Developer <a href="https://www.apartments.com.au/developers/bottega-property-group">Bottega House</a> has secured council approval for its first Brisbane project - a $270 million luxury residential development on an absolute riverfront site in leafy St Lucia.&nbsp;

The 15-storey project, known as <a href="https://www.apartments.com.au/new-apartments/st-lucia-by-bottega-house-180-macquarie-street-st-lucia-qld-4067">St Lucia by Bottega House</a> , will occupy a prime north-facing site at 178-180 Macquarie Street, directly fronting the Brisbane River in the established inner-west suburb known for its rowing clubs, golf courses and sprawling University of Queensland campus.&nbsp;

St Lucia by Bottega House will feature a suite of amenities including dedicated wellness spaces, a mineral pool and cold plunge. The project has been positioned to attract affluent owner-occupiers seeking high-quality, house-sized apartments.&nbsp;

Bottega House has been set up by co-directors Nick Malloch, Louis Mennes and Craig Marsh.

Malloch said the project drew inspiration from its Brisbane River setting and leafy inner-west surrounds, while responding to the demands of discerning locals looking to transition from freestanding homes into apartment living.&nbsp;

"With an expansive river frontage and lush green surrounds, we knew we had to create something special that reflects the natural beauty of the location while offering residents masterfully crafted homes," said Malloch.&nbsp;

"Our intent was to complement the project's quiet, private setting by introducing residences that offer a calm retreat and sanctuary from the everyday. The result is a harmonious blend of architecture, interiors and amenity that emphasises wellbeing, comfort and beauty without excess."&nbsp;

Malloch added that project consultants had been carefully selected in alignment with Bottega House's commitment to care, quality and attention to detail. The design team includes architects <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a>, interiors practice <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and landscaping by <a href="https://www.apartments.com.au/architects/urbis">Urbis</a>.&nbsp;

Three-bedroom apartments are expected to start around $5 millio. Selling agents Keenan &amp; Byrne said the pricing strategy for the project was anticipated to achieve upwards of $25,500 per square metre.&nbsp;

The project's development approval this week follows the success of Bottega House's inaugural Queensland project - a 22-storey collection of full-floor sky homes at Broadbeach on the Gold Coast which included the sale of a two-storey penthouse at a record price for a beachside residence.&nbsp;

St Lucia by Bottega House is expected to launch to market in November, with construction anticipated to be completed mid 2029.

[smartcode_project_cta:default project_id=151826]

Joel Robinson

Bottega House to make Brisbane debut with St Lucia riverfront apartment development

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> is advancing its affordable apartment model into Brisbane with the acquisition of another site at Cordelia Street in South Brisbane for $27 million.

Sherpa, which has a $1.7 billion pipeline across Southeast Queensland, intends to bring a cohort of apartments exclusively for first homebuyers into its proposed 186-apartment project to be built at 2 Cordelia Street.

The Sherpa model has already been incredibly well received from their Gold Coast projects, where Sherpa Group set aside a number of apartments exclusively for first homebuyers.

The new $320 million project marks Sherpa Group's second development in Brisbane, following its $255 million Symphony project, also on Cordelia Street, which is currently under construction.

Symphony will deliver 146 apartments across 28 levels, offering a mix of one, two and three-bedroom apartments. With 114 already sold, construction by <a href="https://www.apartments.com.au/builders/lps-group">LPS Group</a> is scheduled for completion in 2028.

[smartcode_project:default project_id=7574 project_image_fid=351654]

Sherpa Founder, Christie Leet, said the company was excited to be venturing into Brisbane for its second residential project.

“We’re big believers in the future of Brisbane as we lead into the 2032 Olympics and beyond,” Leet said.

“The success of Symphony has guided us into what will be our second project and we look forward to submitting our plans with council soon so we can deliver yet another quality project to the inner city residential market.

“Our Flourish model has been very well received both in Brisbane and the Gold Coast, and we’re excited to be able to offer some of these apartments again exclusively to first homebuyers to help get them into the property market.

“The model has been extraordinarily well received in our previous projects and it is something we are committed to moving forward.”

2 Cordelia Street will be designed by <a href="https://www.apartments.com.au/architects/hal-architects">HAL Architects</a> &amp; Finegrain and will include Sherpa’s signature residential amenities including pool, gym, recreation, wellness and work from home spaces.

The project will feature ground-floor commercial space, creating a vibrant amenity for residents and the surrounding community.

A development application will be lodged with Brisbane City Council in August on the code compliant site and will be launched to the market early 2027.

Sherpa acquires new site for second Brisbane apartment tower

One of North Sydney's best-known commercial buildings could become hundreds of new homes, with insurance giant Zurich Australia lodging a State Significant Development Application (SSDA) to transform 5 Blue Street into a mixed-use residential development above North Sydney Station.

Rather than demolishing the existing building and starting again, Zurich is proposing an adaptive reuse project that would convert the landmark office building into a 15-level residential development delivering 62 apartments, 86 affordable co-living dwellings, activated retail and significant upgrades to the Blue Street Plaza.

The proposal reflects a growing trend of commercial property owners repositioning ageing office assets into residential housing as Sydney grapples with housing supply shortages and changing workplace demand.

<img alt="Zurich" data-entity-type="file" data-entity-uuid="0bba7d12-06dc-4375-aad7-238c94b21ac5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.42.05%E2%80%AFAM.png?VersionId=NJl5oLAEBDGuPmY3RnyliKODjMc8lvRh" />

Located directly above North Sydney Metro and train station, the 3,051 sqm site occupies one of the most strategically positioned parcels of land on Sydney's Lower North Shore.

Designed by fjcstudio, the proposal seeks to retain and adapt much of the existing structure while creating a contemporary residential address that better connects with the public domain surrounding North Sydney Station.

The application proposes two basement levels, ground floor retail, affordable co-living accommodation across the podium levels, and apartments above, while preserving and enhancing the publicly accessible Blue Street Plaza.

Rather than pursuing maximum apartment numbers, Zurich has opted for a housing mix heavily weighted towards larger owner-occupier residences.

The proposal includes 62 build-to-sell apartments comprising 12 one-bedroom, 19 two-bedroom, 29 three-bedroom apartments and two premium penthouses. It also incorporates 86 affordable co-living dwellings, which would be managed in perpetuity by a Community Housing Provider.

That balance between traditional apartments and affordable housing reflects the NSW Government's push to increase housing diversity around major transport infrastructure.

The proposal has been lodged concurrently with a rezoning application, with Zurich arguing the site is ideally positioned to support additional housing given its immediate proximity to public transport, employment and services.

"The proposal aims to respond to the housing challenges facing Sydney through the delivery of diverse housing types in a highly accessible location," the design report by fjcstudio states. It also seeks to improve pedestrian amenity through upgrades to Blue Street Plaza while creating a high-performing residential building that responds to the surrounding context.

<img alt="Zurich" data-entity-type="file" data-entity-uuid="36082e15-c636-4481-bb68-5a5f6443fe39" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%2010.41.36%E2%80%AFAM.png?VersionId=5P6VD.fvmqjQfIG3TWWMRXxQWiQBjeFB" />

Rather than replacing the commercial building, fjcstudio has developed a design that works with the existing structural framework above the rail corridor, an approach that significantly reduces demolition while allowing the site to be repositioned as a mixed-use residential precinct.

The existing structural constraints have informed much of the building's design, including its relationship with Blue Street and surrounding public spaces.

The building has been designed as a slender tower rising above a clearly defined podium, with vertically expressed façades intended to reduce the perceived bulk while reinforcing North Sydney's emerging skyline.

According to fjcstudio, the architectural language responds directly to the surrounding commercial towers while maintaining a finer grain expression more closely aligned with the neighbouring Lavender Bay streetscape.

The tower incorporates articulated façade elements, landscaped podium edges and recessed upper levels to soften its appearance and improve pedestrian amenity below.

A significant component of the proposal is the revitalisation of Blue Street Plaza.

The existing public space has long served as one of the primary pedestrian connections between North Sydney Station, Greenwood Plaza and Blue Street, yet its role is expected to become even more important following the opening of Sydney Metro.

Zurich's proposal seeks to strengthen that role by improving landscaping, introducing new retail frontages, enhancing pedestrian permeability and creating more active edges throughout the day and evening.

Ground floor retail would wrap the plaza, while separate residential and co-living entries have been designed to improve wayfinding without reducing street activation.

Landscape design has been integrated throughout the podium and public realm, softening what is currently one of the most heavily urbanised parts of North Sydney.

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fjcstudio has carefully oriented apartments towards Sydney Harbour and the CBD while using privacy blades and articulated façades to minimise overlooking between neighbouring buildings.

Large framed openings along the western elevation maximise harbour outlooks, while the eastern apartments have been angled towards the south-east to improve privacy from neighbouring development.

The project forms part of the continuing transformation of North Sydney from a predominantly commercial CBD into a genuine mixed-use city centre.

Since the completion of Victoria Cross Metro Station, developers have increasingly shifted their attention towards residential projects capable of leveraging the area's unparalleled transport connectivity.

&nbsp;

FiveX recently lodged plans for a 61-storey, 490-apartment tower that would become one of the tallest residential buildings in North Sydney if approved.

Aqualand continues to expand its Lower North Shore presence following the completion of AURA on Walker Street and its recent St Leonards and Roseville proposals.

Developers are also progressing projects throughout Walker Street, Miller Street and the Victoria Cross precinct as demand for well-located owner-occupier apartments continues to strengthen.

First look: Zurich targets North Sydney office conversion with 148-unit proposal above Metro station

Busy developer Aqualand Prestige has formally taken the next step in its expansion across Sydney's Lower North Shore, lodging a State Significant Development Application (SSDA) for its long-held Archer Street site in Chatswood.

The application covers <a href="https://www.apartments.com.au/new-apartments/51-55-archer-street-chatswood-nsw-2067">51-55 Archer Street</a>, a 1,767 sqm amalgamated site on the eastern edge of the Chatswood CBD, where the developer is seeking approval for a 45-level mixed-use tower delivering 114 apartments, including a significant affordable housing component, alongside retail, commercial space and six basement levels of parking.

The SSDA marks the latest milestone for a project Aqualand has been quietly progressing over the past two years. The developer first secured the site for its Aqualand Prestige platform before undertaking an alternative design excellence process with PTW Architects, ultimately avoiding a formal design competition through the Housing Delivery Authority pathway.

The proposal has evolved considerably from Aqualand's original concept. The revised scheme has been designed around larger owner-occupier product, with an unusually high proportion of three and four-bedroom apartments, targeting the more affluent buyer profile, and downsizer, emerging across the North Shore.

<img alt="Archer St" data-entity-type="file" data-entity-uuid="0171204c-5811-41b5-9b09-2335d1b7c3d0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-22%20at%208.52.48%E2%80%AFAM.png?VersionId=6YTuxfq.puZo7k2wbfgemcO5K3QfXYGQ" />

The 114-apartment mix comprises six studios, 27 one-bedroom apartments, 18 two-bedroom apartments, 50 three-bedroom residences and 13 four-bedroom homes. A quarter of the building will be dedicated to affordable housing, well above the mandated 15 per cent&nbsp;

PTW has structured the building vertically, with affordable housing across levels one to six, premium apartments through levels seven to 31, duplex skyhomes on klevels 32 to 43, a penthouse on level 44, and a rooftop plant level above. Six basement levels will provide resident parking and servicing.

The tower is proposed to reach approximately 154 metres, placing it among a growing collection of residential high-rises transforming Chatswood's skyline.

Rather than competing purely on height, PTW says the design has been driven by creating a slimmer tower capable of delivering significantly larger apartments.

"The primary objective of this project was to create a distinctive building that stands out from the recently approved or built structures in the Chatswood area," the design report states, noting the structural efficiency allows greater investment into apartment quality and resident amenity.

Residents would have access to more than 450 sqm of communal open space including landscaped gardens, swimming pool, rooftop entertaining areas, fitness spaces, community gardens, children's play areas and barbecue facilities.

A major focus of the design has been the public domain.

The ground plane has been opened up through landscaped terraces inspired by Willoughby's sandstone ridges, with native planting, public seating, artwork, retail activation and a series of gathering spaces intended to soften what has traditionally been a hard commercial streetscape.

The landscape strategy references Blue Gum forests once common throughout the area, while incorporating Indigenous storytelling, public art and lighting installations to strengthen the connection to Country.

Chatswood has been one of Sydney's busiest apartment markets over the past 12 months, with a steady pipeline of both new project launches and fresh development applications.

Hyecorp recently launched Celine, a 122-apartment development just along Archer Street, while Changfa and Huirong Group are progressing The Anderson, an 84-apartment project on Anderson Street.

Develotek recently secured approval for a 101-apartment tower on Pacific Highway, while Tian An LFD received the green light for Hammond Greens, its apartment development on the edge of the Chatswood Bowling Club.

Commercial property developer FiveX is also making its move into the residential market. Last month it lodged plans for a 61-storey tower with 490 apartments, which, if approved, would become one of the tallest residential buildings in Chatswood.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-fivex-targets-chatswood-skyline-with-61-storey-tower-after-north-sydney-plans">First look: FiveX targets Chatswood skyline with 61-storey tower after North Sydney plans</a>

Aqualand is also expanding its development pipeline following the launch of its luxury residential brand, Aqualand Prestige. The developer has delivered a string of high-end apartment projects across Sydney's affluent suburbs over the past decade, most recently AURA by Aqualand on Walker Street in North Sydney.

[smartcode_project:default project_id=30959 project_image_fid=292863]

It has since quietly assembled its next wave of projects.

Earlier this year Aqualand launched Boronia in Roseville, a boutique 111-apartment development on Larkin Street. The project is one of the first significant apartment developments to launch in the suburb ahead of what is expected to become one of Sydney's most active new housing precincts under the NSW Government's Low and Mid-Rise Housing reforms, which allow greater density around train stations.

[smartcode_project:default project_id=152095 project_image_fid=373685]

The developer has also lodged plans for a two-tower, 413-apartment development on Herbert Street in nearby St Leonards, further strengthening its presence across the Lower North Shore.

Beyond that, Aqualand remains behind the final stage of Barangaroo, where plans will deliver a five-hectare mixed-use precinct comprising new homes, retail, hospitality and community facilities, alongside a new Metro entrance and more than two hectares of public open space, completing the Barangaroo precinct.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/central-barangaroo-development-takes-big-step-with-concept-proposal-approval">Central Barangaroo development takes big step with concept proposal approval</a>

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-aqualand-joins-st-leonards-apartment-party">First look: Aqualand joins St Leonards apartment party</a> 
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First look: Aqualand pushes ahead with Chatswood apartment tower as SSDA lodged for Archer Street

Mass timber is becoming an increasingly popular construction material in apartment developments, but Adelaide developer <a href="https://www.apartments.com.au/developers/otello">Otello</a> is taking the approach a step further.

At its new <a href="https://www.apartments.com.au/new-apartments/flowe-bowden-18-gibson-street-bowden-sa-5007">Flowe Bowden</a> development, the exposed cross-laminated timber (CLT) structure isn't just about reducing the building's environmental footprint. It also forms the foundation of a broader wellness strategy, influencing everything from indoor air quality and natural materials to the way residents move through and experience the building.

The 115-apartment mixed-use development, designed by Melbourne-based architecture practice Fieldwork, will occupy a prominent island site opposite Bowden Village Reserve, combining one, two and three-bedroom apartments with retail and a dedicated wellness destination.

[smartcode_project:default project_id=152022 project_image_fid=375528]

Wellness isn't confined to a gym or shared resident facility at Flowe. Instead, Fieldwork embedded the concept into the building itself.

The development has been split into two residential wings connected by a naturally ventilated central breezeway, replacing traditional enclosed corridors with open-air walkways that improve natural light, encourage cross ventilation and create more opportunities for neighbourly interaction.

"Rather than treating wellness as something that only happens on the ground floor, our response integrates it throughout the building, which led us to ask what it really means to design a healthy building," Fieldwork Director Quino Holland said.

[smartcode_project:default project_id=152022 project_image_fid=375531]

The building's architecture also reflects Bowden's industrial heritage. The lower podium references the area's historic brick and sandstone buildings, while the upper levels transition to exposed CLT, allowing the timber structure to become a defining feature throughout the apartments and shared spaces.

The use of mass timber sits alongside a range of sustainability initiatives, including a fully electric, gas-free design, rooftop solar and a targeted 5 Star Green Star rating.

[smartcode_project:default project_id=152022 project_image_fid=375524]

Inside the residences, the focus remains on natural, durable materials. Blackbutt engineered timber flooring, exposed CLT ceilings, porcelain surfaces and warm timber joinery create a calming interior palette, while low-VOC finishes and responsibly sourced materials have been selected to improve indoor air quality.

Kitchens have been designed as the centrepiece of each apartment, featuring porcelain island benchtops, timber-look cabinetry and brushed steel tapware, with layouts that maximise natural light and ventilation.

[smartcode_project:default project_id=152022 project_image_fid=375530]

The more traditional interpretation of wellness comes in the form of Level Eleven, a two-storey wellness club spanning the ground floor, mezzanine and first floor.

The facility will include a gym, yoga and reformer Pilates studios, Finnish and infrared saunas, magnesium hot and cold plunge pools, and dedicated recovery spaces. Unlike many residential wellness facilities, Level Eleven will also operate commercially, allowing the broader Bowden community to access the venue while giving residents exclusive membership benefits.

The ground floor has also been designed around everyday living. A café overlooking Bowden Village Reserve will activate the street frontage, while a bike workshop with tool storage, co-working space and dog wash has been incorporated to support daily routines and encourage interaction between residents.

"Flowe brings together my two biggest passions, creating places and creating healthier lives," Otello founder Daniel Harris said.

"We wanted to create something Adelaide hasn't seen before, a genuinely healthy building, where the way you live is lifted without even trying."

Flowe is positioned directly opposite Bowden Village Reserve and within walking distance of Bowden Railway Station and the Adelaide Entertainment Centre, placing future residents just minutes from the Adelaide CBD while remaining connected to one of the city's most established urban renewal precincts.

[smartcode_project_cta:default project_id=152022]

Otello launches wellness-focused Flowe Bowden with Adelaide-first mass timber apartment design

Meeting Minutes

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The RBA have suggested that the there will be another cut later in the year.
"Financial market pricing implied that the cash rate target was expected to be lowered by 25 basis points at the present meeting, with a further 25 basis point reduction expected later in the year," the RBA said in their June 2019 meeting minutes.
"Given the amount of spare capacity in the labour market and the economy more broadly, members agreed that it was more likely than not that a further easing in monetary policy would be appropriate in the period ahead."
The meeting minutes highlighted that the Coalition government win, paired with APRA's announcement that they will loosen their lending standards, will effect the housing market.
The RBA Governor Philip Lowe said in the June meeting minutes that it is too early to determine the overall effects, however he cited the auction clearance rates in Sydney "increasing noticeably following these developments."
"Members noted that the housing market was likely to be affected by the removal of uncertainty around possible changes to taxation arrangements relating to housing," Lowe said.
"They also considered the effects of the Australian Prudential Regulation Authority's (APRA's) proposal to amend its requirement for banks to determine the borrowing capacity of loan applicants using a specified minimum interest rate."
The RBA noted that building approvals declined further in April to be more than 20 percent lower over the preceding 12 months.
"This suggested that, even if there were a marked turnaround in housing sentiment, given the lags involved it would take some time for this to translate into higher residential construction activity," Lowe added.
Lowe said housing credit had stabilised in recent months, having slowed substantially over the preceding year.
One of the biggest segments the RBA were monitoring when considering cutting the official interest rate was the labour market.
"The data on conditions in the labour market in April had been mixed," Lowe said.
"Members noted the significant uncertainty around modelled estimates of the unemployment rate consistent with full employment.
"The unemployment rate had increased to 5.2 per cent in April from (an upwardly revised) 5.1 per cent in March.
"This followed a six-month period during which the unemployment rate had remained at around 5 per cent. 
"The increase in the unemployment rate had been accompanied by an increase in the participation rate to its highest level on record. 
To read the full minutes, <a href="/expert-insights/finance/minutes-of-june-2019-monetary-policy-meeting-of-the-reserve-bank-board">click here</a>.
 
 
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jrobinson-rf4aSBido9

Further cash rate cut expected later in the year: RBA June 2019 meeting minutes

Minutes of June 2019 Monetary Policy Meeting of the Reserve Bank Board

Minutes of April 2019 Monetary Policy Meeting of the Reserve Bank Board

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Despite pressures to cut rates, the RBA have held firm, suggesting there is no need for an adjustment to the cash rate in the near term.
"Members agreed to continue to assess the outlook carefully," RBA Governor Philip Lowe said in the <a href="/expert-insights/finance/minutes-of-march-2019-monetary-policy-meeting-of-the-reserve-bank-board">March meeting minutes</a>.
"Given that further progress in reducing unemployment and lifting inflation was a reasonable expectation, members agreed that there was not a strong case for a near-term adjustment in monetary policy.
"Rather, they assessed that it would be appropriate to hold the cash rate steady while new information became available that could help resolve the current tensions in the domestic economic data."
On housing, Lowe said the process of adjustment in the housing market had continued. 
"Housing prices in Sydney, Melbourne and Perth had declined further, and turnover in the housing market had fallen significantly," he said.
Lowe noted that available data showed continued declines in Sydney, Melbourne and Perth into 2019, however also said the data was difficult to interpret when taking into account the always quiet January period.
"In Sydney, housing prices were 13 per cent lower than their July 2017 peak, while in Melbourne housing prices were 10 per cent lower than their November 2017 peak," Lowe suggested.
He highlighted the auction clearance rates picking up in Sydney and Melbourne over February, although added that demand for housing credit had slowed 'noticeably' as conditions in the housing market changed.
Lowe noted that despite the likelihood dwelling investment was expected to decrease in the December quarter, however the pipeline of work to be done remained large.
"Members noted that the pipeline of work to be done remained large and was expected to support dwelling investment through 2019, particularly in New South Wales and Victoria," Lowe said, although added there will be a marked slowing in dwelling investment soon.
"Residential building approvals and information from the Bank's liaison program pointed to a marked slowing in dwelling investment in one to two years' time, unless pre-sales increased significantly in the following few quarters.
"The recent weakness in sales of detached new houses had been most pronounced in Sydney and Melbourne, but had also been evident in other locations.
"Contacts had reported that tighter access to credit for off-the-plan and project homes had been constraining buyer demand," Lowe said.
The RBA are still hopeful of growth in GDP of around three percent of 2019 and a further decline in the unemployment rate to 4.75% over the next couple of years.
 
 
 
 
 
 
 
 
 
 
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No strong case for cash rate hike as housing turnover 'falls significantly': RBA March 2019 minutes

Minutes of March 2019 Monetary Policy Meeting of the Reserve Bank Board

Minutes of February 2019 Monetary Policy Meeting of the Reserve Bank Board

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The RBA's minutes for the December cash rate meeting have noted demand for off the plan apartment had declined significantly since mid-2017.
The RBA also suggested that liaison with developers indicated that demand for new detached housing in eastern Australia had eased over the previous year or so and some developers had reported that this decline in demand had become more pronounced.
"Given the substantial amount of work outstanding and recent data on dwelling approvals, dwelling investment was expected to remain around this level for at least the following year or so before moderating," it noted.
They said that dwelling investment has continued around its recent high level in the September quarter, and given the substantial amount of work outstanding on dwelling approvals, dwelling investment was expected to remain around this level for at least the following year or so before moderating.
Again Sydney and Melbourne were the main housing localities for the eastern capital decline. 
"Members observed that housing prices had fallen across all price segments in Sydney," the minutes noted, adding house prices had fallen by around nine percent since September 2017 to be around their September 2016 levels.
They said Melbourne levels have dropped back to what they were around March 2017, having seen a decline of just under six percent since their November 2017 peak.
"Auction clearance rates and indicators of private-treaty activity had also declined a little further in both cities," the RBA also added.
Despite the property market decline, the RBA found that, having liaised with retailers, that underlying trading conditions had been stable.
Surveys suggested that households' views about their financial situation had remained around average.
For the full RBA minutes <a href="/expert-insights/finance/downsize-risks-acknowledged-in-december-2019-minutes-of-reserve-bank-board">click here</a>.
 
 
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RBA notes developers report demand for off-the-plan apartments has declined significantly: December meeting minutes

jonathanchancellor-7SQnKwU6yx

Downsize risks acknowledged in December 2019 Minutes of Reserve Bank Board

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<div>
EXPERT OBSERVER
Consumer sentiment: The ANZ-Roy Morgan consumer confidence rating fell by 1.7 per cent to 117.8 in the past week. The index is well above the average of 114.2 held since 2014, and above the longer-term average of 113.0 held since 1990.
Reserve Bank Board minutes: The minutes from the November 6 Board meeting were issued. While no rate change is expected any time soon, the Board continues to believe that the next move in rates will be up. Board members see risks of a bigger decline in the jobless rate and thus risks of higher wage growth.
The IMF 2018 Article IV Consultation Mission: The IMF said that “The [Australian] economy’s strong growth momentum is expected to continue in the near term. Notwithstanding recent strong growth, it is not yet the time to withdraw macroeconomic policy support given remaining slack.”
The consumer confidence figures have implications for retailers, and other consumer-focussed businesses. The Reserve Bank Board minutes provides guidance on interest rate settings.
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<div class="x_WordSection2">
<h1>What does it all mean?</h1>
The Reserve Bank Board undertook its annual review of forecasts and concluded that forecast errors had been lower than ‘average’ or normal. Members of the Board also ran different scenarios to assess the impact on interest rates and also ran scenarios to judge the impact on Australia of higher US wage and price growth. Overall, it seems clear from the text that the Reserve Bank Board is comfortable with how things have played out over 2018 and is comfortable with current interest rate settings.
While the Reserve Bank continues to watch the US-China trade dispute, it remains upbeat, believing that growth of Australia’s trading partners will “remain above potential in 2019.” However the Board did note “the latest forecasts had incorporated a small negative effect from recent tariff changes on growth in a number of economies, including the United States and some east-Asian economies.”
There are definitely no signs of angst expressed by Reserve Bank Board members.
Consumer confidence fluctuates from week-to-week. Over the year to November 18, the ANZ-Roy Morgan sentiment gauge has averaged 118.5 points, broadly in-line with current levels of confidence. 
The sharpest falls in weekly sentiment have occurred around political events this year – the Liberal Party leadership crisis (“Libspill”) and Wentworth by-election, respectively in August and October. Of course, households will be navigating three elections in the coming months with Victoria, New South Wales and Federal polls ahead. Business and consumer confidence will likely be choppy in this environment. 
That said, sentiment is holding-up remarkably well, given that home prices have been falling in Sydney, Melbourne and Perth for over a year. And the Aussie sharemarket touched 20-month lows today, down by almost 7 per cent (ASX200 index) so far this year. Importantly, consumer views about the state of their finances and economic conditions are still all above their long-run average levels.
<h1>What do the figures show? </h1>
Consumer Sentiment
The ANZ-Roy Morgan consumer confidence rating fell by 1.7 per cent to 117.8 in the past week. The index is well above the average of 114.2 held since 2014, and above the longer-term average of 113.0 held since 1990. 
Three of the five components of the index decreased last week:
The estimate of family finances compared with a year ago was down from +15.2 to +6.7; 
The estimate of family finances over the next year was down from +27.5 to +25.2;
Economic conditions over the next 12 months was down from +11.7 to +9.9; 
Economic conditions over the next 5 years was up from +15.1 to +16.6;
The measure of whether it was a good time to buy a major household item was up from +29.5 +30.7.
The measure of inflation expectations fell from 4.3 per cent to 4.2 per cent.
Reserve Bank November Board minutes:
On the economy: “Members noted that the recent run of economic data suggested that growth in the Australian economy had been higher over the year to the June quarter than earlier forecast, and above estimates of potential growth. Labour market conditions had remained strong and other available indicators pointed to further solid GDP growth in the September quarter. At the same time, inflation in the September quarter had slowed as expected, partly as a result of a large policy-induced decline in childcare prices.”
On the job market: “Conditions in the labour market had also been stronger than expected and forward-looking indicators of labour demand continued to point to ongoing strength in the near term. As a result, the forecast for the unemployment rate had been revised lower and the forecast for wages growth had been revised slightly higher.”
Good economic forecasts: “As part of a regular annual review process, members considered how the domestic economy had evolved over the preceding year relative to the Bank's forecasts of a year earlier. Members noted that the magnitude of forecast errors for key variables, including GDP growth, the unemployment rate and inflation, had been smaller than the historical averages.”
Global risks: “Members noted that the direction of international trade policy continued to be a significant risk to the global outlook.”
Money market conditions: “Information from liaison suggested that there had been little change in domestic money market conditions in recent months. The modest increase in funding costs earlier in the year had been passed on by most lenders to existing borrowers with variable-rate business and housing loans.”
Residential developments: …”there had been reports that bank financing of large development projects had become more difficult, particularly in areas where there had already been substantial development.”
<h1>What is the importance of the economic data?</h1>
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
The Reserve Bank releases minutes of its monthly Board meeting a fortnight after the event. The minutes give a guide to Reserve Bank thinking on interest rate settings.
<h1>What are the implications for interest rates and investors?</h1>
Consumers remain positive. But the real test will come over the next month for Aussie retailers in the lead up to Christmas. And department stores will again be under pressure this week with the Black Friday and Cyber Monday mega online sales kicking-off. <a href="http://finder.com.au/" target="_blank">Finder.com.au</a> estimates that Aussie consumers will splurge around $320 million on goods.
The Reserve Bank reiterated in its Board meeting minutes today that the outlook for consumption remained uncertain given slow income growth, high mortgage debt levels and cooling housing markets. But wages growth appears to have bottomed, interest rates remain at very supportive record-low levels and utilities bills and petrol prices have fallen from their most recent peaks. And of course 180,200 full time jobs (out of a total of 308,100 job gains) have been created over the past ten months. 
With elections ahead, the IMF has weighed in with its views on its wish-list for Aussie policy reforms. The Fund suggested that “broad tax reform to support productivity and inclusive growth would be desirable…. These reforms should be combined with reforms to raise the GST revenue, lower the company tax rate more broadly, and reduce tax concessions.” On research and development reforms, the IMF said that “The recommendations of the science agenda laid out in Australia 2030: Prosperity through Innovation are constructive and should be implemented.” And on housing, “Housing supply reforms will be critical to restoring housing affordability.”
CommSec expects no change in the official cash rate until later in 2019. However, just like Reserve Bank Board members, we are closely watching trends in the job market and wages. The Reserve Bank is uncertain about the extent of spare capacity in the job market and therefore this has implications for wage growth.
Ryan Felsman is a senior economist at CommSec.
 
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Reserve Bank upbeat on Aussie economic growth: CommSec

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EXPERT OBSERVER
The minutes of the November monetary policy meeting of the Reserve Bank Board confirm the confident approach we have seen in the recent Statement on Monetary Policy.
While consumption growth is still identified as a source of uncertainty, the Board expects it to remain around the 3% level over the next few years that we have seen recently. Household disposable income growth is also forecast to increase at that rate.
GDP growth and labour market conditions had been stronger than the Bank had expected over the last twelve months. Accordingly, the forecast for the unemployment rate had been lowered to 4 ¾ per cent from 5 per cent by mid-2020, with an implied downside risk to that forecast. With the improved labour market outlook, there has been a modest upward revision to the outlook for wages growth. This is a particular encouraging development for the Bank as they see wages growth as the key uncertainty for future consumption growth and inflation.
In that regard, the forecast for inflation has been lifted modestly, reflecting the brighter outlook for economic activity, the labour market and wages.
Despite a disappointing capex survey, non-mining business investment was expected to continue to make a significant contribution to output growth supported by above average business conditions and the significant pipeline of non-residential construction work.
Their discussion around the housing market is a little less confident. Residential building approvals are recognised to have fallen in the September quarter and liaison with builders paints a difficult picture. Furthermore, it is noted that housing prices have fallen further in Sydney and Melbourne, although are stable in most other cities. With the Bank’s core forecast that consumption and income growth will be aligned, there is no allowance for any negative wealth effects from these housing developments. The minutes discuss the various policy stances of other central banks noting that “market pricing was consistent with policy rates remaining steady over the following year in Australia and New Zealand, where policy rates had not been lowered to the extent they had in some other economies”.
The Board also discussed the Bank’s forecasting performance over the previous year, noting that forecast errors were smaller than historical averages with GDP growth and business investment surprising to the upside, the terms of trade average being higher than expected, and the marked depreciation in the Australian Dollar. Labour market outcomes were also stronger than expected, although wages growth and inflation had evolved largely as expected. This assessment supports the gradualist policy approach supported by growth holding above potential with associated declining spare capacity leading to a gradual increase in wages growth and inflation.
There is also a rather curious discussion around arguments that had been advanced by various commentators. The arguments are set out but they make no qualitative assessment of their reliability.
We know that the Governor has noted that interest rates could be cut in the event of a global shock and it is interesting that the minutes point out that the monetary policy response to that shock would depend on the associated move in the exchange rate.
The final section of the minutes once again emphasises the importance of wages growth. It is noted that there has been a noticeable pick-up in wages growth in most advanced economies, and Australia requires “a gradual increase in wages growth for inflation to be sustainably within the target range”.
As in the section of the minutes on the domestic economy, the concluding section leaves the discussion around housing markets somewhat up in the air. Credit conditions are recognised as being tighter than they had been for some time, but lending rates remain low and there was strong competition for borrowers of high quality.
In the final paragraph in the minutes, the Board emphasises that “there was no strong case for a near-term adjustment in monetary policy”, although the comment “since progress on unemployment and inflation was likely to be gradual” which featured in the October minutes was not used in these minutes. Based on the confident assessment in the body of the minutes, it is possible that the Board is a little more confident with its view that the next move in the cash rate will be an increase.
Conclusion
This is a balanced set of minutes but does indicate more confidence from the Board around its growth, employment, wages and inflation views. The outlook was also boosted by the expectation that consumption and income growth will hold at 3% despite slowing employment growth, and risks around the housing market in Sydney and Melbourne.
By noting that market pricing is not expecting a policy adjustment for the next year, the Bank does appear to be extremely patient with its next policy move. Westpac expects that their growth forecast for 3 ¼ per cent growth in 2019 is too high, mainly because of an expected downturn in residential construction, a slowdown in consumption growth associated with weaker income growth and some wealth effects. That development alone is likely to take the edge off the expectation of rising wages and higher inflation.
We retain our view that the cash rate will remain on hold in 2019 and 2020.
BILL EVANS is the chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
 
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<a id="LPlnk633217" class="OWAAutoLink" href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2018/2018-11-06"> </a>
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