<p>The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.</p>

<p>It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 52-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.</p>

<p>Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.</p>

<p>While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.</p>

<p>[smartcode_project:default project_id=6515 project_image_fid=68833]</p>

<p>Developer Bensons Property Group is behind the 52-storey tower, which has just shy of 250 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.</p>

<p>The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.</p>

<p>"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.</p>

<p>"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.</p>

<p>"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."</p>

<p>[smartcode_project:default project_id=6515 project_image_fid=360215]</p>

<p>One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.</p>

<p>"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.</p>

<p>While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.</p>

<p>"The size of the site is something that would be incredibly difficult to replicate today," she says.</p>

<p>"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."</p>

<p>[smartcode_project:default project_id=6515 project_image_fid=68839]</p>

<p>There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.</p>

<p>As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.</p>

<p>"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.</p>

<p>A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.</p>

<p>The remaining apartments are ready to inspect in person, by appointment.</p>

<p>[smartcode_project_cta:default project_id=6515]</p>


Joel Robinson

A decade in the making: Residents to move into Chevron One as construction wraps up

<p>A general rule of thumb in new apartment developments is that the penthouses get the rooftop.</p>

<p>It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.</p>

<p>Sherpa Group has taken the opposite approach.</p>

<p>Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.</p>

<p>The philosophy has reached its most ambitious expression at Flourish Soleira in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=374053]</p>

<p>"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.</p>

<p>"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.</p>

<p>"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=374052]</p>

<p>The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.</p>

<p>Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=372547]</p>

<p>The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.</p>

<p>The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=374054]</p>

<p>Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.</p>

<p>Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=370962]</p>

<p>While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.</p>

<p>It began with Flourish Amargo, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.</p>

<p>Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.</p>

<p>[smartcode_project:default project_id=146527 project_image_fid=366550]</p>

<p>That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.</p>

<p>Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.</p>

<p>[smartcode_project_cta:default project_id=150017]</p>


Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

<p>As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.</p>

<p>At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.</p>

<p>[smartcode_project:default project_id=426 project_image_fid=359199]</p>

<p>The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.</p>

<p>Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.</p>

<p>In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.</p>

<p>[smartcode_project:default project_id=426 project_image_fid=360299]</p>

<p>The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.</p>

<p>Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.</p>

<p>This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.</p>

<p>[smartcode_project:default project_id=426 project_image_fid=360300]</p>

<p>What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.</p>

<p>The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.</p>

<p>Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.</p>

<p>[smartcode_project_cta:default project_id=426]</p>


Elevated amenity anchors daily life at Aeris, Melrose Park

<p>Repeat buyers are one of the strongest measures of confidence in any apartment development.</p>

<p>At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.</p>

<p>Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.</p>

<p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/FH_1EzB-1vs?si=XScVlP1ERsTDJoME" title="YouTube video player" width="560"></iframe></p>

<p>"I had some boxes I wanted to tick," he says.</p>

<p>Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.</p>

<p>“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.</p>

<p>He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356818]</p>

<p>After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.</p>

<p>"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."</p>

<p>Today, Keith says the move has completely changed how he experiences Newcastle.</p>

<p>"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356828]</p>

<p>Beyond the location, he says it's the sense of community that has surprised him most.</p>

<p>"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."</p>

<p>For Aimee and Lyle Goodman, the journey started almost by chance.</p>

<p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/tsioMLcnjas?si=zq-ys3JuWpfa5hFv" title="YouTube video player" width="560"></iframe></p>

<p>The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.</p>

<p>"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."</p>

<p>As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.</p>

<p>"We actually catch up more as a family now," Aimee says.</p>

<p>"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356829]</p>

<p>Lyle says their confidence came from GWH's reputation within Newcastle's building industry.</p>

<p>"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."</p>

<p>That confidence only grew throughout the buying process.</p>

<p>"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=351104]</p>

<p>Aimee says one moment stood out.</p>

<p>"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."</p>

<p>The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.</p>

<p>Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356822]</p>

<p>ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;</p>

<p>The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356826]</p>

<p>For Keith, the appeal remains straightforward.</p>

<p>"You feel at home even before you've moved into your home."</p>

<p>For Aimee, the change is measured in time.</p>

<p>“I just felt like I had more time,” she says.</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=351102]</p>

<p>Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.</p>

<p>ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.</p>

<p>[smartcode_project_cta:default project_id=135096]</p>


From ONE to ERA: Why buyers are choosing GWH again in Newcastle West

<p>Virgate Property Group is preparing to commence construction of Verdé, its new apartment development in Melbourne's Arts Precinct at Southbank, following a strong run of sales that has seen more than half of the project's 173 apartments secured.</p>

<p>Verdé has attracted a broad mix of first home buyers, owner-occupiers upgrading from nearby inner-city suburbs and investors, with younger owner-occupier couples aged between 28 and 45 accounting for the strongest enquiry. Many are already living in Southbank, South Melbourne, Albert Park, Port Melbourne, South Yarra and the CBD.</p>

<p>"Verdé is located in one of the most desirable pockets of southern Melbourne," Blair Property Group Director Darren Blair, who is managing sales at Verdé, said.</p>

<p>"It's within walking distance of the Arts Centre, Royal Botanic Gardens, Albert Park Lake, and Southbank's restaurants and retail. It's a great lifestyle location with strong amenity and liveability, which made it a very attractive choice for the project."</p>

<p>[smartcode_project:default project_id=4661 project_image_fid=372549]</p>

<p>Virgate was already familiar with the precinct, having previously delivered the successful Domain House development in neighbouring South Melbourne. That experience gave the developer confidence to acquire the Coventry Street site and continue expanding its presence in Melbourne's inner south.</p>

<p>"We had been keeping an eye on the site and the broader precinct for a few months before deciding to move forward with the acquisition," Virgate said.</p>

<p>The project was ultimately secured in 2020 following feasibility studies, planning assessments and due diligence, with the brief centred on delivering "a high-quality, considered design that feels both refined and fit for purpose."</p>

<p>[smartcode_project:default project_id=4661 project_image_fid=314259]</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/bruce-henderson-architects">Bruce Henderson Architects</a>, Verdé comprises 173 one, two and three-bedroom apartments priced from $599,000. The architecture is distinguished by a faceted glass façade that responds to both the site's outlook and Melbourne's changing light conditions.</p>

<p>According to Bruce Henderson Architects, the coloured glazing gives the building a distinctive identity while also providing privacy and solar shading, with residences oriented to capture views across the bay, city skyline and surrounding parklands.</p>

<p>Inside, <a href="https://www.apartments.com.au/interior-designers/designoffice">DesignOffice</a> has created interiors focused on natural light, efficient planning and enduring materials. Apartments feature engineered oak flooring, natural stone benchtops, floor-to-ceiling glazing and SMEG appliances, while a restrained material palette aims to complement the expansive outlooks rather than compete with them.</p>

<p>[smartcode_project:default project_id=4661 project_image_fid=372550]</p>

<p>Resident amenity has also been designed around everyday functionality rather than occasional use. Facilities include a concierge-serviced lobby, residents' lounge with fireplace, library and co-working space, gym, terrace garden with barbecue facilities, ground-floor café, and package delivery management.</p>

<p>The project's location continues to be one of its strongest drawcards. Positioned on Coventry Street, Verdé sits within walking distance of the National Gallery of Victoria, Arts Centre Melbourne, Royal Botanic Gardens and Albert Park Lake, while Southbank's dining precinct, Sturt Street trams and the new ANZAC Station are all nearby. The surrounding education catchment also includes Melbourne Grammar, Melbourne Girls Grammar, Mac.Robertson Girls' High School and several major university campuses.</p>

<p>The sales team says buyers have responded particularly well to the combination of location, design quality and long-term liveability.</p>

<p>"They're responding really positively to the quality of the design, premium resident amenities and the uninterrupted views. Many also appreciate the location and how connected it is to everything they need."</p>

<p>The ability to secure stamp duty savings before completion has also been a key factor for purchasers, alongside the opportunity to personalise finishes ahead of settlement.</p>

<p>With construction set to commence soon and more than half the apartments already sold, Verdé enters its next phase as one of the Arts Precinct's more established apartment developments, offering remaining buyers an opportunity to secure a residence before construction advances further. Expected completion is scheduled for late 2027.</p>

<p>[smartcode_project_cta:default project_id=4661]</p>


Virgate's Verdé Southbank moves toward construction as sales fly past halfway stage

Pete Wargent

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<p>EXPERT OBSERVER</p>
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<div>Just to add to all the other woeful data released today, the preliminary index of commodity prices was down by -3.5 per cent in November, following on from a substantially (downwardly) revised -6.6 per cent decline in October. </div>
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<div>Productivity figures released today were the worst in at least 25 years, and you can follow much of the other underwhelming news <a href="https://jamesfostermacro.blogspot.com/" target="_blank">here</a>. </div>
<div> </div>
<div>The Reserve Bank of Australia meets on Tuesday and the Board will need to work its way through a barrage of dire figures, including the ongoing nosedive in dwelling construction.</div>
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<br><div>Futures markets are unsurprisingly pricing further easing, with the economy, inflation, and wages growth all so mired in the doldrums.</div>
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<div>The question the Board will need to consider is: what exactly would waiting until February achieve?</div>
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<div>
<em><span>PETE WARGENT</span> is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em><span> </span>
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pwargent-M4siyDbqQY

Is a recession brewing? Pete Wargent

<html><body>
<p>EXPERT OBSERVER</p>
<div><strong><span style="text-decoration: underline;">Market mispricing?</span></strong></div>
<div> </div>
<div>If you'll kindly indulge a Tuesday night blog post after an evening talking, um, Australian monetary policy at the Clock Hotel (n.b. soft drinks only!), then herewith it follows. </div>
<div> </div>
<div>One week ago the October 2019 RBA Minutes were released, and they stated that, if needed, policy would be eased further <em><strong>to achieve full employment and the inflation target. </strong></em>
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<div><em><span style="text-decoration: underline;">Source: RBA</span></em></div>
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<div>Then on October 18 the RBA Governor delivered a designedly upbeat speech to the IMF in Washington, which justifiably highlighted Australia's record unbroken stretch of economic growth among other Antipodean successes (including the floating currency, which often - though not always - moves in harmony with commodity prices). </div>
<div> </div>
<div>I didn't listen to the audio live, but while we don't need to link to all of the media pieces, across the board we saw a rash of articles suggesting that the RBA is done with cutting and has hosed down the prospect of further cuts.<br><br>A bit odd, it seemed.<br><br>
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<div>I'll come back to this point, but I broke one of my own golden rules here: at the risk of sounding like an episode of <em>Yes, Prime Minister,</em> always listen to what was actually said, not what was said about what was being said!</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Inflation smoked</span></strong></div>
<div> </div>
<div>The latest employment figures were <a href="https://petewargent.blogspot.com/2019/10/the-gentlest-of-turning-points" target="_blank">modestly positive</a>, but the leading indicators are weakening and there was no indication that labour force slack will be reduced significantly, or that full employment will be on the horizon any time soon. </div>
<div> </div>
<div>Unemployment was still uppish at 5.2 per cent, and the underemployment rate remained <a href="https://petewargent.blogspot.com/2019/10/the-gentlest-of-turning-points" target="_blank">way high at 8.3 per cent</a>. </div>
<div> </div>
<div>Looking towards next Wednesday's inflation figures for the September quarter, it's hard to see where any inflationary pressures at all are going to come from, except for - yet again - smokes. </div>
<div> </div>
<div>There may well be some food price inflation due to the drought (which itself drags further on economic growth), but rental price growth will be at or close to record lows, and there may be some other offsetting<span> factors. </span>
</div>
<div> </div>
<div><span>Crunching through the numbers, with a hat tip to the ever-brilliant Justin Smirk at Westpac, spits out trimmed mean inflation of, say, 0.3 per cent, and the weighted median may well be even lower still.</span></div>
<div><span> </span></div>
<div><span>So that gets you to annual core inflation of about 1½ per cent for trimmed mean, and just 1.2 per cent for the weighted median, which is so far below the mandated target you could drive a truck through the gap (or an attractively priced new SUV the way new car sales have been tracking!). </span></div>
<div><span> </span></div>
<div><span>If all of this proves to be the case - and, by the way, the mid-point of the inflation target is 2½ per cent - why wouldn't the RBA be cutting with bells on?</span></div>
<div><span> </span></div>
<div><span>Financial markets have effectively priced out a November cut - and almost any further cuts at all - as far as I can tell because some people said that's what the Governor said...but is that what was said?</span></div>
<div> </div>
<div><strong><span style="text-decoration: underline;">What's the French word for nuance?</span></strong></div>
<div> </div>
<div>To recap briefly, we have a 'no' to full employment, and a resounding 'no' for being close to achieving the inflation target, which market expectations see as a distant dream. </div>
<div> </div>
<div>Now let's go back to the IMF speech, and more specifically the very brief Q&amp;A segment.</div>
<div> </div>
<div>And then to a question from the floor!<br><br>Question: has the RBA got 'a lot of work to do' in terms of delivering monetary easing (the cash rate is at 0.75 per cent), and should we assume negative rates or other unorthodox policies?</div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/-clR0lulvZts/Xa7QjR6iU9I/AAAAAAAAybk/Gr6cNLxerWop15HuL3ZX5MUE0_VVFXOOQCNcBGAsYHQ/s1600/rba2.jpg"><img src="https://1.bp.blogspot.com/-clR0lulvZts/Xa7QjR6iU9I/AAAAAAAAybk/Gr6cNLxerWop15HuL3ZX5MUE0_VVFXOOQCNcBGAsYHQ/s640/rba2.jpg" width="640" height="314" data-original-height="548" data-original-width="1111"></a></div>
<div>
<span style="text-decoration: underline;"><em><br></em></span><span style="text-decoration: underline;"><em>Source: RBA</em></span>
</div>
<div>To my mind, there's only one way that a central bank Governor could've answered that question given the circumstances, and here it is:</div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/-f-5mD8YZPyQ/Xa7QjEC41XI/AAAAAAAAybc/v_-AtHtN2jUVIO0rjd4o_QVHjJNPYIG5QCNcBGAsYHQ/s1600/rba3.jpg"><img src="https://1.bp.blogspot.com/-f-5mD8YZPyQ/Xa7QjEC41XI/AAAAAAAAybc/v_-AtHtN2jUVIO0rjd4o_QVHjJNPYIG5QCNcBGAsYHQ/s640/rba3.jpg" width="640" height="164" data-original-height="286" data-original-width="1112"></a></div>
<p> </p>
<div><em><span style="text-decoration: underline;">Source: RBA</span></em></div>
<p><br><strong><span style="text-decoration: underline;">November live</span></strong><br><br></p>
<div>Now I could be off beam here - it's happened on this blog at least once before! - but this answer, and perhaps some of the remainder of the transcript might have been misinterpreted...and the market pricing may in turn have been led astray. </div>
<div> </div>
<div>No central banker could have reasonably responded 'we have lots more to do' on easing, and the question on negative interest rates was always going to be batted to the fence, which it quite rightly was. </div>
<div> </div>
<div>The consensus view is that there will be no further easing this year, but if inflation is as low as it looks to be - essentially a sin tax on tobacco and a bit of drought-related food price inflation - then the November meeting could be a live one.<br><br>I've leaned heavily here on the analysis of Sophia Rodrigues of Central Bank Intel (if you're an institution you should subscribe to her forthcoming content), and another prominent markets analyst in Sydney (well, it's the Clock Hotel, you can work it out). </div>
<div> </div>
<div><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>. </em></div>
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Why the November RBA meeting may be live: Pete Wargent

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<p>EXPERT OBSERVER</p>
<div>Some blessed relief for housing investors as the number of interest-only loans was finally off the lows in the June 2019 quarter. </div>
<div> </div>
<div>Following changes to serviceability rules further increases should hopefully be observed in the second half of 2019. </div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/-4O4lsCRwf3w/XXihJfNIBtI/AAAAAAAAxvI/VFB74vQ0fLkVPLfJdrzacn1_6lJS14RKQCNcBGAsYHQ/s1600/APRA3.jpg" target="_blank"><img src="https://1.bp.blogspot.com/-4O4lsCRwf3w/XXihJfNIBtI/AAAAAAAAxvI/VFB74vQ0fLkVPLfJdrzacn1_6lJS14RKQCNcBGAsYHQ/s640/APRA3.jpg" width="640" height="380" data-original-height="810" data-original-width="1360"></a></div>
<div> </div>
<div>The stock of interest-only loans continued to decline sharply to 21.8 per cent of total mortgages, however - comfortably the lowest share on record - having been at 39 per cent of the stock of outstanding mortgages by value as recently as early 2017. </div>
<div> </div>
<div>This shows how dramatically effective the interest rate differential was in lending and borrowing behaviours, alongside caps and certain other restrictions. </div>
<div> </div>
<div>Despite all the hype, there have been comparatively few signs of forced selling to date, with most borrowers managing the transition comfortably. </div>
<div> </div>
<div>In fact, new stock listings have remained exceptionally low. </div>
<p> </p>
<div class="separator"><a href="https://1.bp.blogspot.com/-qbdYgMvXRC0/XXihJBDCpMI/AAAAAAAAxvE/_ggtTS4Uevoc2v0bCDK5FXu4nIDb4s5lgCNcBGAsYHQ/s1600/APRA1.jpg" target="_blank"><img src="https://1.bp.blogspot.com/-qbdYgMvXRC0/XXihJBDCpMI/AAAAAAAAxvE/_ggtTS4Uevoc2v0bCDK5FXu4nIDb4s5lgCNcBGAsYHQ/s640/APRA1.jpg" width="640" height="360" data-original-height="808" data-original-width="1431"></a></div>
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<div>There has been an impact on consumption, though, and NAB now forecasts <strong><span style="text-decoration: underline;">three</span></strong> further interest rate cuts over the next nine months, as indeed does ANZ.<br><br>In fact, NAB also sees a chance of unconventional measures on top of these cuts. </div>
<div> </div>
<div>Of the remaining interest-only loans Westpac retains the largest stock.</div>
<div> </div>
<div>Finally, the 5-year squeeze on higher-LVR lending has finally eased a little, with the majors steadily writing more loans at 80-90 per cent LVRs, which is also a relief to see.</div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/-kP14s7e2XO0/XXihJTZDa1I/AAAAAAAAxvA/xt8bOFD1EI4ph6UQAGgzC_czyaFZF6CYwCNcBGAsYHQ/s1600/APRA2.jpg" target="_blank"><img src="https://1.bp.blogspot.com/-kP14s7e2XO0/XXihJTZDa1I/AAAAAAAAxvA/xt8bOFD1EI4ph6UQAGgzC_czyaFZF6CYwCNcBGAsYHQ/s640/APRA2.jpg" width="640" height="368" data-original-height="807" data-original-width="1397"></a></div>
<p>Non-banks wrote a fair chunk of the loans at above 90 per cent LVRs, but there have been fewer exceptions reported as a share of total lending.</p>
<div><strong><span style="text-decoration: underline;">Brink of crisis</span></strong></div>
<div> </div>
<div>Overall, there are some tentative signs that banks are somewhat more willing and able to write mortgages, half a decade after the prudential tightening began.<br><br>Investment lending is now only about half of what it was at the peak, and some loosening is welcomed to allow first homebuyers an opportunity to buy, with prices also lower over the past two years.<br><br>Moreover, the banking Royal Commission brought Australia to the brink of a recession and a related banking crisis.<br><br>At the last count monthly building approvals have crashed to 12,944 (with unit approvals down 44 per cent year-on-year), which is a diabolical leading indicator for activity in the economy, while credit growth is also dreadfully weak.<br><br>Despite these atrocious numbers, there's often a palpable complacency evident in the housing market commentary.<br><br>A banking crisis can still be averted, but only if banks can get some credit flowing again...and soon. </div>
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Has the interest-only cliff almost been negotiated? Pete Wargent

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<p>Not too many surprises in the Treasurer's 2019 Federal Budget, then.</p>
<p>Tax cuts for households were effectively doubled from around $150 billion to about $300 billion, in rounded numbers. </p>
<p>Quite a substantial saving of tax for households was mooted to be released in stages, and more Aussies eventually set to be paying tax at 30%.</p>
<p>There were some more immediate handouts, something of a boost to infrastructure spending, and a broadening of the scope for business asset write-offs.</p>
<p>Nothing too unexpected nor dramatic, but an expansionary Budget nonetheless. </p>
<p><strong>Rentals tightening ex-Sydney</strong></p>
<p>Assuming the Opposition wins the election, as is widely expected, there may be changes to tax policy for housing. </p>
<p>But although this hasn't showed up in official data yet, the squeeze on property investors is now quietly beginning to hurt some of the people Labor's policy is designed to help, most notably renters.</p>
<p>I'd suspected this might happen, but had no worthwhile evidence for it until this week.</p>
<p>I've been in Melbourne for a few days, and agents are now reporting queues and multiple applications on some rental properties, and offers being made above asking rents prior to settlement for entrant landlords.</p>
<p>This is mainly taking place in the landlocked inner- and middle ring suburbs of Melbourne.</p>
<p>And granted it's far more so the case for trendy terraces and family homes than it is for apartments. </p>
<p>But it's the first hard evidence that a reduced supply of rental stock will eventually lead to an accommodation shortage and a spike in rents, with or without Labor's proposed changes. </p>
<p>The construction pipeline is also now shrinking after a record cycle for housing starts. </p>
<p><strong>Fixed rates falling</strong></p>
<p>Affordability in cities such as Sydney has improved over more than two years since the first quarter of 2017, with transactions taking place at a level about 15% lower than at the heady peak, on average, while incomes are also up modestly by about 5% over the past couple of years. </p>
<p>Unemployment rates in the two most populous cities and states have fallen to multi-decade lows at about 4 to 5%. </p>
<p>Funding costs have eased suddenly and sharply, globally the upwards pressure on interest rates has quickly reversed, and fixed mortgage rates in Australia are now falling. </p>
<p>Yesterday the Reserve Bank took a "surprising and significant step" towards a formal or explicit easing bias after a couple of years in a more balanced position, through amending the closing sentence of its monetary policy decision to a more dovish stance. </p>
<p>That paves the way for an interest rate cut some time between May and August, with another to follow later (markets are pricing about a three in 10 chance of a cut as soon as next month). </p>
<p>We aren't quite there yet, but the end of the downturn in housing market sentiment appears to be closer.</p>
<p>An official cash rate heading towards 1% will do that, of course, even when banks don't pass on the full 50 basis points. </p>
<p>Perhaps more important than all of the above is that there are some tentative signs of lending to investors picking up.</p>
<p>And if leading indicators are our thing, all industry participants I've spoken over the past week or two have reported a noticeable lift in activity of late...especially on the 'buy side'. </p>
<p><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em><span> </span></p>
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End of housing downturn draws closer: Pete Wargent

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<div>EXPERT OBSERVER</div>
<div> </div>
<div>It looks as though tighter deposit requirements have run their course. </div>
<div> </div>
<div>Although December 2018 was a horrible quarter for mortgage lending in the lead-up to the end of the Royal Commission, the squeeze on loan-to-value ratios looks to be just about done. </div>
<div> </div>
<div>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/3/22/interest%20only%201.jpg" alt=""> </div>
<div> </div>
<div>
<div>There are relatively few interest-only (IO) mortgages being written now, and this squeeze also looks to be about done. </div>
<div> </div>
<div>It's a smaller share of a smaller pie, and this is reducing household debt ratios as we speak (contrary to the incorrect claims you might read elsewhere). </div>
<div> </div>
<div>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/3/22/interest%20only%202.jpg" alt=""> </div>
<div>
<div>The ADI stock of outstanding IO loans is now less than ¼ of mortgages by value, the lowest on record across the data series. </div>
<div> </div>
<div>This may sound a lot, but most IO loans revert to principal repayment relatively quickly, and anyway IO mortgages can make a lot of sense for borrowers with offset accounts. </div>
<div> </div>
<div>Many borrowers have opted to revert to principal repayment early for the cheaper mortgage rates on offer. </div>
<div>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/3/22/interest%20only%203.jpg" alt=""> </div>
<div> </div>
<div>
<div>There was previously some debate surrounding what constituted a 'new' IO loan, but the interest-only 'cliff' is no longer a thing, since any mechanically forced reset no longer applies. </div>
<div> </div>
<div>It's in nobody's interests to see stressed borrowers go into arrears, so the reset should now be managed comfortably enough.</div>
<div> </div>
<div>
<div><strong>Left the building</strong></div>
<div> </div>
<div>It's interesting to note that partly thanks to switching across to cheaper rates, interest repayments have now declined to sit well below 10 per cent of household disposable income, down from 16 per cent a decade earlier.</div>
<div> </div>
<div>This is a very significant decline, and this hugely improved level of mortgage serviceability partly accounts for why mortgage arrears remain so low. </div>
<div> </div>
<div>Betwixt the Council of Financial Regulators and the Reserve Bank today the respective authorities confirmed today that there would be no further tightening of lending standards required, instead perhaps implying that banks rather need to write some business.</div>
<div>
<br><strong>From the RBA:</strong>
</div>
<div> </div>
<div><em>"From a financial stability perspective, prudent lending standards are a good thing. They ensure that households and banks are resilient to changes in circumstances. </em></div>
<div><em> </em></div>
<div>
<em>But there needs to be a balance. </em><em>The regulators are not proposing any further tightening in lending standards. </em>
</div>
<div><em> </em></div>
<div><em>And the appropriate amount of credit risk is not zero – banks need to continue to lend and that will inevitably involve some credit losses."</em></div>
<div> </div>
<div>Welcome news, while fixed mortgage rates are being cut widely as funding costs have declined. </div>
<div> </div>
<div>The regulators have left the building (for the time being!). </div>
<div> </div>
<div>
<div id="post-body-36613851729109642" class="post-body entry-content">
<div>
<em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em> </div>
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Interest-only cliff: no longer a thing - Pete Wargent

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<p>Let's take a considered look at S&amp;P's mortgage arrears.</p>
<p>Basically unchanged throughout 2018 at 1.38% for 30+ day arrears.<br><br></p>
<div><img src="https://4.bp.blogspot.com/-Vo8SaZNYHOY/XGz3wSX9jCI/AAAAAAAAukc/e-f-TJrPVXQ6rwdaW0bW0UfV4GEgRBzxACLcBGAs/s640/A4.jpg" width="640" height="592" data-original-height="739" data-original-width="797"></div>
<p><br>90+ day arrears are now up a notch to 0.75%.</p>
<div>That's mainly related to major banks locking interest-only (IO) borrowers in as they roll over to P&amp;I loans.</div>
<div> </div>
<div>While this could be a drag on consumption most IO borrowers have buffers measured in years, and most didn't borrow anywhere near to their maximum capacity either.</div>
<div> </div>
<div>I'd argue that most of the little mortgage stress that there is has been inflicted by excruciating mortgage regulation rather than rising unemployment, mortgage rates, or over-stretched borrowers.<br><br>Weakness in Western Australia's economy is the other main contributory factor. </div>
<div> </div>
<div>In fact, job vacancies are at record highs according to the ABS surveys, both in absolute terms and as a share of the labour force. <br><br>The unemployment rate is also at the lowest level in 6½ years at just 4.98%, while the respective unemployment rates in New South Wales and Victoria are actually the lowest on record. </div>
<p> </p>
<div><img src="https://3.bp.blogspot.com/-hy-30cTR-MI/XGz3vrZOGoI/AAAAAAAAukU/RQ2aHjaL1rADByCjEKtZjfV83mPpaFXBgCLcBGAs/s640/A1.jpg" width="640" height="374" data-original-height="808" data-original-width="1377"></div>
<p> </p>
<div>The main deterioration in arrears has clearly been in Western Australia, now at 2.73% for 30+ day arrears.</div>
<p> </p>
<div><img src="https://2.bp.blogspot.com/-G6W_dyRJsAs/XGz3vsE1gzI/AAAAAAAAukY/Kwhx1eVp658hbZ3Qx5Ty-bm9WjanrF38wCLcBGAs/s640/A2.jpg" width="640" height="370" data-original-height="809" data-original-width="1395"></div>
<p><br>And non-confirming arrears remain close to their lowest ever level.<br><br></p>
<div><img src="https://3.bp.blogspot.com/-pZl-i00tyY0/XGz3vhO-h_I/AAAAAAAAukQ/nwOfbvqfZoQFE4QwTJSnZHLnQ8SeNzT_wCLcBGAs/s640/A3.jpg" width="640" height="370" data-original-height="811" data-original-width="1396"></div>
<p><br>Unemployment is low, mortgage rates are low, and there are plenty of job openings.<br><br>Banks just need to lend on a more reasonable and timely basis.</p>
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Arrears pain is dull but mortgage regulation is excruciating: Pete Wargent 

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<p>EXPERT OBSERVER<a href="http://petewargent.blogspot.com/2019/02/vic-closes-in-on-full-employment" style="font-family: Helvetica, Arial, sans-serif; font-size: 13px;"> </a></p>
<div id="post-body-310214148269562303" class="post-body entry-content">
<div><strong><span style="text-decoration: underline;">Wages tick along</span></strong></div>
<div><span> </span></div>
<div><span>More wages weakness reported in the December 2018 quarter, though I doubt it'll be enough to move the needle for the Reserve Bank's view too much. </span></div>
<div><span> </span></div>
<div><span>Wages growth was +0.6 per cent for the private sector, and +0.6 per cent for the public sector, seasonally adjusted, decimal point quibbles aside. </span></div>
<div><span> </span></div>
<div><span>Annual growth in private sector wages of +2.29 per cent was still plenty slower than in the public sector at +2.53 per cent.</span></div>
<div><span> </span></div>
<div><span>However, this was the 'fastest' annual pace of growth in private sector - if you can justifiably use the word fast in this context - in the four years since December 2014.</span></div>
<div><span> </span></div>
<div><span>And it's also well ahead of headline inflation, which could feasibly sink to just 1½ per cent next quarter on lower fuel prices. </span></div>
<br><div class="separator"><a href="https://1.bp.blogspot.com/-nBZjMNpaef8/XG0O7o2sr4I/AAAAAAAAulA/VZ8K7fIX80EqIqcd4CJw4MWLe2mV9yFEwCLcBGAs/s1600/A1.jpg" target="_blank"><img src="https://1.bp.blogspot.com/-nBZjMNpaef8/XG0O7o2sr4I/AAAAAAAAulA/VZ8K7fIX80EqIqcd4CJw4MWLe2mV9yFEwCLcBGAs/s640/A1.jpg" width="640" height="352" data-original-height="791" data-original-width="1436"></a></div>
<br><div>As noted here previously (h/t Justin Smirk, Westpac) Victoria has been creating a thunderous volume of job openings and is nipping along nicely towards full employment, so wages will almost certainly pick up here. </div>
<br><div class="separator"><a href="https://4.bp.blogspot.com/-MkBSZfoxosY/XG0O8haXWeI/AAAAAAAAulI/oH4WaHmCGAAdtoZwbf9GSyZRrOTO1xxdQCLcBGAs/s1600/A4.jpg" target="_blank"><img src="https://4.bp.blogspot.com/-MkBSZfoxosY/XG0O8haXWeI/AAAAAAAAulI/oH4WaHmCGAAdtoZwbf9GSyZRrOTO1xxdQCLcBGAs/s640/A4.jpg" width="640" height="380" data-original-height="801" data-original-width="1348"></a></div>
<br><div>Indeed, at the state level for all sectors Victoria (+2.7 per cent) and New South Wales (+2.4 per cent) have accounted for most of the improvement since the nadir, while sprightly Tasmania (+2.6 per cent) is resurgent from a low base. </div>
<br><div class="separator"><a href="https://4.bp.blogspot.com/-kOwyXgYwYH8/XG0O7pPxALI/AAAAAAAAulE/FB4OU2W9HY8VVAIUx81m-k742UxlNDErQCLcBGAs/s1600/A2.jpg" target="_blank"><img src="https://4.bp.blogspot.com/-kOwyXgYwYH8/XG0O7pPxALI/AAAAAAAAulE/FB4OU2W9HY8VVAIUx81m-k742UxlNDErQCLcBGAs/s640/A2.jpg" width="640" height="374" data-original-height="815" data-original-width="1393"></a></div>
<br><div>Not much joy here in Western Australia, though we should acknowledge that WA has seen by some margin the greatest increase in wages over the past two decades, so a bit of post-boom payback was perhaps due. </div>
<br><div class="separator"><a href="https://1.bp.blogspot.com/-OhfQGmdLmDE/XG0O7stD8dI/AAAAAAAAuk8/GXmnh0QeLxgHwBqZiLw-Lg_0WGNeBgGPgCLcBGAs/s1600/A3.jpg" target="_blank"><img src="https://1.bp.blogspot.com/-OhfQGmdLmDE/XG0O7stD8dI/AAAAAAAAuk8/GXmnh0QeLxgHwBqZiLw-Lg_0WGNeBgGPgCLcBGAs/s640/A3.jpg" width="640" height="382" data-original-height="820" data-original-width="1371"></a></div>
<br><div>At the industry level the strongest wages growth was seen in healthcare and social assistance (+2.8 per cent), and electricity, gas, water, and waste (+2.8 per cent), while the weakest growth was in IT &amp; Telcos (+1.6 per cent). </div>
<div> </div>
<div><strong><span style="text-decoration: underline;"><span>The wrap</span></span></strong></div>
<div><span> </span></div>
<div>
<span>Still pretty sluggish overall, but skilled job vacancies came in at a near </span><span>7-</span><span>year high today, so there's still probably just enough evidence that the jobs market might pull through, provided credit flows a bit more freely in 2019. </span>
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<div> </div>
<div>
<em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em> </div>
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More wage weakness but VIC close in on full employment

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<p>An interesting series of charts was posted by Simon Pressley of Propertyology, showing how a number of Brisbane construction hotspots have seen the rental supply tightening back into balance.</p>
<p>Pressley showed tightening vacancy rates in Nundah (1.6%), Bulimba (2.8%), and Chermside (2.2%) as a few prime examples, while West End and Fortitude Valley were still chewing through the their glut in January 2019. </p>
<p>A bit closer in, here's New Farm and Teneriffe with the rental supply at the tightest level since 2013.</p>
<p><a href="https://1.bp.blogspot.com/-BoPSEDLF9Qc/XGclMjbarMI/AAAAAAAAud4/5aE0-lar1Zo7unykmnj8FjPOAHK2U-_JACLcBGAs/s1600/4005.jpg" target="_blank"><img src="https://1.bp.blogspot.com/-BoPSEDLF9Qc/XGclMjbarMI/AAAAAAAAud4/5aE0-lar1Zo7unykmnj8FjPOAHK2U-_JACLcBGAs/s640/4005.jpg" width="640" height="370" data-original-height="604" data-original-width="1042"></a></p>
<p><em>Source: SQM Research</em></p>
<p>Hamilton also recorded its lowest vacancy rate since 2013.</p>
<p>Commencements and units under construction have levelled off, while new approvals continue to slide back towards historic averages.</p>
<p><a href="https://3.bp.blogspot.com/-kFNTHPXnuUc/XGcmXCOSJnI/AAAAAAAAueE/Ux_4nPAi9IIsRykVgkeDyHzIpzust4x3gCLcBGAs/s1600/A1.jpg" target="_blank"><img src="https://3.bp.blogspot.com/-kFNTHPXnuUc/XGcmXCOSJnI/AAAAAAAAueE/Ux_4nPAi9IIsRykVgkeDyHzIpzust4x3gCLcBGAs/s640/A1.jpg" width="640" height="362" data-original-height="799" data-original-width="1409"></a></p>
<p>And while not all internal migrants head to the capital cities, as I write, this interstate migration to Queensland is at its highest level in about 13 years, those heady pre-crisis days when when the mining boom was in full swing. </p>
<p><a href="https://3.bp.blogspot.com/-IuA2xbvjQNk/XGcnJnkNq8I/AAAAAAAAueM/ej7ZA6C_KO0zK7dI3LOhGl_1W6hpYf1gACLcBGAs/s1600/NIM.jpg" target="_blank"><img src="https://3.bp.blogspot.com/-IuA2xbvjQNk/XGcnJnkNq8I/AAAAAAAAueM/ej7ZA6C_KO0zK7dI3LOhGl_1W6hpYf1gACLcBGAs/s640/NIM.jpg" width="640" height="372" data-original-height="796" data-original-width="1368"></a></p>
<p>While developers aim to manage risk as well as they can, there's always an element of forecasting of demand when strategies are put together.</p>
<p>For a while it looked as though the demand for units and rentals wouldn't keep up with the record rates of construction.</p>
<p>But it increasingly looks as though things have swung back into balance in the nick of time, as Queensland draws more and more internal migrants away from the major capitals. </p>
<div><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em></div>
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Brisbane filling up with rental supply tightening: Pete Wargent

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<div>EXPERT OBSERVATION</div>
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<div>It's a happy new year, and all that, but not so much for bankers, with lending growth continuing to flounder. </div>
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<div>The Reserve Bank's latest figures showed credit growth slowing to 4.4 per cent, down from 5.2 per cent a year earlier, and broad money growth at fresh quarter-century lows of just 1.86 per cent. </div>
<p> </p>
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<div>It was noteworthy to hear last week that the RBA has been watching the gross household debt-to-income ratio as a main point of concern, especially as <a href="http://petewargent.blogspot.com/2018/12/debt-ratio-revised-lower-now-falling" target="_blank">this ratio has already peaked and is now falling</a>. </div>
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<div>The distinction from <em>housing</em> debt-to-income was quite interesting (to me at least) as the lines between housing, small business, and personal credit are blurred at best, with small business loans often secured against a home, and so on. </div>
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<div>As you can see in the chart below, changes in the direction of housing credit growth have tended to lead changes in dwelling price growth. </div>
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<div>You can also see that no such change had occurred by the end of November 2018. </div>
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<div class="separator"><img src="https://1.bp.blogspot.com/-Dqi23bcB6-Q/XCqUHZwLEgI/AAAAAAAAtsg/RKoxndSCpVUL5OIvz-ZGLEb4G8XspSL5gCLcBGAs/s640/RBA3.jpg" width="640" height="378" data-original-height="795" data-original-width="1346"></div>
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<div>A simple credit impulse model as favoured by ANZ economists suggests that capital city (i.e. Sydney and Melbourne) dwelling price declines should moderate, although there are several factors unique to this cycle - not least the boom and bust in Chinese investors - that could throw the model a bit off course (this may have already happened to some extent since 2014). </div>
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<div class="separator"><img src="https://2.bp.blogspot.com/-hg19s7pQfzU/XCqUE6b5LmI/AAAAAAAAtsY/pvq8s6-v7MEhCHqgIJamHA7GeoF0vQUcQCLcBGAs/s640/RBA2.jpg" width="640" height="374" data-original-height="787" data-original-width="1341"></div>
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<div>Investor credit growth was already at the lowest level on record, and it fell to even lower levels last month, allowing APRA to remove another of its now-redundant arbitrary caps, this time on interest-only lending. </div>
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<div>Given the enormous growth in the population aged 25 to 34 in particular, this is now a remarkably low level of growth in investor credit, even if it did follow on from a boom. </div>
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<div class="separator"><img src="https://4.bp.blogspot.com/-LmCPOkyIAMs/XCqUDn5r1zI/AAAAAAAAtsU/43fTNK6yncENxThK3etijkbED9oHjaPAgCLcBGAs/s640/RBA.jpg" width="640" height="366" data-original-height="803" data-original-width="1402"></div>
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<div>Not surprisingly the growth in owner-occupier credit also declined for a ninth consecutive month.</div>
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<div>CoreLogic will release its latest home value index for the month of December, and this will show significant declines for Sydney and Melbourne in 2018.<br><br><strong><span style="text-decoration: underline;">The wrap</span></strong><br><br>In short, business credit was moderate, personal credit was negative, and housing credit has no pulse - let's hope that doesn't turn into a full-blown coronary.</div>
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<div>Happy New Year! </div>
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<div><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and blogger.</em></div>
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2018 finishes with housing credit having no pulse: Pete Wargent

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<p class="post-title entry-title">EXPERT OBSERVER</p>
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<div>The Coalition, have been crushed in the Victorian elections at the hands of Labor.</div>
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<div>Voting was so one-sided it was effectively all over by 7pm.</div>
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<div>Not too long now until the Federal election, and it all looks pretty gloomy for Prime Minister Morrison.</div>
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<br>Some interesting news that quietly slipped out on Friday is that the government's financials are in enormously good nick when compared to the Budget profile. </div>
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<div>The year-to-date cash balance showed a deficit nearly $9 billion ahead of the Budget profile (with the year-to-date deficit of $15 billion miles ahead of the $24 profile deficit).</div>
<br><div class="separator"><a href="https://4.bp.blogspot.com/-WO4oj3X5o9M/W_m_w6YrtmI/AAAAAAAAtCk/o39wSjwGIr0XdKBW8UmG97Gd04s3_cOtACLcBGAs/s1600/IMG_9793.PNG"><img src="https://4.bp.blogspot.com/-WO4oj3X5o9M/W_m_w6YrtmI/AAAAAAAAtCk/o39wSjwGIr0XdKBW8UmG97Gd04s3_cOtACLcBGAs/s640/IMG_9793.PNG" width="640" height="556" data-original-height="1165" data-original-width="1338"></a></div>
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<div><em><span style="text-decoration: underline;">Source: Commonwealth Government</span></em></div>
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<div>This is mainly thanks to a sharp fall in unemployment and stronger commodity prices, leading to a tremendous surge in tax receipts, combined with lower payments. </div>
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<div>The latest labour force figure<a href="http://petewargent.blogspot.com/2018/11/blessed-relief" target="_blank">s</a> revealed annual employment growth surging back up to 2½ per cent, or +308,100, with an unemployment rate at a six-year low of 5 per cent. </div>
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<div><span>The Budget has been in deficit for more than a decade, but on these numbers a surplus might be withing striking distance as soon as next month when the mid-year Budget update is normally scheduled. </span></div>
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<div><span>The electorate may not like them much - an understatement - but at least this is a strong result for the Coalition's management of the Budget. </span></div>
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