The sought-after Latent Defects Insurance policy, offering off the plan apartment buyers peace of mind for 10 years post-completion, has made its way to Sydney’s harbourside. Boutique developer <a href="https://www.apartments.com.au/developers/toohey-miller">Toohey Miller</a> has secured this insurance for its newly launched Elizabeth Bay development, <a href="https://www.apartments.com.au/new-apartments/barncleuth-square-elizabeth-bay-4-4a-barncleuth-square-elizabeth-bay-nsw-2011">Barncleuth</a>. This marks the developer’s second project in the area, following the success of No. 1 Onslow Place.

Latent Defects Insurance, offered by <a href="https://www.apartments.com.au/news/resilience-latent-defects-insurance">Resilience Insurance</a>, provides cover for structural or waterproofing defects in new apartment buildings. It is a policy that only the developer or builder can take out, not the apartment purchaser.

Located just&nbsp;off Macleay Street, one of Sydney’s most desirable high streets, Barncleuth offers a rare collection of only 10 residences. With just two per floor, each oversized floorplan has been designed by SJB specifically for the owner-occupier.

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The five-storey building captures views over Rushcutters Bay and Paddington, blending contemporary brickwork with the expressive silhouettes of its Art Deco neighbours.

Inside, the residences, designed by David Hicks, prioritise generous scale and enduring quality, with a mix of two- and three-bedroom layouts. Expansive terraces and cross-ventilated interiors maximise light and airflow, while sustainable features such as a green roof and locally sourced materials reflect SJB’s commitment to long-term liveability.

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Developer Toohey Miller, led by Nick Couloumbis, says the design aims to bring lasting quality to an area long celebrated for its apartment heritage.

"It's a stone's throw from the best restaurants in Sydney. Some people call it the Soho of Sydney," Couloumbis told Apartments.com.au when the project was approved.

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By securing <a href="https://www.apartments.com.au/news/resilience-latent-defects-insurance">Resilience Latent Defects Insurance</a>, Barncleuth joins a growing group of premium Sydney projects adopting the gold standard in building protection.&nbsp;

The cover, provided before construction begins, ensures any hidden structural or waterproofing defects are repaired immediately, without lengthy litigation or fault disputes.

Resilience Insurance CEO Corey Nugent said the product has been a catalyst for renewed confidence in the off the plan market.&nbsp;

“Ultimately what we’re trying to do is build better buildings consumers can trust. When buyers take possession, they have full insurance protection from day one, for 10 years,” Nugent explained.

Unlike traditional policies such as strata or construction insurance, Resilience LDI is a first-resort, strict liability policy, meaning repairs are covered immediately without needing to prove negligence. Coverage extends to foundations, load-bearing walls, and waterproofing, the elements most critical to long-term structural integrity.

Regarded construction firm Jasara has been appointed to deliver Barncleuth. They are forecasting an early 2027 completion.

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Joel Robinson

Toohey Miller brings 10-year Latent Defects Insurance to Elizabeth Bay as Barncleuth apartments launch

<a href="https://www.apartments.com.au/developers/golden-sedayu">Golden Sedayu</a> has unveiled plans for the next phase of its landmark $4 billion <a href="https://www.apartments.com.au/new-townhouses/burswood-point-saintly-entrance-burswood-wa-6100">Burswood Point</a> project, just 3.5km from the Perth CBD at the Belmont Racecourse site.

The Local Development Plan Application has been lodged for a world-class mixed-use hub (Precinct B) on the previously untouched 2.5km stretch of Swan River foreshore.

Designed by Skidmore, Owings &amp; Merrill (SOM), recognised for their work on the world’s tallest skyscraper, Burj Khalifa in Dubai and the One World Trade Centre in New York, Precinct B will feature 15 buildings, offering a mix of residential and commercial spaces including a shopping centre up to 30,000 sqm in size.

Complementing this, an internationally acclaimed five-star hotel, and a high-end pedestrian-friendly retail boulevard with vibrant day-and-night retail, dining, and entertainment venues, will provide exciting new ways for Perth residents to connect with the riverfront.

This latest milestone signals continued construction and expansion momentum across Perth’s premier riverfront community, which is set to attract local, national and international visitors.

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The masterplan features 110,000 sqm of public open space, which is comparable to other Perth landmarks including inner-city Langley Park and South Perth foreshore. The riverside precinct will be brought to life through a visionary landscape concept by globally renowned architectural practice Grant Associates.

With an impressive international portfolio, including Gardens by the Bay and Funan Mall in Singapore and Barangaroo South in Sydney, the firm brings expertise in creating environments that harmonise with surrounding amenity.

At 38 hectares, Burswood Point is one of the largest urban development projects ever undertaken in Australia, and one of Perth’s most transformative mixed-use developments.

Golden Sedayu Managing Director Andrew Sugiaputra said the company was working closely with SOM, Grant Associates and the Government of Western Australia to ensure Burswood Point’s design responds sensitively to its surroundings, reflecting and enhancing the character, history, and natural features of the local environment.

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“West Australians enjoy a privileged outdoor lifestyle and the Swan River is central to their enjoyment,"&nbsp;Sugiaputra said.

"We’re proud to be creating something truly spectacular and unique for the city, a place that feels alive from sunrise to sunset, a place where people can stay, shop, dine, and celebrate life on the river."

Precinct B builds on the outstanding success of Burswood Point’s first residential stage, which has been met with exceptional market demand. Somerset Residences, a two- tower luxury apartment development, and the exclusive riverfront homes collection are under construction and selling fast. As the number of Perth houses listed for sale remain at or near record lows, Burswood Point will deliver 4,500 new homes over the next 10 years.

“Golden Sedayu is dedicated to delivering on our promises,"&nbsp;Sugiaputra added.

"Our clients can buy with confidence, knowing that the price is fixed throughout construction. In an industry that has faced challenging market conditions, we’re proud to provide our clients complete peace of mind and confidence in the value of their investment."

&nbsp;

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Golden Sedayu reveals next 15 buildings in Perth's $4 billion Burswood Point precinct

Rising at the base of The Remarkables,&nbsp;diversified New Zealand developer&nbsp;<a href="https://www.apartments.com.au/developers/safari-group">Safari Group</a>'s Mountain Oak Apartments presents a foothold in Frankton, one of Queenstown’s most dynamic and fast-growing locales.&nbsp;

Surrounded by soaring alpine scenery and year-round tourism drawcards, Mountain Oak Apartments is a masterplanned precinct that perfectly balances accessibility with lifestyle amenity.

<img alt="Safari Group offers low-touch investment proposition in Queenstown’s popular ski fields district" 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://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_auto/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Ext_Cam15_Sunny.jpg?VersionId=SJAROUM_1s.Tr5ciMk4EEj5oAt_Vewmv" />

Frankton has emerged as a strategic growth zone just seven kilometres from Queenstown’s CBD, popular among both residents and investors for its proximity to the airport, the region’s two premier ski fields, Coronet Peak and Cardrona Alpine Resort, and an expanding network of shops, services, and recreation options. The apartments enjoy immediate access to the popular Market Street dining hub, as well as Five Mile Shopping Centre and the seasonal Remarkables Market, where locals gather for fresh produce and artisan goods.

The location also places residents near the gateway to South Island adventures. Scenic trails, golf courses, and Lake Wakatipu’s edge are within easy reach, while the historic village of Arrowtown, renowned for its preserved gold rush-era charm and walking routes, is a short drive away. Local transport connectivity is supported by the nearby airport and arterial roads, ideal for frequent travellers and short-term guests alike.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" 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/313_Living_WEB.jpg?VersionId=3LglY20Jp_MAzQYdvwODRWvtjL.cZcqI" />

Tourism-driven demand underpins strong investment fundamentals in Queenstown, with a noted shortage of short- and long-term accommodation stock. Mountain Oak’s 365-day visitor accommodation consent directly addresses this need, offering a rare opportunity to serve Queenstown’s dual population of holidaymakers and hospitality workers.

Construction of the 141 residences began in June 2025, with completion anticipated by mid-2027. Apartments range from one-bedroom to penthouses, with pricing from NZ$639,000. Dual-key options and low-maintenance finishes support a flexible rental model with strong gross return potential.

Staff Writer

From slopes to markets: Mountain Oak connects residents to the best of Queenstown

Deicorp is doubling down in the Hills Showground Station Precinct, the rapidly growing area surrounding the Castle Hill Metro and one of the state’s largest transit-oriented urban renewal sites.

Having launched Hills Showground Village several years ago, and now about 70 per cent through its build, Deicorp has brought another mini-masterplan to market just a few streets away.

The developer has now released the first of 873 residences in <a href="https://www.apartments.com.au/new-apartments/showground-pavilions-castle-hill-3-andalusian-way-castle-hill-nsw-2154">Showground Pavilions</a>, five new buildings located just 500 metres from the Metro, which connects Castle Hill residents to Martin Place in around 37 minutes.

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The mix includes one, two, and three-bedroom apartments, as well as a limited release of garden terrace homes with studies.

&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/turner-studio">Turner Studio</a> and <a href="https://www.apartments.com.au/architects/group-gsa">GroupGSA</a>, the residences are configured around a network of landscaped courtyards and podium-level gardens, with additional rooftop terraces offering views across the district.&nbsp;Communal amenities include a 3,500 sqm public park, playgrounds, shaded seating areas and walking and cycling paths.

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Interiors feature flexible layouts with oversized living areas, deep balconies, SMEG kitchen appliances and floor-to-ceiling glass to maximise light and airflow.&nbsp;

Many apartments include a study space, while select residences offer private outdoor areas. A total of 44 apartments have been designated as affordable housing for key workers, such as nurses, teachers and police officers.

&nbsp;

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On top of its strong connectivity to the city, Deicorp has delivered significant new amenity to the area. The developer recently opened the 9,500sqm, four-level retail precinct at Hills Showground Village, which includes 26 specialty retailers and a 1,400sqm public plaza, creating a new community hub for shopping, dining, fitness, and everyday convenience. Castle Towers, one of Australia’s largest shopping centres, is also just one Metro stop away.

Between Hills Showground Village and Showground Pavilions, Deicorp is delivering more than 1,300 new homes to the rapidly growing Castle Hill precinct, representing a $2 billion investment in the suburb.

Showground Pavilions is one of several Metro-linked projects in Deicorp’s pipeline, joining developments at Tallawong Village, Zetland, Five Dock, Macquarie Park and Crows Nest.

[smartcode_project_cta:default project_id=150067]

Deicorp expands Castle Hill footprint with Showground Pavilions launch

The completion of Melrose Park Village marks a significant achievement in the evolution of one of Sydney’s largest urban renewal projects, developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a>.&nbsp;

Located in the city’s north-west, <a href="https://www.apartments.com.au/new-apartments/melrose-park-village-2a-2f-appleroth-street-nsw-2114">Melrose Park Village</a> represents the fourth completed stage in the broader $5 billion Melrose Park masterplan, which will ultimately bring over 6,000 new homes, a town centre, new schools and 52,000 sqm of green open space.

The completion of Melrose Park Village delivers 421 apartments across six buildings ranging from six to thirteen storeys, all centred around a 4,000 sqm landscaped courtyard designed as a communal “urban backyard” for residents.&nbsp;

The project is now 96 per cent sold, with 14 premium three-bedroom apartments remaining in the final building. Each offers two car spaces with prices starting from $1.259 million.

Alex Grujovski, Project Director, Apartment &amp; Mixed-Use Developments, said “Sekisui House Australia is proud to celebrate the completion of Melrose Park Village, which stands as a sustainable and connected community in the heart of Sydney’s north-west.&nbsp;

“This project represents a pivotal step in our long-term vision for <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a>, reflecting our commitment to creating communities that blend nature, technology and human connection. Since 2020, we have delivered over 1,075 apartments across four stages, each designed to enhance wellbeing, connectivity and convenience through exceptional architecture and resident-focused amenities.”

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Residents benefit from an array of lifestyle facilities including a 4,000 sqm internal park, rooftop gardens and BBQ areas, wellness amenities such as an infrared sauna, yoga studio and gymnasium, plus co-working spaces, pet wash facilities, EV charging stations and a resident shuttle bus.&nbsp;

Sustainability remains at the core of the precinct with rooftop solar, smart energy meters, air and water filtration systems and groundwater reuse technology supporting efficient resource use.

Melrose Park Village was designed by <a href="https://www.apartments.com.au/architects/ajc-architects">AJC Architects</a>, who have led the design of the broader Melrose Park masterplan since inception, developing architectural principles that continue to guide the precinct’s evolution.

Michael Heenan, Design Lead at AJC Architects said the design is completely generated by AJC’s Urban Backyard concept.

"At the heart of Melrose Park Village is a generous green courtyard, a shared backyard for all residents. We designed it at the scale of a local park, a place for families to live, play and grow, capturing the spirit of the Australian backyard.”

The courtyard features nature play areas, a climbing wall and open lawns for social and recreational use. Heenan added that the team’s approach to smart city design, carbon capture and sustainability guided every aspect of the project.&nbsp;

“Stage 4 reflects our belief that density can improve liveability. By integrating architecture, landscape and open space, we have created a model for sustainable urban living that feels contemporary and distinctly Australian.”

&nbsp;

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&nbsp;

Melrose Park Village was delivered in partnership with <a href="https://www.apartments.com.au/builders/parkview">Parkview Constructions</a>, a trusted builder with whom Sekisui House Australia has delivered thousands of apartments across Sydney over the past 15 years.&nbsp;

Upon completion, Melrose Park will deliver more than 6,000 dwellings, 52,000 sqm of open green space featuring over 1,400 mature trees, new transport connections, a town centre set to open in 2026 and Melrose Park High School which is currently under construction and due to open in Term 1 2027.&nbsp;

This milestone marks another major step towards realising Sekisui House Australia’s vision to transform a former industrial site into a future-ready neighbourhood for over 12,000 residents.

[smartcode_project_cta:default project_id=150065]

Completion of Melrose Park Village marks a major step forward in $5 billion masterplan

Rba Insights

RBA Governor Statement

At its meeting today, the Board decided to:

maintain the cash rate target at 10&nbsp;basis points and the interest rate on Exchange Settlement balances of zero per&nbsp;cent

maintain the target of 10&nbsp;basis points for the April 2024 Australian Government bond

purchase government securities at the rate of $4&nbsp;billion a week and to continue the purchases at this rate until at least mid February 2022.

Prior to the Delta outbreak the Australian economy had considerable momentum. GDP increased by 0.7&nbsp;per&nbsp;cent in the June quarter and by nearly 10&nbsp;per&nbsp;cent over the year. Business investment was picking up and the labour market had strengthened. The unemployment rate had fallen below 5&nbsp;per&nbsp;cent and job vacancies were at a high level.

The recovery in the Australian economy has, however, been interrupted by the Delta outbreak and the associated restrictions on activity. GDP is expected to decline materially in the September quarter and the unemployment rate will move higher over coming months. While the outbreak is affecting most parts of the economy, the impact is uneven, with some areas facing very difficult conditions while others are continuing to grow strongly.

This setback to the economic expansion is expected to be only temporary. The Delta outbreak is expected to delay, but not derail, the recovery. As vaccination rates increase further and restrictions are eased, the economy should bounce back. There is, however, uncertainty about the timing and pace of this bounce-back and it is likely to be slower than that earlier in the year. Much will depend on the health situation and the easing of restrictions on activity. In our central scenario, the economy will be growing again in the December quarter and is expected to be back around its pre-Delta path in the second half of next year.

Notwithstanding the strong economic and labour market outcomes pre-Delta, wage and price pressures remain subdued. Over the year to the June quarter, the Wage Price Index increased by just 1.7&nbsp;per&nbsp;cent.

Housing prices are continuing to rise, although turnover in some markets has declined following the virus outbreak. Housing credit growth has picked up due to stronger demand for credit by both owner-occupiers and investors. Given the environment of rising housing prices and low interest rates, the Bank is monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.

Very accommodative financial conditions will continue to support the recovery of the Australian economy. Borrowing rates are at record lows, sovereign bond yields are at very low levels and the exchange rate has depreciated over recent months. The fiscal responses by the Australian Government and the state and territory governments are also providing welcome assistance in supporting household and business balance sheets.

The Board&#39;s decision to extend the bond purchases at $4&nbsp;billion a week until at least February 2022 reflects the delay in the economic recovery and the increased uncertainty associated with the Delta outbreak. The Board will continue to review the bond purchase program in light of economic conditions and the health situation, and their implications for the expected progress towards full employment and the inflation target. These bond purchases, together with the low level of the cash rate, the yield target and the funding that has been provided under the Term Funding Facility, are providing substantial and ongoing support to the Australian economy.

The Board is committed to maintaining highly supportive monetary conditions to achieve a return to full employment in Australia and inflation consistent with the target. It will not increase the cash rate until actual inflation is sustainably within the 2&nbsp;to 3&nbsp;per&nbsp;cent target range. The central scenario for the economy is that this condition will not be met before 2024. Meeting this condition will require the labour market to be tight enough to generate wages growth that is materially higher than it is currently.

RBA holds rates, turnover declines following the virus outbreak: RBA Governor Philip Lowe's September 2021 meeting statement

The RBA has held interest rates at a record low 0.1 per cent at its September meeting.

RBA Governor Philip Lowe&#39;s said that housing prices are continuing to rise, although turnover in some markets has declined following the virus outbreak.

&quot;Housing credit growth has picked up due to stronger demand for credit by both owner-occupiers and investors, Lowe noted.

&quot;Given the environment of rising housing prices and low interest rates, the Bank is monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.&quot;

In Finder.com.au&#39;s monthly RBA Survey, AMP Capital chief economist Shane Oliver said the lockdown and its hit to the economy&nbsp;has further delayed the time when the effective RBA conditions &ndash; full employment and 3% or more wages growth to sustain 2-3% inflation &ndash; will be met to justify a rate hike.

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Commentator Saul Eslake said he takes the RBA at its word&nbsp;when it says it won&#39;t begin tightening monetary policy until the labour market is sufficiently tight to generate wage inflation that&#39;s sufficiently strong to push &#39;underlying&#39; consumer price inflation sustainably into the 2-3% target range.

&quot;While I think that may well be sooner than the RBA&#39;s &lsquo;central case&rsquo; of 2024, I don&#39;t think it will be any earlier than mid-2023,&quot; Eslake says.

Dr Andrew Wilson from My Housing Market says that no change in fundamental economic weakness confirmed again with low wages growth despite robust labour market.

&quot;As usual &ndash; absolutely no plausible case on current data for higher rates over the foreseeable future &ndash; and then there is Covid.&quot;

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New research from Finder reveals that over half of&nbsp;homeowners across the country&nbsp;are concerned about interest rates increasing in the near future.

Around15% fear they may not be able to make their repayments once rates creep up.

Finder.com.au&#39;s head of consumer research Graham Cooke says some homeowners may have purchased beyond their means in the midst of the housing market frenzy.

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&ldquo;The past 12 months have seen property prices explode as record numbers of Australians have fled into the housing market,&quot; Cooke says.

&ldquo;Low interest rates have encouraged many buyers to purchase earlier than they otherwise might have for fear of missing out.

&ldquo;But not all of them will have budgeted for their monthly repayments to go up if or before the cash rate increases,&rdquo; Cooke said.

Finder analysis reveals the average monthly mortgage payments in Sydney are worth 76% of the average worker&rsquo;s after-tax earnings &ndash; the highest in the country. Melbourne (57%) is not far behind, followed by Canberra (49%) and Hobart (49%). Perth is at the bottom of the list, with the average mortgage costing a more reasonable 35% of average earnings.

RBA Governor Philip Lowe's said that housing prices are continuing to rise, although turnover in some markets has declined following the virus outbreak

RBA leave cash rate on hold at September meeting

Investor lending went up in May, according to the latest monthly data from the Australian Prudential Regulation Authority, but the growth rate was down on the prior wo months.

Strong growth in owner-occupied lending continued with a jump of 0.9 per cent.

Investor lending increased by 0.1 per cent (or $900 million) in May, down on April&#39;s growth rate of 0.3 per cent ($2.1 billion) and March, when it increased by 0.2 per cent ($1.6 billion).

<img alt="" height="519" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/rba_housing_charts.jpg" width="1200" />

Westpac had the largest rise in the owner-occupied portfolio to $236.9 billion in May but its investor loan portfolio dipped to $177 billion.

The CBA was the next biggest lender to investors with a $161 billion loan book, the the NAB at $100 billion and ANZ at $87 billion. The largest lender outside the big four was Macquarie at $27 billion and Bendigo &amp; Adelaide Band at $15 billion.

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APRA said &quot;the recent sustained growth in home lending continues to reflect robust borrower demand&quot; underpinned by record-low interest rates, government measures supporting first home buyers (such as the First Home Loan Deposit Scheme), and new home building, as well as an optimistic employment outlook.

APRA figures for May show a slowing in investor borrowing

jchancellor

May sees reduced growth in property investor lending: APRA

The RBA have held interest rates at a record low 0.1 per cent at the June meeting.

RBA Governor Philip Lowe noted in his meeting statement the increased borrowing by investors in the housing market.

&quot;Housing markets have strengthened further, with prices rising in all major markets. Housing credit growth has picked up, with strong demand from owner-occupiers, especially first-home buyers,&quot; Dr Lowe said.

&quot;There has also been increased borrowing by investors.

&quot;Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.

Finder&#39;s RBA Cash Rate Survey found that over three quarters of experts surveyed believe the cash rate won&#39;t rise until Q4 2022 or later.

Around 60 per cent of experts expect the cash rate to increase in 2023 or later.&nbsp; Just under 10 per cent believe the cash rate could increase before the end of 2021.

AMP Capital chief economist Shane Oliver said that while the economic recovery is faster than expected, the RBA&rsquo;s conditions for a rate hike are still far from being met.

&quot;The jobs market is still a long way from full employment, wages growth at 1.5% is way below the 3% plus pace necessary to sustain two to three per cent&nbsp;inflation and in any case inflation is still well below its target zone. So a rate hike remains some time off.&quot;

Despite market sentiment, and the RBA&#39;s steadfast view rates won&#39;t move until 2024, banks across Australia have been hiking their four-year fixed home loan rates.

According to Ratecity, at the start of the year&nbsp;were 32 four-year fixed rates under two&nbsp;per cent, including from three of the big four banks. Following BankVic&#39;s recent hike, there now isn&#39;t a single lender offering under two per cent for a four year fixed.

RateCity.com.au research director, Sally Tindall, said the pack was tightening as some lenders took some record low rates off the table, while others trimmed rates to become more competitive.

&ldquo;A number of record low rates have been relegated to the history books over the last two months, as lenders took some of the lowest rates off the table,&rdquo; Tindall&nbsp;said.

&ldquo;There are now just two rates that are still at record lows &ndash; Reduce Home Loan&rsquo;s variable rate at 1.77 per cent and BCU&rsquo;s 1-year fixed rate at 1.67 per cent. All the other lowest rates have been hiked.

&ldquo;We expect more fixed rates will rise after the RBA&rsquo;s term funding facility wraps up at the end of this month and we edge closer to the next cash rate hike.&quot;

Finder's RBA Cash Rate Survey found that over three quarters of experts surveyed believe the cash rate won't rise until Q4 2022 or later

RBA holds rates at June meeting

RBA Governor Philip Lowe&#39;s meeting statement

At its meeting today, the Board decided to maintain the current policy settings, including the targets of 10&nbsp;basis points for the cash rate and the yield on the 3-year Australian Government bond, as well as the parameters of the Term Funding Facility and the government bond purchase program.

The global economy is continuing to recover from the pandemic and the outlook is for strong growth this year and next. The recovery remains uneven, though, and some countries are yet to contain the virus. Global trade in goods has picked up strongly and commodity prices are mostly higher than at the start of the year. However, inflation remains low and below central bank targets.

Sovereign bond yields have been steady recently after increasing earlier in the year due to the positive news on vaccines and the additional fiscal stimulus in the United States. Inflation expectations have lifted from near record lows to be closer to central banks&#39; targets. The 3-year government bond yield in Australia is at the Board&#39;s target of 10&nbsp;basis points and lending rates for most borrowers are at record lows. The Australian dollar remains in the upper end of the range of recent years.

The economic recovery in Australia has been stronger than expected and is forecast to continue. This recovery is especially evident in the strong growth in employment, with the unemployment rate falling further to 5.6&nbsp;per&nbsp;cent in March and the number of people with a job now exceeding the pre-pandemic level.

The Bank&#39;s central scenario for GDP growth has been revised up further, with growth of 4&frac34;&nbsp;per&nbsp;cent expected over 2021 and 3&frac12;&nbsp;per&nbsp;cent over 2022. A pick-up in business investment is expected and household spending will be supported by the strengthening in balance sheets over the past year. The unemployment rate is expected to continue to decline, to be around 5&nbsp;per&nbsp;cent at the end of this year and around 4&frac12;&nbsp;per&nbsp;cent at the end of 2022.

Despite the strong recovery in economic activity, the recent CPI data confirmed that inflation pressures remain subdued in most parts of the Australian economy. A pick-up in inflation and wages growth is expected, but it is likely to be only gradual and modest. In the central scenario, inflation in underlying terms is expected to be 1&frac12;&nbsp;per&nbsp;cent in 2021 and 2&nbsp;per&nbsp;cent in mid&nbsp;2023. In the short term, CPI inflation is expected to rise temporarily to be above 3&nbsp;per&nbsp;cent in the June quarter because of the reversal of some&nbsp;COVID-19-related price reductions.

Housing markets have strengthened further, with prices rising in all major markets. Housing credit growth has picked up, with strong demand from owner-occupiers, especially first-home buyers. Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.

At its July meeting, the Board will consider whether to retain the April 2024 bond as the target bond for the 3-year yield target or to shift to the next maturity, the November 2024 bond. The Board is not considering a change to the target of 10&nbsp;basis points. At the July meeting, the Board will also consider future bond purchases following the completion of the second $100&nbsp;billion of purchases under the government bond purchase program in September. The Board is prepared to undertake further bond purchases to assist with progress towards the goals of full employment and inflation. The Board places a high priority on a return to full employment.

The date for final drawings under the Term Funding Facility is 30&nbsp;June 2021. Given that financial markets in Australia are operating well, the Board is not considering a further extension of this facility. Authorised deposit-taking institutions have drawn $100&nbsp;billion so far and a further $100&nbsp;billion is currently available. Given the facility provides funding for 3&nbsp;years, it will continue to support low funding costs in Australia until mid&nbsp;2024.

The Board is committed to maintaining highly supportive monetary conditions to support a return to full employment in Australia and inflation consistent with the target. It will not increase the cash rate until actual inflation is sustainably within the 2&nbsp;to 3&nbsp;per&nbsp;cent target range. For this to occur, the labour market will need to be tight enough to generate wages growth that is materially higher than it is currently. This is unlikely to be until 2024 at the earliest.

The RBA kept the official cash rate at record lows at its May meeting

Housing markets strengthen further in all major markets: RBA Governor Philip Lowe's May 2021 meeting statement

The RBA maintained its current policy settings at its May meeting, keeping the official cash rate at a record low 0.1 per cent.

RBA governor Philip Lowe said housing markets have strengthened further, with prices rising in all major markets.

&quot;Housing credit growth has picked up, with strong demand from owner-occupiers, especially first-home buyers,&quot; Mr Lowe said.

&quot;Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.&quot;

The RBA stood by their view that rates won&#39;t likely change until 2024. Around&nbsp;65 per cent of experts surveyed in Finder&#39;s monthly RBA Cash Rate Survey believe there won&#39;t be any rate change until 2023.

AMP Capital chief economist Shane Oliver is one who believes a rate change will come before 2024.

&quot;While&nbsp;the economy is recovering faster than expected, the RBA is still a long way away from seeing its stated requirements for a rate hike &ndash; being a tight jobs market, wages growth well above 3% and actual inflation sustainably within the 2-3% target range,&quot; Oliver said.

&quot;A rate hike is still a fair way off although I think it will come before the RBA&rsquo;s expectation for &lsquo;2024 at the earliest&rsquo;.&rdquo;

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The clear&nbsp;message from the RBA however&nbsp;hasn&#39;t stopped banks changing their fixed rates, with Westpac, including their subsidiary banks including St George, Bank of Melbourne and BankSA, lifting their four-year fixed from 1.89 per cent to 2.19 per cent. They also raised their five-year fixed to 2.49 per cent.

The four-year rise copied the move by CBA in March, however CBA reduced its one and two-year fixed rates at the same time.

UHomeLoan also raised their three-year fixed by 10 basis points to 1.85 per cent.

&ldquo;This sudden wave of lenders increasing longer-term rates and decreasing shorter-term rates reveals a strategy to lock their customers in for shorter time periods,&quot; Graham Cooke, insights manager at Finder said.

&ldquo;This can be seen as a bet on variable rates increasing sooner than expected. It also reveals that the tide could be turning on our historically low fixed home loan rate environment.&quot;

AMP Capital chief economist Shane Oliver is one who believes a rate change will come before 2024.

RBA hold rates at May meeting

Australia&#39;s inflation, a key metric in the RBA&#39;s future interest rate calls, rose 0.6 per cent over the March quarter, according to data released by the ABS.

The consumer price index (CPI)&nbsp;came in materially lower than what was forecasted across markets and broadly in line with the RBA&#39;s below market expectation.

Westpac was forecasting a one per cent lift in the CPI, with AMP Capital forecasting a 0.9 per cent rise.

The RBA&nbsp;say they will not increase the cash rate until actual inflation is sustainably within the two to three per cent range.

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For this to occur, wages growth will have to be materially higher than it is currently, which&nbsp;will require significant gains in employment and a return to a tight labour market, the RBA noted at its April board meeting.

The latest results will unlikely change the RBA&#39;s thinking that rates won&#39;t move until 2024 at the earliest.

CPI was 1.1 per cent up annually, compared to the forecasted 1.4 per cent.

New dwelling prices declined 0.1 per cent over the quarter, namely due to the impact of the Federal Government&#39;s HomeBuilder grant and similar grants by Western Australian and Tasmania state governments.

&quot;Without the offset from these grants, the price of new dwelling would have risen, reflecting increases in materials and labour prices in response to strong demand&quot;, head of prices statistics at the&nbsp;ABS&nbsp;Michelle&nbsp;Marquardt said.

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The consumer price index (CPI) came in materially lower than what was forecasted across markets



RBA unlikely to advance interest rate moves after lower than expected inflation figures

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As expected the Board of the Reserve Bank maintained its current policy settings, including the targets of 10 basis points for the cash rate and the yield on the 3 year Australian Government bond, as well as the parameters of the Term Funding Facility and the government bond purchase program.

Since the last Board meeting on March 2 the most important economic developments have been the announcement of the surprise fall in the unemployment rate from 6.4% in January to 5.8% in February and reports of extraordinary strength in the national housing market.

The unemployment report has prompted only a minor change in the Governor’s rhetoric from “the economy is still operating with considerable spare capacity and the unemployment rate remains higher than it has been for some years” (March) to “the economy is operating with considerable spare capacity and unemployment is still too high.” (April).

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The key sentiments from March are repeated, “it will take some time to reduce this spare capacity and for the labour market to be tight enough to generate wage increases that are consistent with achieving the inflation target” and “wage and price pressures are subdued and are expected to remain so for some years.”

Rising house prices are recognised, “prices rising in most markets.” But the same approach we saw in March is adopted where lending standards are emphasised, “the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.”

Importantly the Governor points out that “investor credit growth remains subdued.”

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It is interesting that he did not comment, at this stage, on the recent trend for new lending for housing. In February new lending for investors lifted by 4.5% in the month compared to -0.8% for “upgraders” and -4% for First Home Buyers.

In fact the six month growth rate for new investor finance approvals (31%) is now above the upgraders’ rate (24%) and First Home Buyers (30%). No doubt the Board will be watching these trends very closely.

The commitment to the 3 year bond rate target at 0.1% was confirmed and it was noted that “The Board remains committed to the 3 year government bond yield target of 10 basis points” while noting that “Later in the year it will consider whether to retain the April 2024 bond as the target bond or to shift to the next maturity.” That would be the November 2024 bond – a likely decision which would be supported by the consistent observation that “the Board does not expect these conditions (necessary to increase the cash rate) to be met until 2024 at the earliest.”

Insisting that it will be 2024 “at the earliest” is not consistent with restricting the target bond to an April 2024 maturity.

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As with March the Governor remains supportive of the bond purchase program, “the Bank is prepared to undertake further bond purchases if doing so would assist with progress towards the goals of full employment and inflation.” Note that in the March Statement the Governor indicated his preparedness to extend the policy “if necessary” – the April sentiment seems even more supportive of the bond buying approach.

Since the March Board meeting the AUD has fallen by around US 1.5c but there is no indication of “job done” with respect to the bond buying program which is directly aimed at lowering the AUD (recall that Assistant Governor, Financial Markets, Chris Kent recently estimated that the QE program had lowered the AUD by up to 5%).

Conclusion

Westpac recently confirmed its views that the Bank will extend the new $100 billion bond purchasing program (which is set to begin next week) with a further $100 billion when the new program concludes in the week ending August 27.

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However, we expect that the new program which we expect to begin in the following week will be at a slightly slower pace ($4 billion in purchases rather than $5 billion) so that it can extend into early March. Maintaining the $5 billion pace for the next program would see it concluding in late January requiring the Bank to make an announcement about any future program at the December Board meeting.

We expect that the Board will decide to taper the following program to $50 billion but such a decision will be better made at the February 2022 Board meeting rather than in December when much more information, including the intentions of the Federal Reserve, might be available.

Consistent with the tapering decision we also expect that, having extended the Yield Curve Control policy to target the November 2024 bond, the Board will announce that it is not extending Yield Curve Control beyond the November bond, making the February 2022 Board meeting an important milestone in the Bank’s long road to normalising policy.

Bill Evans is the chief economist at Westpac.
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The Governor’s Statement following the April Board meeting is as expected

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Rising house prices recognised in April RBA minutes: Westpac's Bill Evans

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The RBA have stood firm on record low interest rates at the April 2021 cash rate meeting, nothing that house prices are continuing to soar across across the nation.

The board, with newly appointed board members Carolyn Hewson and Alison Watkins, noted that housing markets have strengthened further, with prices rising in most markets.

"Housing credit growth to owner-occupiers has picked up, with strong demand from first-home buyers," RBA Governor Philip Lowe's meeting statement read.

The statement concluded with Lowe stating the board does not see a cash rate hike until 2024 at the earliest.

There are a few economists who believe there will be a cash rate hike by the end of the calendar year.

Finder's RBA cash rate survey saw six out of its 39 experts and economists it surveys every RBA month suggest there will be a rate hike, with Dale Gillham, the chief analyst at Wealth Within, expecting a rise as early as July.

Tony Makin from Griffith University, Nicholas Gruen at Lateral Economics, Noel Whittaker, QUT, Jakob B. Madsen, University of Western Australia and Clement Tisdell, UQ-School of Economics, all predict a cash rate rise in Q4 2021.

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Griffith University's professor of economics Tony Makin says that despite what the RBA is saying, a cash rate rise will be inevitable should inflationary pressures suddenly build here and overseas.

"Massive government bond issues worldwide to cover large ongoing budget deficits will also continue to exert upward pressure on bond yields.

"Although asset price inflation is not officially targeted, continued escalation of housing and share prices also suggests tighter monetary policy could be warranted sooner than expected."

Harley Dale, chief economist at CreditorWatch, says the decision comes as no surprise with the RBA injecting substantial liquidity into Australia’s financial system.

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"As a result, Australia’s economy appears to be firmly in recovery mode, but we tend to gauge the situation based on aggregates and averages, which is misleading," Dale says.

“There is talk of re-emerging inflationary pressures as the economy regrows itself. That would be a good thing for the Australian economy, but as long as we stay below the aggregate the economic recovery remains fractured. 

“There are still significant parts of the economy being left behind despite overall improving conditions. If we can sustain an improvement in unemployment rates and the broader labour market, we will be well on our way to a full-blown recovery. We’re not there yet though and monthly statements from the RBA will likely reflect that fact in coming months.”
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There are a few economists who believe there will be a cash rate hike by the end of the calendar year

No cash rate rise to 2024: RBA holds interest rate at record low 0.1 per cent at April 2021 meeting

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Expert Observer

At its meeting today, the Board decided to maintain the current policy settings, including the targets of 10 basis points for the cash rate and the yield on the 3-year Australian Government bond, as well as the parameters of the Term Funding Facility and the government bond purchase program.

The rollout of vaccines is supporting the recovery of the global economy, although the recovery is uneven. While there are still considerable uncertainties regarding the outlook, the central case has improved. Global trade has picked up and commodity prices are mostly higher than at the start of the year. Inflation remains low and below central bank targets.

Sovereign bond yields have increased over recent months due to the positive news on vaccines and the additional fiscal stimulus in the United States. Inflation expectations have also lifted from near record lows to be now closer to central banks' targets. The 3-year government bond yield in Australia is at the Board's target of 10 basis points and lending rates for most borrowers are at record lows. The Australian dollar remains in the upper end of the range of recent years.

The economic recovery in Australia is well under way and is stronger than had been expected. The unemployment rate fell to 5.8 per cent in February and the number of people with a job has returned to the pre-pandemic level. GDP increased by a strong 3.1 per cent in the December quarter, boosted by a further lift in household consumption as the health situation improved. The recovery is expected to continue, with above-trend growth this year and next. Household and business balance sheets are in good shape and should continue to support spending.

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Nevertheless, wage and price pressures are subdued and are expected to remain so for some years. The economy is operating with considerable spare capacity and unemployment is still too high. It will take some time to reduce this spare capacity and for the labour market to be tight enough to generate wage increases that are consistent with achieving the inflation target. In the short term, CPI inflation is expected to rise temporarily because of the reversal of some COVID-19-related price reductions. Looking through this, underlying inflation is expected to remain below 2 per cent over the next few years.

Housing markets have strengthened further, with prices rising in most markets. Housing credit growth to owner-occupiers has picked up, with strong demand from first-home buyers. In contrast, investor credit growth remains subdued. Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.

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The Board remains committed to the 3-year government bond yield target of 10 basis points. Later in the year it will consider whether to retain the April 2024 bond as the target bond or to shift to the next maturity. The initial $100 billion government bond purchase program is almost complete and the second $100 billion program will commence next week. Beyond this, the Bank is prepared to undertake further bond purchases if doing so would assist with progress towards the goals of full employment and inflation. Authorised deposit-taking institutions have drawn $95 billion under the Term Funding Facility and have access to a further $95 billion. Since the start of 2020, the RBA's balance sheet has increased by around $215 billion.

These various monetary measures are continuing to help the economy by keeping financing costs very low, contributing to a lower exchange rate than otherwise, and supporting the supply of credit and household and business balance sheets. Together, monetary and fiscal policy are contributing to the recovery in aggregate demand and the pick-up in employment.

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The Board is committed to maintaining highly supportive monetary conditions until its goals are achieved. The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest.
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