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

Joel Robinson

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

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

Sammut secures approval for debut Brisbane apartment development in Toowong

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

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

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

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

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

WM Residences fills gap in Mordialloc townhouse market

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NAB has just slashed several of its 2-year fixed rates for owner-occupiers paying principal and interest by 0.20 per cent.
For first home buyers NAB is offering 3.49 per cent, which is one of the lowest 2-year fixed rates available in Australia.
NAB is also offering $2,000 back on new loans of $250,000 or more.
This follows shortly after <a href="/news/anz-finally-cuts-fixed-home-loan-rates">ANZ cut rates</a> across several fixed rate home loans packages as of May 10.
ANZ was the last of the <a href="/news/westpac-joins-other-big-two-to-cut-fixed-home-loan-interest-rates">big four banks to reduce fixed rates</a> on home loans.
RateCity.com.au research director Sally Tindall said it was unusual to see one of the big four banks offer one of the lowest fixed rates in Australia.
“The fact that NAB, a big four bank, is offering one of the lowest fixed rates in Australia is a sign of the times,” she said.
“The big banks are now playing in the low cost loan space in a bid for new customers and they aren’t taking a backwards step.
RateCity data shows around 50 lenders have cut fixed rates in the last two months ahead of the expected RBA cut.
Some lenders are even moving variable rates in the week out from the RBA, including ING which moved rates today and Mortgage House, which now has the lowest ongoing variable rate in Australia of 3.29 per cent.  
Click <a href="https://www.propertyobserver.com.au/images/2019/5/30/NAB%20Slash%20rates.JPG" target="_blank">here</a> to enlarge.
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Note: All interest rates in the tables above are for owner-occupiers paying principal and interest.
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j.ballantyne1990-6AQqhLzZaK

NAB cuts two year fixed rates

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The next three RBA meetings are clearly live for a rate cut, says the NAB's Alan Oster.
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With its outlook for below trend growth, and below target inflation combined with little further improvement in the labour market, NAB expect the RBA to cut rates twice in 2019, taking the cash rate to a new record low of 1%.
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"We expect a cut by at least August."
"We have left our call for the first cut as July, with a follow up in November." 
However, with the RBA still looking for an improvement in the labour market and monthly figures often volatile, NAB recognise that the timing of the first cut will be especially data dependent.
"On the one hand a marked deterioration in upcoming labour market data as well as weaker national accounts partials, could see the cut brought forward to next month.
"Against that a cut could be delayed to August when the Bank will have observed another quarter of likely weaker GDP growth, a further update on the CPI and a revised set of staff forecasts ahead of the next SMP."
NAB noted labour market indicators should be closely watched, as a turn in the labour market could reasonably be 1.0 expected given the prior slowing in output growth.
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The NAB Survey measure of employment weakened in April and job ads appear to have fallen.
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The NAB reported the impact of the downturn in the housing market was "affecting both output and inflation data.
"The cooling appears to be ongoing, with prices continuing to decline and building approvals continuing to trend down."
NAB expect dwelling investment to record another decline in Q1 following the relatively sharp fall in the last quarter of 2018. 
"Overall we expect dwelling investment to decline by around 20% over the next two years. 
"Alongside this, we expect house prices to decline by another 5% nationally over 2019 and early 2020 before levelling out for a period."
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The report noted capital city house prices have now fallen by almost 10% since peaking in late 2017. 
"These declines have been led by Sydney (down 15%) and Melbourne (down 11%) where the role of investors is much larger and prices saw a much more significant rise. 
"That said, recent months have seen price declines broaden to the other states, with Brisbane and Adelaide having now declined over the year in addition to the ongoing weakness in Perth. In Hobart growth has slowed, but the city remains the standout, with prices remaining well up on a year ago," Alan Oster said.
On the activity side, building approvals continued their trend decline in March, unwinding the spike a month earlier. 
Over the past year approvals are 27% lower and are now 37% below their peak in 2017.
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The decline in approvals is evident across both houses and apartments down 19% and 57% respectively from their peaks in 2017. 
The decline in approvals suggests that activity in the sector will weigh on growth overall as the pipeline of outstanding work is completed.
NAB noted alongside the cooling in the market, housing credit growth has continued to slow. 
Investor lending slowed to just 0.7% y/y in March 2019, while growth in credit extended to owner-occupiers is tracking a little higher but has slowed to 5.7%. 
Overall housing credit has risen by 4.0% over the past year. 
ABS data on the value of new loan approvals has continued to trend down suggesting that credit growth will likely weaken a little further over coming months.
"To date, the adjustment in the housing market appears to have occurred in an orderly fashion – and may have served to reduce the prior build up of risk in the sector," Alan Oster said.
"We see the weakness in prices as having been driven by the earlier tightening driven APRA restrictions, a waning in foreign investor demand as well as affordability constraints themselves. 
"In addition it appears that there are some pockets of oversupply. 
"Going further, we see the cooling in the market continuing with prices declining a little further and also a notable downturn in the construction cycle. 
"Beyond this, we are closely watching for any additional spill overs from this sector to other sectors."
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Next three RBA meetings are live for a possible rate cut: NAB

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NAB's housing lending revenue has dropped for a second year in a row, and shareholders have seen their dividends drop.
The bank, still feeling the pinch from the banking royal commission, has slashed its dividends by 16 percent, from an unsustainable 99 cents a share to 83 cents.
NAB posted $2.7 billion profits, 4.3 percent up from the same period a year ago.
NAB chief executive Philip Chronican said in a statement that the decision to cut the dividend was difficult.
"We have to trade off the fact that our shareholders really rely on that dividend for income, but we need to also make sure that we've got a strong bank," Chronican said.
NAB's housing lending revenue is now $250 million less than it was in September 2017, when the national housing market began its downturn.
It is around $200 million less than this time last year, with steadily declines over the last four half yearly result announcements.
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The bank have however managed to reduce their interest only loan book, but it still sits at a relatively high 26.5 percent.
There was a spike in the second half of 2017, where $9.2 billion of interest only loans were converted to principal and interest.
In the first half of 2019 there were $7.9 billion of IO loans moved to P&amp;I.
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Of the 26.5 percent, eight percent are owner-occupier interest only loans, with 18.5% made up of investor interest only loans.
Over half of their loan book is made up of owner occupier principal and interest loans.
It was reported yesterday <a href="/expert-insights/finance/anzs-home-loan-portfolio-shows-big-drop-in-interest-only-borrowers">ANZ only have 18%</a> of their loans as interest only.
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In April NAB introduced a debt-to-income decline threshold of 9x.
Three percent of NAB's portfolio now has dynamic LVR over three percent.
Click here <a href="https://www.propertyobserver.com.au/images/2019/5/2/NAB-LVR.jpg" target="_blank">to enlarge</a>.
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jrobinson-rf4aSBido9

NAB housing lending revenue continues to drop, and shareholders pay the price

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NAB Economics have forecasted Sydney and Melbourne house prices to both decline over eight percent over 2019.
Melbourne is forecasted to see falls greater than Sydney.
Houses in the Victoria capital are expected to fall 8.8%, compared to Sydney's 8.4%.
The forecasts mean NAB expect Sydney house prices to fall 20% peak to trough, with Melbourne 15%.
NAB expect house prices in the two biggest property markets to continue to decline in 2020, just at a much slower rate.
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Hobart and Adelaide are the only capital cities forecasted to see house prices growth in 2019.
"Overall, we see the adjustment in house prices continuing in an orderly manner, with prices remaining well up on 5 years ago," NAB said.
NAB expect Sydney's unit prices to be the worst performing over 2019, with 7.2% declines forecasted.
Melbourne's declines are set to be softer at 4.3%, below Perth (-4.7%) and just above Brisbane (-4.2%).
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Market sentiment among 300 surveyed property professionals ticked a little in higher Q1 2019 as the monthly rate of house price decline eased in the first three months of the year.
The NAB Residential Property Index rose five points to a still very weak -15 as house prices in much of the country continued falling.
Sentiment was negative in all states bar South Australia and the Northern Territory (where annual dwelling prices in SA remain positive) and remained weakest in NSW and VIC where price falls were biggest.
Confidence was unchanged for the next 12 months, suggesting that market momentum will remain weak into 2020, however longer-term confidence improved with suggestions housing market conditions may start improving moving into 2021.
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Sydney property prices to decline by 20% from peak, with Melbourne down 15%: NAB

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EXPERT OBSERVER
While we have integrated the latest national accounts data and fine tuned our growth forecasts we have not fundamentally changed our view on pattern of growth outcomes over the next two years.
Thus last month, prior to the Accounts, we were expecting through the year growth to December 2019 of 2.6% now we are expecting 2.5%.
We have also not changed our forecasts for 2020 at around 2¼. What has however happened – given the new history - is a much larger slowing in year average terms in 2019 – previously 2.4% now 2.1%.
However we see the through the year growth numbers as providing a better gauge of growth momentum going forward.
As was heralded in yesterday’s  February Monthly Business Survey the slowing in the growth momentum has  continued into Q1 2019.
 In particular, the situation in discretionary retail and consumption more generally has deteriorated even further. We now expect not much improvement in the growth rate in consumer spending in 2019 – at around 2.0%  and any improvement in 2020 will need policy action. 
The Accounts also highlighted a turn down in the construction cycle – which appears to have continued (and indeed accelerated) into early 2019. This reinforces our view that over the next two years we are facing a pronounced residential construction cycle (a fall of around 20%).
That said supporting growth will be continued spending by the public sector, both on the NDIS and infrastructure. In addition to this, we still expect business investment to make a significant contribution to growth – though there are growing risks to this.
 Also exports will continue to grow, as LNG hits full production then plateaus at a high level. So it is important not to get too negative on our growth prospects.
That said our forecasts now point to below trend growth and a degree of rising spare capacity in the economy (already evident in the February Business Survey). 
This will mean less progress on reducing unemployment and slower than anticipated progress in wage growth (outside of policy intervention) and ultimately inflation. We now see no improvement in unemployment till mid 2020 and a slight deterioration thereafter.
This is why we now expect the RBA to cut the cash rate twice in 2019. While the exact timing of cuts is data dependent, we see the RBA cutting rates in July and then November. 
We believe this would be the path of “least regret” for the bank. We expect that as slower growth and less progress on reducing unemployment take hold at a time of subdued inflation and abating financial stability concerns the Bank will assess it can do more to bolster the economy.  
Of course a material deterioration in the labour market in the next few months (not our forecast) could see an earlier cut from the RBA.
ALAN OSTER is the Chief Economist for NAB
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Slowing growth with rate cuts ahead: NAB's Alan Oster

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EXPERT OBSERVATION
We now think that the RBA will make two rate cuts in 2019.
Growth appears to have lost significant momentum, placing at risk further improvement in the labour market at a time when inflation poses little constraint on policy and financial stability risks have abated.
We have pencilled in one 25bp cut to 1.25% in July and a further 25bp cut to 1% in November.
We see the timing of a rate cut as very data dependent; any deterioration in the labour market would lead to cuts and this could happen earlier than the financial market currently anticipates. 
If, as we expect, the loss of momentum in private-sector activity seen in H2 2018 continues, then there is unlikely to be much improvement in the labour market despite its resilience to date. This view is reinforced by the forward indicators in the NAB Business Survey pointing to continuing (if not further) weakening. That is especially so for private consumption and the residential construction cycle.
This means the RBA outlook for a further fall in unemployment to gradually lift wages and ultimately inflation is increasingly in doubt. We therefore expect the RBA to provide some further support to the economy in the form of lower interest rates.
Determining the timing of such moves is much more difficult, but we are forecasting two 25bp cuts in July and November. In this respect, we note that the RBA is independent and the political cycle should and will be irrelevant to the timing of a rate cut.
With monetary policy being forward looking, we think the RBA will act this year on a “no regrets” basis to boost economic activity and to offset a likely (on our forecasts) increase in unemployment in 2020. It is possible that further policy adjustment will be required in 2020.
Last month we removed our expectation for any increase in the cash rate over the next 18 months.
Even when judged against the RBA’s relatively positive outlook for growth and relatively good labour market outcomes, there seemed little case for a near-term increase in the cash rate given inflation remained a little below target. In shifting our view, we noted that, if anything, there was a significant chance of a near-term interest rate cut, particularly should building downside risks materialise.
The Q4 national accounts confirmed that the downturn in the residential construction sector is likely to be as sharp as we had previously forecast and similar in magnitude to the early 1990s recession. It also confirmed that consumption growth has remained weak, alongside only modest growth in household income.
The NAB Monthly Business Survey showed that the business sector lost significant momentum through the second half of 2018, with low business confidence suggesting little expected improvement. Indeed forward indicators in the Survey all suggested that firms believe that the loss of momentum will continue.
The only part of the Survey that had maintained strong momentum is employment, but we see this as very much related to previously strong conditions in H1 2018. The key question then is: will employment continue to hold up?
We fear not, given job advertisements have declined modestly for a number of months, suggesting that employment growth will ease. While we have only made modest downward revisions to our previous growth forecasts of 2.4% this year and 2.2% next year, we now expect little if any improvement in the near term in the unemployment rate, with an eventual increase later in the forecast horizon.
Wage growth is predicted to lift to around 2½ -2¾% by the end 2020 - not seen to be enough to see inflation rise to the middle of the RBA target band.
There remains some downside risks to our growth forecasts - and consequently labour market and inflation forecasts - if there turn out to be significant ‘wealth effects’ from the fall in house prices or if business investment should turn out materially weaker, as the Business Survey has begun to suggest as a risk.
What developments would allow the RBA to continue to keep interest rates on hold?
Chiefly, if the unemployment rate remained low – or declined further – in spite of ongoing weak consumption growth and the downturn in housing construction. That seems unlikely to us.
Substantial fiscal stimulus in the upcoming Budget would also be helpful, as would a sustained reduction in short-end funding pressures faced by lenders.
ALAN OSTER is the Chief Economist for NAB Group
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NAB now predicting two cash rate cuts in 2019: Alan Oster

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EXPERT OBSERVATION
We expect Q4 GDP to confirm a softening trend, recording another soft print of 0.4% in the quarter to be 2.6% higher over the year.
This release will also provide an important update on household sector dynamics around dwelling investment and consumption – two factors we see constraining growth over the next year or so and look to have done so in Q4. With growth projected to slow, amidst remaining spare capacity in the economy, we see rates on hold for an extended period.
While this release is unlikely to trigger an immediate shift on rates, it will provide another marker on the growth front which may lead to an eventual reassessment of the future growth path by the RBA, particularly if weaker growth flows through to labour market conditions.
Looking forward, we see the economy supported by public sector spending, a rise in LNG exports and healthy growth in business investment. Offsetting these supports, consumption is likely to only grow modestly and dwelling investment is expected to fall. 
Wednesday’s GDP figures are forecast to show the economy growing at a similar pace to Q3, printing at 0.4% q/q and seeing a year-average result of 2.9% for 2018.
In doing so, the data would confirm the economy slowed significantly in the H2 2018. Retail sales data and NAB’s modelling of household spending on services suggests that consumption growth will lift slightly to 0.5% - an improvement from Q3, but still a weak outcome.
Official data on residential construction suggest dwelling investment is to fall by around 3%, in line with NAB’s expectation of a decline of around 18% over the next two years, a view supported by the ongoing decline in building approvals. For our Q4 forecasts we see some downside risk to consumption and upside risk to public demand roughly offsetting. 
Looking forward, we expect growth over the next two years to be driven by public infrastructure investment, business investment and further growth in net exports, with consumption to only see modest growth and dwelling investment to fall relatively sharply.
For now, we do not forecast a ‘wealth effect’ weighing on spending, despite our forecast for further declines in house prices, but rather see a larger effect from housing through a significant fall in the construction cycle.
The key uncertainty around our forecasts relates to consumption and business investment. While consumption is playing out broadly as we expected based on weaker income growth, there remains some risk from further declines in house prices leading to a ’wealth effect’.
On the business side, the NAB business survey suggests some loss in momentum over the past 6 months and a recent dip in capacity utilisation. This presents a downside risk to our strong outlook for investment.
With wage and price data suggesting inflationary pressure remained weak in Q4, we expect national accounts measures of prices and income growth will also remain modest. Nonetheless, this release will provide an update on household income growth, the savings rate and the pattern of household expenditure. Unit labour costs look to have remained weak - consistent with ongoing weakness in market sector inflation.
Monetary policy implications: While the RBA remains focused on labour market for now, weaker GDP data will provide little comfort that activity will support ongoing strong employment growth.
Also, these data will provide a signal as to the likely speed and magnitude of the dwelling investment downturn as well as the pattern of household consumption – both downside risks to the RBA’s forecasts for growth.
The national accounts will likely confirm that income growth has remained low and also pose further questions around whether the labour market as a lagging indicator is yet to respond to the slowing in growth from mid last year.
We think that the RBA will wait for further evidence of a slowing labour market before shifting to an easing bias as leading indicators of the labour market are still favourable. Though with growth slowing we think the risk is building to the downside as the last effects of strong growth early in 2018 fade.
ALAN OSTER is NAB's Chief Economist 
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Household sector weakness to persist: NAB's Alan Oster

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Cooling in the housing market led by Sydney and Melbourne has now been ongoing for 18 months, but the decline in prices have accelerated towards the back end of 2018, according to the NAB Forward View Report.
The report noted, fall in prices has also been reflected in the activity side of the housing market with turnover falling and clearance rates remaining low.
Investment in dwellings was primarily held at a consistent level by alterations and additions.
<img src="https://www.urban.com.au/images/2019/2/14/NAB%20DW%201.JPG" alt="">
NAB forecast the downturn in the construction cycle to continue over the next two years.
Sydney prices are now 12% below their July 2017 peak and Melbourne has declined by 9% since November 2017.
The report writers stated, "prices in Perth have weakened again recently after showing some signs of stabilisation in mid-2018."
"The other capitals have held up better (likely less effected by developments in the investor segment of the market)."
"We see peak-to-trough declines of around 15% in both Sydney and Melbourne but acknowledge that based on current momentum the declines may be larger, particularly in Sydney."
<img src="https://www.urban.com.au/images/2019/2/14/NAB%20DW%202.JPG" alt="">
Housing credit growth has also continued slowing, more so for investors than owner-occupiers.
Approvals for new building have declined and are now levels last seen in 2012, with the sharpest declines in apartment approvals.
<img src="https://www.urban.com.au/images/2019/2/14/NAB%20DW%203.JPG" alt="">
The report stated, "We expect house prices to decline further, in an orderly fashion, and housing activity indicators to show further weakness as the market continues to adjust."
"Our forecasts embody a relatively sharp slowdown in dwelling investment with a fall approaching 20% over the next two years."
"This is consistent with further weakness in building approvals and a relatively sharp downturn in the construction cycle."
NAB forecasts house prices to decline further over 2019 before levelling out in 2020.
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Sydney home prices down 12% from peak: NAB

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National Australia Bank economists no longer forecast a 2019 rate rise from the Reserve Bank of Australia.
The bank has join those who believe there possibly could be a rate cut before the end of this year.
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The economists said they no longer expected the RBA to hike rates in late 2020, a prediction they made as recent as late 2018.
"We ... now expect the cash rate to remain on hold over the forecast horizon," the bank's economists advised in a research note released today.
"While our central case is for the cash rate to remain on hold, based on the balance of risk, the next move could well be down - potentially as soon as H2 2019."
The RBA has kept rates at 1.5 per cent since August 2016, but last week itself shifted from a bias toward rate hikes to a more neutral stance.
"In particular, we see ongoing slow wage growth, falling savings rates, high debt levels and falling house prices as ongoing headwinds," NAB said in a note authored by chief economist Alan Oster, global head of research Ivan Colhoun and senior economist Gareth Spence.
"Our forecasts raise the question as to why the RBA would not move to give the economy some further support," they said.
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NAB sees no 2019 cash rate rise, and possibly the next move down

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Most Australians think it's not a good time to sell a property, according to a new survey.
According to NAB's latest consumer survey, a majority of respondents said they'd prefer not to list either the property are living in (56%) or an investment property (51%).
Some 41% also said that it wasn’t a good time to take out a mortgage for investment property.
The survey found roughly half of Australians said it was a good time to renovate the home they were living in (53%).
Buying a property to live in was the aspiration of 49%.
Mostly consistent in the different states some were outliers, in TAS the number who said it was a good time to buy a home to live in ranged from 61% in WA (where dwelling prices are around 17% lower than the last peak in mid-2014) to just 46% in NSW and QLD.
"When it came to selling a property to live in, the number of consumers who said it wasn’t a good time to sell was highest in WA (69%) perhaps also suggesting some home owners may be currently sitting on capital losses," the report said. 
"It was lowest in TAS (36%) which has also been fastest growing state for house prices since late-2017 and also the only state where consumers believe house prices will continue growing over the next 12 months."
"When it came to whether now was a good time to buy an investment property, WA was the most positive state and TAS (28%) the least positive followed by QLD (32%)."
"But more consumers in TAS (34%) thought now was a good time to sell an investment property, by far the highest number of all states," the report added.
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