting into high-quality apartments that allow them to remain within their community. Alex &amp; Willow has resonated strongly with this group because it offers genuine scale, thoughtful design and immediate proximity to the village.” 
&nbsp; 
The sale reflects a broader and consistent trend of local downsizers actively seeking high-quality, low-maintenance residences close to established village centres. Agents report that demand for this product type has remained resilient, particularly where developments offer a rare combination of scale, design quality and walkable amenity. 
&nbsp;&nbsp; 
Fabrizio Perilli, Managing Director of Perifa and Versatile Group, said the sale marks a defining moment for the project. 
&nbsp; 
“The penthouse sale is a strong endorsement of the quality we have delivered, alongside our partners, and the clear demand from local downsizers for premium, boutique residences in this location,” Perilli said.&nbsp; 
&nbsp; 
“Most importantly, we’re proud to see the Alex &amp; Willow community beginning to take shape. As we move closer to completion, we’re looking forward to welcoming residents and seeing the project come to life.”&nbsp;

[smartcode_project:default project_id=6680 project_image_fid=338516] 
&nbsp; 
Designed by <a href="https://www.apartments.com.au/architects/nettletontribe">Nettleton Tribe</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/richards-stanisich">Richards Stanisich</a>, Alex &amp; Willow is a boutique collection of generously sized two- and three-bedroom residences in the heart of Crows Nest village.&nbsp;

Completion is slated for early 2027.

[smartcode_project_cta:default project_id=6680]

Alex & Willow, Crows Nest penthouse sells off the plan for $6.5 million

Fresh from launching the first stage of its Wollongong precinct, <a href="https://www.apartments.com.au/new-apartments/keira-place-wollongong-120-122-smith-street-wollongong-nsw-2500">Keira Place</a>, builder-developer Urban Property Group has unveiled plans for the next phase of the masterplanned community.

Now on public exhibition through the NSW Government's Housing Delivery Authority pathway is a State Significant Development Application for a further 657 homes on the prominent gateway site opposite Beaton Park.

The proposal comprises three buildings, including two build-to-sell towers rising 25 and 30 storeys, delivering 391 apartments, alongside a 12-storey co-living building with 266 residences, making it one of the largest co-living proposals currently planned in regional New South Wales.

Of the apartments proposed in the build-to-sell towers, the majority, 310, are two-bedroom dwellings. The balance comprises 44 one-bedroom apartments and 37 three-bedroom residences. Apartment sizes range from around 50 sqm for one-bedroom homes to approximately 90 sqm for three-bedroom apartments.

<img alt="Smith St" data-entity-type="file" data-entity-uuid="19347059-1612-41a0-9c74-b86a657237f8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-10%20at%2010.02.18%E2%80%AFAM.png?VersionId=sWXnaCcA.cIC6N8YT1dg5pJ2e1V3Z6z7" />

The submission says the proposal has evolved significantly from its original Housing Delivery Authority application following extensive consultation with the State Design Review Panel and Wollongong City Council.

The final scheme has been designed to align with the emerging vision for the Flinders Street Precinct, an area identified by Council as a future high-density mixed-use neighbourhood capable of accommodating substantial housing growth close to transport, employment and community infrastructure.

According to the design report prepared by COX Architecture, the development aims to "deliver a built outcome consistent with the future character of the Wollongong CBD while responding to the site's unique constraints and opportunities."

"Our vision for the next phase of the site evolution in Wollongong is grounded in three design pillars that guide the design response: place, natural environment and celebration," COX said.

"Inspired by its surroundings and grounded in the stories of place on Wodi Wodi Country, the design proposal acknowledges the established character of its setting while creating a unique and timeless identity that sits harmoniously within it.

"The design proposal responds to its specific site conditions, acknowledging the vegetation, climate, wind conditions and solar access of the site."

The architecture responds directly to the site's position between Wollongong's urban core and its natural landscape setting.

COX identified views towards Mount Keira and the Illawarra Escarpment as defining features of the site, while the upper levels of the towers will also capture expansive views across the city and out to the Pacific Ocean.

The design team has positioned the tallest buildings closer to the rail corridor, where overshadowing impacts can be better managed while establishing a landmark built form on the northern approach into the city.

<img alt="Smith St" data-entity-type="file" data-entity-uuid="79580d5b-500c-4ebf-9629-797146a4a694" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-10%20at%209.51.59%E2%80%AFAM.png?VersionId=WbTB1EKSG.KDfsfz0F3wp1QVa2oCMGR5" />

Urban Property Group secured the 11,000 sqm Smith Street site in 2022 and has since progressed plans for the broader Keira Place precinct.

Construction recently commenced on the first stage of Keira Place, which will deliver 150 apartments across two residential buildings, including 27 affordable housing apartments and 18 specialist disability accommodation dwellings, alongside activated ground-floor retail and commercial space.

Urban Co-CEO Patrick Elias said the commencement of construction marked a significant milestone for Wollongong and reflected the developer's long-term commitment to regional cities.

"Today's groundbreaking is about turning approvals into homes and moving quickly to deliver much-needed housing in Wollongong's city centre," Elias said.

"Keira Place will provide a diverse mix of homes close to jobs, transport and services, while setting a high benchmark for quality, durability and consumer protection."

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/groundbreaking-marks-start-of-construction-at-keira-place-in-wollongong-cbd">Groundbreaking marks start of construction at Keira Place in Wollongong CBD</a>

&nbsp;

&nbsp;

&nbsp;

Urban Property Group unveils trio of towers for next stage of new Wollongong precinct, Keira Place

Meeting Minutes

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EXPERT OBSERVER
Recently the Bank has communicated extensively with the market.
This has included a major speech from the Governor to the Australian Business Economists; his the semi annual appearance at the House of representatives Standing Committee on Economics; and the August Statement on Monetary Policy.
So, it comes as no surprise that the Minutes of the August Board Meeting contain no surprises.
The Board confirms that it does “not rule out adjusting the current package if circumstances warranted”.
The package is highlighted by a 0.25% cash rate and a 0.25% target for the three year bond rate.
The condition for the three year bond target is somewhat looser than for the cash rate target with “progress towards the inflation target” compared with “confident that inflation will be sustainably within the 2–3 per cent target band”.
For that reason “it would be appropriate to remove the yield target before the cash rate itself is raised”.
This policy description has been used consistently since the Board minutes of the April meeting.
It is not entirely clear as to whether “remove the yield target” means abandon yield curve control or adjust the level of the target to, say, 0.40%.
In his appearance at the Parliamentary Committee he opined that the three year target of 0.25% was reasonable since he expected that the cash rate would hold at 0.25% for the next three years.
However, he was guarded as to whether he thought it likely that the 0.25% would hold for five years and therefore it was  not encouraging that the target of 0.25% would be extended to five years.
My preference would be that if in 2022 the Bank was still of the view that the cash rate was unlikely to hold at 0.25% for another three years it would be appropriate to lift the three year target rate to, say, 0.40% thus maintaining yield curve control without having to defend an unrealistic target.
Given that this current language is likely to be used consistently in the Minutes certainly through 2021 the Board can maintain its flexibility on whether to abandon yield curve control or set a different target rate.
Another issue for policy is the Australian dollar. The Governor stated last week that a lower dollar was helpful in boosting jobs through a lift in competitiveness.
With the Bank’s assumption that foreign borders would remain closed until mid- 2021 the benefit of a more competitive dollar is blunted somewhat in the near term.
However, he stated that any move to intervene to lower the dollar would be ineffective if the value of the dollar was in line with fundamentals.
In fact, in the Minutes we see “The Australian dollar had been broadly in line with fundamental determinants, such as commodity prices and interest rate differentials”.
With the outlook for commodity prices encouraging and interest rate differentials moving in a very narrow band the opportunity for a grossly overvalued AUD to emerge prompting some currency intervention seems unlikely.
Adopting a negative interest rate policy to lower the fundamental value of the dollar through a widening the yield differential has been described by the Governor as “ extraordinarily unlikely”.
I am always interested in the detailed economic discussion for insights from the Bank’s extensive liaison work with business.
In that regard “Information from the Bank’s liaison program indicated that the share of contacts expecting to freeze wages or to implement temporary wage cuts was higher than in the past”.
With wages growth being a key determinant of inflation that news will not be comforting for a central bank targeting a return to 2–3% inflation.
All three economic outlook scenarios – base; upside; and downside had inflation below 2% (upside 1.75%) by end 2022 with the downside scenario seeing inflation at 0.5% even by end 2022.
The conclusion was that “underlying inflation pressures would remain subdued for a considerable period”.
On business investment “information from liaison with businesses and recent surveys indicated that weakness in non- mining business investment over recent quarters would become more pronounced in the period ahead”….” Firms were prioritising their liquidity positions in response to uncertainty about future demand”….” many non-residential projects that had not yet commenced were on hold”.
Conclusion
The Bank’s forecasts put the policy debate in a difficult position.
What does “progress towards full employment“ mean?
If the unemployment rate has fallen from the forecast peak of 10% (we think that is too high – more like 8.5–9.0%) to 7% does that qualify as sufficient “progress” to tighten policy?
Yes, a three percentage point fall in the unemployment rate is significant but is it sufficient “progress”?
Surely there is a case for maintaining maximum policy stimulus if you are that far away from full employment and inflation has spent years outside the target band.
On the other hand, if the forecasts prove to be optimistic (and the downside scenario prevails) there should be a  debate around what other policy options might be considered effective.
Perhaps, as we move forward, that debate will merit more attention.
<div>
BILL EVANS is Chief Economist for Westpac. 
</div>
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bevans-rYk9SxEa4r

RBA's forecasts put policy debate in a difficult position: Westpac's Bill Evans

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The reduced flow of new arrivals to Australia is affecting some real estate markets, RBA Governor Philip Lowe noted in the July RBA meeting minutes released today.
He was referring primarily to the rental market, with vacancy rates increasing sharply in Sydney and Melbourne to just above four per cent.
Lowe cited the increase in the supply of rental housing in some areas.
He said soft conditions in the rental market were expected to weigh on rent inflation for some time.
The RBA members also noted conditions in the established housing market remained mixed.
"Housing prices in some larger cities had declined in June, though were only a little below recent peaks in the case of Sydney and Melbourne", Lowe said, adding that house prices in a number of smaller cities were broadly unchanged.
He said housing turnover has recovered somewhat after a "significant decline" when in-person auctions and open homes were banned owing to physical distancing restrictions.
Refinancing activity had risen sharply, Lowe noted, as borrowers had taken advantage of lower rates and the strong competition for lower-risk borrowers.
"Interest rates on new fixed-rate mortgages were noticeably lower than on new variable rate mortgages, which had led to an increasing share of new or refinanced loans on fixed rates", Lowe said.
"While some existing borrowers had deferred their loan payments, payments into offset accounts had remained high.
"This was consistent with many home loan borrowers saving for precautionary reasons and having reduced opportunities for spending."
Investor credit continued to contract, while credit extended to owner-occupiers continued to grow steadily at around the pace of preceding months. Lowe said credit growth overall was likely to slow in the months ahead, with commitments for new housing loans having fallen sharply in May.
"Members noted that this was consistent with weak economic conditions and the soft outlook for the housing market".
The RBA board also touched on how the elements of their emergency March policy package could have been configured differently.
"There has been variation across countries in the design of these measures.
"It would have been possible, for example, to set lower, but still positive, interest rate targets and to have purchased a quantity of government bonds above that necessary to achieve the bond yield target.
To read the full RBA minutes, click here.
 
 
 
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jrobinson-rf4aSBido9

Overseas buyers absence hurts Australian property market: RBA governor Philip Lowe

Conditions in the established housing market remained mixed: RBA July 2020 meeting minutes

Recovery could be expected to start later in 2020 : RBA May meeting minutes

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At the March meeting, RBA governor Philip Lowe said the benefits from lower interest rates outweighed the risk of cutting rates.
When deciding to cut to a historic low 0.5 per cent, Lowe said members discussed that a further reduction in interest rates could encourage additional borrowing at a time when there was already a strong upswing in the housing market.
He said that risk, in the current context of heightened uncertainty, was not viewed as particularly high, relative to the benefits from lower interest rates.
The RBA board's first point of call at the March meeting was to discuss financial markets.
They tend to open with international economic conditions, but given the financial ramifications on COVID-19, which was mentioned 24 times in the minutes, financial markets came first.
Financial markets also began the December minutes, although this was well before any notion of COVID-19 was even discussed as having such an imprint on the Australian economy.
RBA Governor Philip Lowe's opening statement stated that it had become increasingly clear that the spread of the novel coronavirus disease (COVID-19) beyond China would cause a major disruption to economic activity around the world.
There was no great concern on the housing market front from Lowe, who described the February housing market as "robust."
"National housing price growth had remained robust in February and most capital cities had experienced at least moderate price increases," Lowe said.
"The strong growth in housing prices had also encouraged more new residential listings, albeit from very low levels. 
"Turnover had increased, which, by itself, was expected to help support other types of spending."
Lowe said indicators of activity at the earlier stages of residential building had remained consistent with a turnaround in activity in the second half of 2020, especially for detached dwellings.
He noted however the December quarter data on residential building work done indicated dwelling investment had decreased again, driven by a further decline in the construction of new dwellings.
Over the previous six months, growth in housing credit for owner-occupiers had increased a little, members observed, but housing credit was growing more slowly than housing loan commitments, consistent with a rise in mortgage payments over the previous six months.
Loan commitments to investors had increased modestly over the same period, while housing credit for investors had stopped declining recently.
 
 
 
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RBA consider cutting interest rates as not high risk at March meeting

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MARCH RBA MINUTES
<h2 id="financial-markets">Financial Markets</h2>
Members commenced their discussion by noting that, since the previous meeting, it had become increasingly clear that the spread of the novel coronavirus disease (COVID-19) beyond China would cause a major disruption to economic activity around the world. Many countries were imposing travel restrictions and businesses and individuals were electing not to travel. COVID-19 had also been creating considerable uncertainty worldwide, leading to a significant reduction in risk appetites. This uncertainty meant that there was an increasing probability that people would seek to avoid gatherings, including public transport and perhaps workplaces.
These developments were evident in the significant changes in global financial markets outside of China in recent weeks. There had been sharp falls in the prices of risky assets and markets were finding it difficult to price the risks, given their unprecedented nature.
In the advanced economies, equity markets had declined sharply from recent highs, with sectors most exposed to COVID-19 disruptions experiencing particularly large falls. Spreads in corporate bond and money markets had widened, including in Australia, and issuance of corporate debt had slowed in late February after a strong start to the year. However, members noted that while spreads had widened, corporate borrowing costs had not risen much, if at all, because sovereign bond yields had declined to very low levels. In a number of countries, including Australia, sovereign bond yields were at record lows. On the whole, international financial markets were functioning effectively despite the sharp rise in volatility.
Members then turned to a discussion of international policy responses. Following the sharp adjustment to Chinese asset prices after the extended Lunar New Year break, the authorities in China had introduced a range of measures to forestall a tightening in financial conditions. This included monetary and fiscal easing targeted at supporting smaller firms in particular, with policymakers also indicating a willingness to ease policies. These measures had underpinned a stabilisation of onshore equity and credit markets. Elsewhere in the region, some central banks had also eased monetary policy, and modest fiscal measures were being deployed in some countries. Financial market volatility in the region had increased, but conditions had remained orderly.
Central banks in the major advanced economies had acknowledged the uncertainty created by the outbreak of COVID-19. Some had signalled a preparedness to provide further monetary policy accommodation if conditions warranted. Market pricing had moved substantially, suggesting that central banks in the advanced economies were expected to ease monetary policy at upcoming policy meetings. The expectation that central banks in the advanced economies would soon respond with easier policy had contributed to yields on long-term sovereign debt declining to historic lows in many markets.
In foreign exchange markets, the Japanese yen had appreciated as concerns about COVID-19 intensified. Members also noted that the US dollar had appreciated in recent months against most currencies. Regionally, the renminbi had been little changed and exchange rates in emerging Asia had depreciated somewhat, but in the context of broader US dollar strength. Members observed that the Australian dollar was at its lowest level in more than a decade.
Domestically, members noted that issuance of bank debt had slowed recently, but this partly reflected the substantial volume of funding already to hand and the modest growth in bank credit. Bank funding costs had declined a little over the prior month, with a modest widening in spreads more than offset by sharp declines in risk-free rates. The reductions in the cash rate in the previous year had brought bank funding costs to historic lows, with retail deposit rates having fallen further in recent months.
Lending rates were also at historic lows. While standard variable mortgage rates had declined by around 60 basis points since mid 2019, the average rate paid on outstanding variable-rate mortgages had drifted down by an additional 10 basis points beyond that. Members noted that, if the downward drift in average rates paid continued at its recent pace, there would be full pass-through of the previous year's reductions in the cash rate to the average mortgage rate by mid 2020.
Members discussed the factors contributing to this downward drift in average mortgage rates. In particular, ongoing strong competition for new high-quality borrowers had seen new and refinancing borrowers receive lower interest rates than those paid by existing borrowers. Improving transparency would help address this. Some borrowers were also switching from interest-only loans to principal-and-interest loans, which had lower interest rates.
Members observed that the growth in housing credit for owner-occupiers had increased a little over the previous six months or so, but housing credit was growing more slowly than housing loan commitments, consistent with a rise in mortgage payments over this period. Loan commitments to investors had increased modestly over the same period, while housing credit for investors had stopped declining recently.
Market pricing suggested that market participants expected the cash rate target to be cut by 25 basis points at the present meeting, and again by June.
<h2 id="international-economic-conditions">International Economic Conditions</h2>
Members commenced their discussion of the global economy by noting that the spread of COVID-19 was expected to affect global growth in 2020 by more than had been factored into the forecasts presented at the previous meeting.
Actions taken by Chinese authorities to limit the spread of COVID-19 had severely restricted economic activity in China in the March quarter and there continued to be significant uncertainty about the size and persistence of this disruption. While industrial output was typically lower in the March quarter because of the Lunar New Year holiday period, production had remained at holiday levels for much longer than usual. Coal consumption by power plants had also remained around the low levels typical of the Lunar New Year period. Members noted that this had not reduced demand for coal imports, which suggested that there had been a significant decline in China's domestic coal production. Iron ore imports also had not been significantly affected. Business conditions in China in February had deteriorated by much more than expected and supplier delivery times had increased sharply, indicating that there had also been disruptions to supply chains. Retail activity and residential property sales had been subdued.
Chinese GDP was expected to rebound later in 2020 as businesses seek to make up lost production and a range of stimulus and tax relief measures from the Chinese Government take effect. Some government measures, including direct support for manufacturers of medical equipment, were intended to support containment efforts, while others, such as assistance to affected small businesses, were designed to reduce the adverse economic spillovers from COVID-19.
Given the disruptions to logistics and other transportation in China, forecasts for global oil demand had been scaled back considerably and oil prices had fallen. This would lead to a decline in headline inflation globally. The prices of other commodities that tend to be responsive to changes in the outlook for global demand, including base metals, had also fallen since the start of 2020. Prices for liquefied natural gas had also declined. Prices of other bulk commodities had been little changed in net terms; iron ore prices had reversed an earlier fall, even as Chinese steel inventories had increased, possibly in anticipation of a pick-up in demand as economic activity rebounded.
Growth in other Asian economies was also expected to be lower in the March quarter than previously thought, reflecting a combination of lower Chinese domestic demand, less Chinese outbound travel and supply chain disruptions. Early indicators of trade activity in the Asian region in February had declined, following a period where trade, industrial production and manufacturing indicators in the more export-oriented economies had stabilised, amid signs of stabilisation in the global electronics cycle. Overall, growth in Australia's major trading partners was expected to be around ½ percentage point lower in 2020 as a result of COVID-19.
In the major advanced economies, GDP data for the December quarter had been weaker than expected for Japan and the euro area, while GDP growth in the United States had been relatively resilient. Even though employment growth had eased over 2019 in the major advanced economies, unemployment rates had continued to edge lower. Prior to any supply disruptions related to COVID-19, industrial production in the euro area had continued to decline, particularly in the auto sector. Members noted that, to date, there had been no reports that supply disruptions were contributing to these declines. Some survey measures of business conditions in the United States and Japan had deteriorated sharply in February, but investment intentions and business sentiment in the United States had been more positive.
<h2 id="domestic-economic-conditions">Domestic Economic Conditions</h2>
Members noted that the December quarter national accounts would be released the day after the meeting. Quarterly GDP growth was expected to have remained moderate, reflecting ongoing weak growth in household consumption and a further decline in dwelling investment. The bushfires over the summer months were expected to have affected growth in both the December quarter 2019 and the March quarter 2020, after which recovery efforts were expected to boost growth.
Members noted that economic activity in the first half of 2020 would be significantly affected by the global response to the COVID-19 outbreak. Services exports (which comprise around 5 per cent of GDP) were expected to decline by around 10 per cent in the March quarter, mainly because of a steep decline in inbound arrivals, including students, particularly from China. This effect alone was expected to lower Australian GDP growth by around ½ percentage point in the March quarter. Tourism and education exports were expected to remain low in the June quarter, before returning to their previous levels over the second half of the year as the Chinese economy recovers and travel resumes. Members observed that this estimate did not include possible effects on domestic activity of supply chain disruptions and public health safety interventions to reduce the likelihood of transmitting COVID-19.
Information from the capital expenditure (capex) survey and preliminary data on non-residential construction work done suggested that both non-mining and mining investment had decreased in the December quarter, led by weakness in building and engineering investment. However, mining firms had continued to expect solid growth in investment over the rest of 2019/20. The capex survey had also reported firms' investment intentions for 2020/21 for the first time. The responses suggested that mining investment would increase strongly, consistent with the most recent set of forecasts and the messages from liaison with businesses, while non-mining investment was expected to remain subdued.
National housing price growth had remained robust in February and most capital cities had experienced at least moderate price increases. The strong growth in housing prices had also encouraged more new residential listings, albeit from very low levels. Turnover had increased, which, by itself, was expected to help support other types of spending. Indicators of activity at the earlier stages of residential building had remained consistent with a turnaround in activity in the second half of 2020, especially for detached dwellings. However, data on residential building work done indicated dwelling investment had decreased again in the December quarter, driven by a further decline in the construction of new dwellings.
Growth in household consumption was expected to have been subdued in the December quarter; retail sales volumes had increased modestly and there had been further declines in motor vehicle sales in the quarter. A few categories of spending that are most correlated with housing activity had picked up in the quarter. The drought had continued to affect food prices and the volume of food sales had declined in the quarter. Members noted that growth in consumption in the first quarter of 2020 could be weaker than expected if the COVID-19 outbreak induced some households to cancel or defer international travel or disrupted supply chains for imported consumer durables. Although there was considerable uncertainty about the size of the net effect on GDP, it was expected to be small based on the available evidence.
Employment had grown by 1.9 per cent over the year to January, which was stronger than growth in the working-age population. However, the unemployment rate had increased to 5.3 per cent, reversing the small decline in the previous month, and the underemployment rate had increased to 8.6 per cent. The unemployment rate had been around 5¼ per cent for most of the preceding year. Members noted that the labour force data could be volatile from month to month and that it was too soon to know if the modest rise in these measures of spare capacity signalled a change in trend. The wage price index confirmed that growth in wages had remained steady at low rates in the December quarter, consistent with information from liaison with businesses, which suggested that wage outcomes had become increasingly concentrated in the 2–3 per cent range. Wages growth had slowed a little in some industries. These data and reports from liaison with businesses suggested that wages growth was unlikely to pick up in the near future.
<h2 id="considerations-for-monetary-policy">Considerations for Monetary Policy</h2>
In considering the policy decision, members observed that it was becoming increasingly clear that COVID-19 would cause major disruption to economic activity around the world. The outbreak had occurred in the context of a global economy that was gradually emerging from a soft patch in trade and manufacturing activity. However, following the outbreak, growth in output in China and other economies was expected to be significantly lower in the first half of the year, reflecting a combination of lower domestic demand, less travel and supply chain disruptions. The recent outbreaks of COVID-19 outside of China, and intensified efforts to contain its further spread, raised the prospect of a broader and more extended disruption to the global economy. It was too early to tell how persistent these effects would be and at what point economic activity would rebound. In response to the outbreak, policy measures to support growth had been announced in several countries, including China. Inflation remained subdued in most advanced economies, despite low unemployment rates.
Financial markets had been more volatile as market participants assessed the implications of COVID-19, with the prices of many risky assets falling sharply. The uncertainty generated by the outbreak, and an expectation that central banks would respond with easier policy, had resulted in long-term government bond yields falling to historic lows in many countries, including Australia. The Australian dollar had depreciated to be at its lowest level in more than a decade. Australia's financial markets were operating effectively, and the Bank would continue to ensure that the Australian financial system had sufficient liquidity.
The advent of COVID-19 around the world was having a significant effect on the Australian economy, particularly in the education, transport and tourism sectors. The uncertainty associated with the outbreak was also likely to affect household spending and business investment in coming months. As a result, GDP growth in the March quarter was likely to be noticeably weaker than previously expected, and it was difficult to predict how long it would take for the economy to return to more usual levels of activity. Once the disruptions passed, GDP growth was expected to pick up, supported by the low level of interest rates, high levels of spending on infrastructure, the lower exchange rate, stronger investment in the resources sector and recoveries in residential construction and household consumption. The Australian Government had also indicated that it would assist areas of the economy most affected by the COVID-19 outbreak.
Given these developments, members considered how best to respond, noting that even prior to the COVID-19 outbreak, progress towards full employment and the inflation target had been expected to be only gradual. The COVID-19 outbreak was expected to delay that progress further.
In discussing a possible monetary policy response, members welcomed indications from the Australian Government that fiscal measures would be taken to support investment, the cash flow of affected businesses and jobs. They also discussed the support that lower interest rates would provide to jobs and economic activity through a lower exchange rate and a boost to aggregate cash flows for households and businesses. Members recognised that the combined monetary and fiscal responses would help the economy deal with the challenges posed by COVID-19.
As part of their deliberations, members considered a number of scenarios, including one where the COVID-19 outbreak would be contained in the very near future and where there would be a rapid recovery in economic activity. In that scenario, the maximum effect of any additional monetary policy stimulus would be felt in the recovery phase, rather than in the short term, when policy support would most be needed. However, this scenario was considered very unlikely, with the more realistic scenario being that the outbreak would have a significant effect on the Australian economy.
Members also discussed the risk that a further reduction in interest rates could encourage additional borrowing at a time when there was already a strong upswing in the housing market. In the current context of heightened uncertainty, that risk was not viewed as particularly high relative to the benefits from lower interest rates.
The Board concluded that it was appropriate to ease monetary policy further in response to the global COVID-19 outbreak to provide additional support to employment and economic activity. Members agreed that it was reasonable to expect that an extended period of low interest rates would be required in Australia to reach full employment and achieve the inflation target. Members also agreed on the importance of monitoring the rapidly changing developments closely in subsequent weeks and maintaining contact to assess the implications of the COVID-19 outbreak for the economy. The Board was prepared to ease monetary policy further to support the Australian economy.
To read the RBA minutes from the RBA website, <a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2020/2020-03-03" target="_blank">click here</a>.
 
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COVID-19 dominates RBA March meeting minutes

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The RBA board were upbeat in their assessment on the housing market at their February 2020 meeting where they left the cash rate on hold at 0.75 per cent.
They said that prices had "increased very strongly in Sydney and Melbourne in recent months", with hopes that higher housing prices and the increase in housing turnover will support consumption and dwelling investment.
They noted household consumption was lower than expected in the September quarter, despite strong growth in household disposable income.
RBA Governor Philip Lowe said the RBA's forecast was for growth in consumption to increase gradually, sustained by moderate growth in household disposable income and the recovery in the housing market.
"Growth in housing prices had picked up in most capital cities and parts of regional Australia over recent months", Lowe said.
<h1>Mortgages</h1>
Mortgage payments increased in the December quarter.
There was a rise in principal and excess payments, more than offsetting the decline in interest payments.
"Members discussed whether this increase reflected a change in behaviour by households and the potential for it to persist," Lowe said.
"They noted that some households were likely to be repaying their debts faster in response to low growth of their incomes and the earlier fall in housing prices."
Housing loan commitments also continued to rise, which the RBA said was largely driven by owner-occupiers. Growth in credit extended to owner-occupiers had increased to 5.5 per cent on a six months ended annualised basis in December.
<h1>Household consumption</h1>
The RBA suggested household consumption had been lower than expected in the September quarter.
"[This was] despite strong growth in household disposable income, supported by the receipt of tax offset payments and lower interest payments following the recent reductions in the cash rate."
The RBA were only expecting retail sales volumes to grow modestly in the December quarter, however nominal sales had increase strongly in November, namely due to Black Friday sales.
"Measures of consumer sentiment had declined over recent months, but consumers' views on their personal financial situation, which historically have had a stronger link to consumption, had been little changed.
"Members noted that a number of factors had contributed to the slowdown in consumption growth since mid 2018.
"The downturn in the housing market had reduced households' wealth, and the extended period of weak growth in household income had probably lowered expectations of future income growth.
"Members observed that the prolonged period of slow growth in income was expected to continue to weigh on consumption over coming quarters.
"Furthermore, recent data had suggested that households were directing more income to saving and reducing their debt.
<h1>Future rate movements</h1>
Lowe advised the lower interest rates could speed up progress towards the Bank's inflation and unemployment targets.
"In considering this case, the Board took into account that interest rates had already been reduced to a low level and that there are long and variable lags in the transmission of monetary policy", Lowe said.
"The Board also recognised that the incremental benefits of further interest rate reductions needed to be weighed against the risks associated with very low interest rates."
To read the full minutes, <a href="/expert-insights/investing/insights-into-rba-thinking-february-2020-rba-minutes">click here</a>.
 
 
 
 
 
 
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jonathanchancellor-7SQnKwU6yx

Prices increasing "very strongly" in Sydney and Melbourne: RBA February minutes

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Demand for housing credit by investors remained subdued, the RBA noted in their minutes for the November meeting where they left the official cash rate on hold at a record low 0.75 per cent.
"Despite the stronger-than-expected pick-up in established housing markets, there had been little evidence of a lift in the early stages of residential development activity, RBA Governor Philip Lowe suggested in the minutes.
He added that risks in the near term to growth from dwelling investment were tilted to the downside, although then went on to make mention of the decline in building approvals, down over 20 per cent over the year.
"Liaison with industry participants suggested that the recent improvement in housing market conditions had not yet translated into stronger sales for new housing," Lowe said.
He said that a larger-than-expected contraction in dwelling investment could delay the gradual improvement in GDP growth.
"Members noted that the recent strengthening in housing market conditions would support building activity in time.
"The lagged response to higher housing prices and a period of low building activity had raised the likelihood that dwelling investment would be stronger in the medium term than currently expected."
Lowe cited the increase in housing loan approvals, which had risen strongly since May, largely driven by owner-occupiers.
"Members noted that there was strong competition for borrowers of high credit quality," Lowe said, although added that despite the competition, the pace of growth in housing credit for owner-occupiers had picked up only slightly, while the stock of housing credit for investors had continued to decline a little.
<h1>Rebounding Markets</h1>
There were further mentions of the rebounding Sydney and Melbourne housing markets, with Brisbane now mentioned in the same breathe.
Lowe said conditions in Brisbane had "firmed", although noted housing conditions remained weak in Perth and Darwin.
"In Sydney and Melbourne, housing prices had been on an upward trajectory since June, the number of auctions had increased and auction clearance rates had been at relatively high levels.
<h1>Borrowing Rates</h1>
Lowe said a large share of the recent monetary policy easing had been passed through to mortgage rates, but cited the lack of movement from the banks following the October cut.
"Borrowing rates for households and businesses were at historic lows," Lowe said.
"After passing through most of the June and July cash rate cuts to standard variable mortgage rates (SVRs), financial institutions had passed through less of the October rate cut, bringing the total reduction in SVRs since June to around 60 basis points.
"Strong competition for high-quality borrowers had led to rates for new and refinanced loans being lower than for existing loans.
"In addition, borrowers were continuing to switch from interest-only loans to lower-rate principal-and-interest loans.
"This meant that average outstanding mortgage rates had declined by around 65 basis points since the middle of the year. This process was expected to continue."
 
 
 
 
 
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Demand for credit by property investors remains subdued: RBA November minutes

Brisbane housing market conditions firm as Sydney and Melbourne continue to strengthen: RBA November minutes

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The minutes of the RBA's meeting for August highlighted the turnaround in the housing market.
"The evidence that conditions in housing markets were showing signs of a turnaround had strengthened in July," the RBA members noted.
He suggested that in Sydney and Melbourne house prices had increased, with housing turnover appearing to have reached a trough.
They noted that auction clearance rates had risen further.
The minutes noted a slightly slower, but noticeable, turnaround in housing market conditions outside of Sydney and Melbourne.
"Outside the two largest cities, housing market conditions had shown tentative signs of improvement; prices had risen in Brisbane, while the pace of decline had slowed in Perth," the minutes read.
There's hope from the RBA that the house price decline could also trigger the downward trend of consumption. 
"Signs of a recovery in some established housing markets suggested that the dampening effect of declining housing prices on consumption could dissipate earlier than had previously been assumed.
Members observed that it could take some time for the stabilisation of conditions in the established housing market to translate into a pick-up in construction activity.
"Leading indicators suggested that dwelling investment was likely to decline further in the near term," the members said.
Residential building approvals had declined further over May and June and were around their lowest levels in six years.
The RBA members continued to state that they expect an extended period of low interest rates as they seek sustained progress towards full employment and the desired inflation target.
Again they said that would consider a further easing if necessary to support sustainable growth in the economy.
To read the full August RBA meeting minutes, <a href="/news/strengthened-property-turnaround-evidence-seen-by-rba-august-rba-minutes">click here</a>.
 
 
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