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

Joel Robinson

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

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

WM Residences fills gap in Mordialloc townhouse market

&nbsp;

Developer GURNER™ Group has revealed $1.65 billion in residential sales nationally across the 12 months to December 2025, driven largely by the continued momentum of its Docklands wellness-focused precinct, Elysium Fields.

The sales result was generated across seven projects in Victoria and New South Wales, headlined by Elysium Fields, GURNER™’s $2.75 billion mixed-use precinct planned for Harbour Esplanade in Docklands.

The project has recorded more than $500 million in sales across the first three towers, equating to around 580 apartments sold.

The first tower, Helios, has now sold out of its 240 private residences, with GURNER™ preparing to release a premium penthouse collection comprising 15 three-bedroom penthouses in coming weeks.

[smartcode_project:default project_id=144441 project_image_fid=370975]

Elysium Fields is being developed on the long-held 20,000 sqm Docklands site at 208-226 Harbour Esplanade, which had remained undeveloped for more than two decades prior to GURNER™ taking over the project around four years ago.

Construction has now commenced across four towers ranging between 18 and 30 storeys, with Hamilton Marino and Maxcon appointed as builders.

Once complete, the precinct is expected to comprise around 1,100 residences, alongside retail, hospitality and public realm uses integrated throughout the site.

[smartcode_project:default project_id=144441 project_image_fid=370981]

Designed by Fraser &amp; Partners in collaboration with GURNER™ Design House, the project has been positioned around the developer’s broader focus on wellness-led residential living.

“We don’t sell apartments. We create a true luxury lifestyle that simply doesn’t exist elsewhere in the market today,” Founder and Executive Chairman Tim Gurner said.

“To deliver that requires an extraordinary level of detail, coordination and discipline across multiple verticals, from design and hospitality through to wellness and service.”

“We’ve always believed that living extends far beyond the physical residence. It’s about how you feel the moment you arrive, how you live day-to-day, and the ecosystem that supports that.” 
[smartcode_project:default project_id=144441 project_image_fid=370977]

The project’s design places a heavy focus on landscaping, wellness amenities and biophilic design principles.

Plans include around 3,700 sqm of landscaped gardens and open space throughout the precinct, alongside a retail and dining offering spanning approximately 5,000 sqm.

The broader public realm strategy centres around what GURNER™ describes as the “Path of Life”, an urban forest and landscaped pedestrian environment intended to connect the various buildings and wellness spaces across the precinct.

The apartments themselves will incorporate a range of wellness-focused inclusions, including purified air and water systems, circadian lighting, antimicrobial surfaces, and optional in-home wellness upgrades.

[smartcode_project:default project_id=144441 project_image_fid=370980]

Gurner said the company’s experience through its Saint Haven wellness clubs had directly informed the residential offering now being incorporated into Elysium Fields.

“We’re seeing a clear global shift toward longevity, performance and proactive health,” Gurner said.

“Our role is to deliver that in a way that feels seamless, highly private and beautifully resolved within the environments we create.”

A large component of the wellness offering is planned through the resident amenity and health facilities proposed within the precinct.

That includes plans for bathing and recovery facilities spread throughout the towers, incorporating mineral pools, saunas, steam rooms, flotation therapy, red light therapy and wellness lounges.

The developer is also seeking approvals for what it describes as a “reverse ageing medical clinic” within the precinct.

[smartcode_project:default project_id=144441 project_image_fid=370978]

According to project information released by the group, the proposed facility would include cryotherapy, IV infusion therapy, infrared and dry saunas, PEMF beds, MRIs, DEXA scans, brain scans and blood analysis services.

Within the first tower, Helios, residents will also have access to a dedicated amenity offering known as the Sky Private Club.

The upper 15 levels of the building will include private lounges, dining spaces, rooftop amenities and optional private wellness studios integrated within residences.

The Helios tower itself comprises 260 apartments ranging between 60 sqm and 300 sqm, including a collection of penthouses.

That includes a planned two-storey penthouse spanning around 600 sqm with uninterrupted bay views.

The Elysium Fields precinct is being delivered in partnership with Digital Harbour Holdings, a consortium that includes the Liberman family, which controls the development rights across the Docklands site.

[smartcode_project:default project_id=144441 project_image_fid=370979]

The sales result comes as GURNER™ continues expanding its national development pipeline beyond Victoria.

“We have a strong pipeline across Australia and are now focused on scaling into key markets including New South Wales and Queensland, while continuing to build on our Melbourne base,” Gurner said.

“We currently have more than $3 billion in the market, growing to over $5 billion by October, and expect to materially outperform last year in the 2026 calendar year.”

The result also reflects the continued strength of the upper-end apartment market in Melbourne, particularly for owner-occupier-focused product with large-scale amenity and lifestyle offerings.

[smartcode_project_cta:default project_id=144441]

Record result anchored by the Group’s “utopian” Elysium Fields precinct – defying market headwinds in Docklands.

Elysium Fields drive Gurner to $1.65 billion in apartment sales over 2025

National Australia Bank (NAB) will fund <a href="https://www.apartments.com.au/new-apartments/palmera-residences-gold-coast-18-garfield-terrace-surfers-paradise-qld-4217">Palmera</a>, a $1 billion, 52-level luxury residential tower being developed by Central Equity in one of the Gold Coast’s most tightly held coastal locations at Northcliffe.

The project, launched recently by <a href="https://www.apartments.com.au/developers/central-equity">Central Equity</a>, one of Victoria’s largest private residential developers, comes at a time when construction funding for large residential developments has become increasingly competitive as lenders tighten exposure to the sector.

Multiplex has been appointed the builder, and construction is now underway.

[smartcode_project:default project_id=108274 project_image_fid=365784]

Since its first project, Central Equity has delivered more than 85 residential developments with a combined end value exceeding $8 billion.

Palmera reflects Central Equity’s growing focus on the Gold Coast luxury apartment market and continues a relationship between Central Equity and NAB that dates back to the late 1980s, when the bank funded one of Melbourne’s earliest inner-city residential towers at a time when high-rise apartment living in the CBD was largely unproven.

“NAB’s funding of Central Equity’s $36 million CBD development in the late 1980’s to the financing of the billion-dollar tower today highlights the long-term relationship between the two organisations in delivering major residential projects” said Central Equity Founder and Chairman Eddie Kutner.

He said NAB’s early support was instrumental in helping establish the company’s development model.

“When we commenced our first residential tower in the late 1980s the concept of funding off-the-plan apartments was still largely untested in Australia,” Kutner said.

“NAB recognised the opportunity early and supported the project when others were uncertain. That relationship has now continued for more than 37 years across many developments.”

[smartcode_project:default project_id=108274 project_image_fid=365771]

Central Equity was established in 1987 when Melbourne’s CBD and Southbank precinct were still dominated by warehouses and commercial buildings. Fewer than 100 residents lived in Southbank at the time, and large-scale residential development in the inner city was not widely considered.

Recognising changing demographics and lifestyle preferences, the company began developing high-rise residential projects designed to bring permanent residents into the city centre.

Central Equity has provided accommodation for approximately 40,000 residents across Melbourne’s CBD and Southbank, while also incorporating supporting infrastructure including essential lifestyle facilities like retail spaces, childcare facilities and neighbourhood activity centres.

Central Equity has spent many years assembling the Palmera development site on the corner of Garfield Terrace and Frederick Street in Northcliffe, creating a supersite of around 3,300 sqm.

The developer said the Palmera apartment tower reflects its long-term view of the Gold Coast as a growing and increasingly diversified economy.

[smartcode_project:default project_id=108274 project_image_fid=365768]

Supported by infrastructure including the light rail network, major road upgrades expanded education, hospital and medical facilities and continued expansion at the Gold Coast Airport with more international and domestic flights.

Positioned in the tightly held Northcliffe precinct, the 52-level tower will deliver 347 apartments, targeting buyers seeking a high-end coastal lifestyle, from downsizers to interstate investors.

Designed by Marchese Partners with interiors by DBI, Palmera has been conceived as a next-generation residential offering, featuring a collection of oversized apartments, with premium three-bedroom residences offering sweeping northern views stretching from Surfers Paradise through to Burleigh Heads.

[smartcode_project_cta:default project_id=108274]

NAB funds $1 billion Surfers Paradise apartment development, Palmera

Two years after completing one of the newest developments in North Sydney, developer <a href="https://www.apartments.com.au/developers/aqualand-australia">Aqualand</a> is turning its attention to the rapidly evolving St Leonards apartment market.

The developer, which completed AURA by Aqualand on North Sydney's Walker Street, has lodged plans for a 5,918 sqm site at <a href="https://www.apartments.com.au/new-apartments/33-37-herbert-street-st-leonards-nsw-2065">33-37 Herbert Street, St Leonards,</a> seeking approval for a pair of residential towers rising above a shared podium opposite Royal North Shore Hospital.

The proposal forms part of the broader transformation underway across the St Leonards-Crows Nest precinct, where former industrial and commercial sites are increasingly being redeveloped into high-density mixed-use projects tied to major transport infrastructure.

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="2cc428cf-fe70-4cac-9cd5-264ad53af62c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.56%E2%80%AFAM.png?VersionId=otKSnHtbjAvAddOnovyXQMgcAwE6DMe1" />

According to the planning documents, the site sits “within the St Leonards–Crows Nest Strategic Centre, identified by the NSW Government as a key area for accommodating future jobs and housing across Sydney.”

The proposal has been designed by fjcstudio, formerly FJMT Studio, and is being progressed through the State Significant Development pathway due to its scale and affordable housing provision.

The scheme would comprise 413 apartments, including 46 affordable housing units, alongside retail and commercial uses fronting Herbert Street. The project would also include communal open space, landscaping, a swimming pool, gymnasium, children’s play areas and podium-level resident amenities.

Planning documents show the development would consist of a part-13, part-39 storey tower form positioned above a four-storey podium.

“The development comprises a unified podium that activates the street interface, and two setback towers to accommodate new housing supply while maintaining an appropriate human scale at ground level,” fjcstudio noted in its Design Report.

The northern and southern towers have been shaped to respond to the surrounding skyline while also limiting overshadowing impacts to nearby public open space, particularly Talus Reserve.

The design report said the differing tower heights were intended to “contribute to a varied skyline while responding to the surrounding built form context and solar access considerations.”

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="36da62dc-ff9e-41f2-a7e3-7be38373751c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.45%E2%80%AFAM_0.png?VersionId=Mo6Rp2r.XRLTzIfg_PEEpw8NepDH8UBs" />

The site sits directly opposite Royal North Shore Hospital and within walking distance of both St Leonards Station and the new Crows Nest Metro station.

While the site itself sits just outside the formal Crows Nest Transport Oriented Development boundary, the planning documents repeatedly reference its alignment with the broader TOD objectives reshaping the Lower North Shore.

“The site is located adjacent to St Leonards Station and in close proximity to Crows Nest Metro which is within the Crows Nest Transit Orientated Development Accelerated Precinct which has been identified by the NSW Government to support housing delivery,” the Design Verification Statement noted.

According to fjcstudio, the project has been designed to respond to the broader transition occurring across St Leonards, where increasing residential density is being concentrated around transport infrastructure and employment hubs.

“The broader precinct is undergoing significant change, with a mix of existing mid-rise buildings and newer high-density developments,” the report stated.

“Recent and approved projects indicate a consistent shift toward taller built form, typically organised as tower-and-podium typologies with more active ground levels.”

The proposal includes close to 6,000 sqm of retail and commercial space across the ground floor and podium levels, designed to create a more activated street edge along Herbert Street.

Aqualand’s plans would also introduce a landscaped podium shared between the two towers, with communal open space in the form of a podium rooftop designed to support resident interaction and improve urban greening outcomes. The scheme would also introduce pocket parks at the northern and southern ends of the site, including a landscaped area at the corner of Herbert and Ella streets designed to improve pedestrian amenity and soften the streetscape.

&nbsp;

The proposal is being progressed through the NSW Government’s Housing Delivery Authority pathway, which was introduced to accelerate housing supply across the state. The application was declared State Significant Development in April 2025 following an expression of interest process.

<img alt="Aqualand" data-entity-type="file" data-entity-uuid="faf6d97d-2671-454f-b85a-fe1c6a7be608" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%209.51.49%E2%80%AFAM.png?VersionId=diVd28OBVr5.YV.7prrOz.uAanwwwm7a" />

St Leonards has been particularly active with new developments in recent weeks. Developer SP Setia’s <a href="https://www.apartments.com.au/news/nsw/first-look-sp-setia-targets-st-leonards-skyline-with-40-storey-tod-tower">plans for a new 42-storey tower</a> recently went on exhibition through the same pathway, while <a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">Stockland’s 52-storey tower proposal</a> was also recently unveiled.

Aside from the St Leonards project, which is expected to take around nine months to move through the approvals process ahead of a potential 2027 launch, Aqualand is also preparing to launch Boronia, a new apartment project in Roseville comprising around 111 apartments on Larkin Street.

The developer also has approvals in place for the next stage of the Barangaroo precinct, which will feature new residential, retail, hospitality and community uses, alongside a new metro entry across the five-hectare site.

More than 50 new retail destinations are planned for Central Barangaroo, alongside a 270-metre-long boulevard connecting Hickson Park to Nawi Cove. Together with Harbour Park, more than 50 per cent of the precinct will comprise public open space and parkland.

First look: Aqualand joins St Leonards apartment party

Rba Insights

<html><body>
EXPERT OBSERVER
<div class="page" title="Page 1">
<div class="layoutArea">
<div class="column">
The Reserve Bank of Australia (RBA) is right to put a spotlight on risks to the economy and housing affordability from a continued slide in construction.
The RBA’s Deputy Governor Guy Debelle has today used a speech to point to a ‘sizeable downturn’ across the housing construction sector. 
The alarm bells have been ringing for some time on the continued slide in housing approvals and construction
The dual effects will be a drag on the economy that the RBA estimates could trim as much as one percent of the nation’s GDP and a worsening story on affordability. 
We now face the prospect of supply softening at a time when access to credit begins to ease, demand lifts and in select market, prices return to an upward trajectory. 
Homebuyers who witnessed one cycle of escalating price rises a few years back now must wonder if the gap between supply and demand will again leave them locked out of the housing market. 
New housing construction is crucial to the nation’s economic trajectory – providing jobs up and down the supply chain, as well as boosting wages and consumer confidence. 
We need a full-throated effort from all tiers of government to remove the impediments to housing construction. 
This includes more focus on removing the planning and regulatory barriers that stifle new projects, as well as the inefficient and inequitable taxes and charges imposed on new housing.
Connie Kirk is the National Executive Director at UDIA.
 
</div>
</div>
</div>
</body></html>

jrobinson-rf4aSBido9

RBA right to call out risks from sliding housing activity: UDIA

<html><body>
The RBA have said there is a sizeable downturn in construction underway.
"Contacts in the Bank's liaison program indicate that demand for new houses and apartments has remained around the low levels of late 2018", RBA Deputy Governor Guy Debelle's said when he <a href="/news/the-evolution-of-the-housing-market-and-its-effect-on-the-economy-rbas-guy-debelle">addressed the CFA Societies Australia Investment Conference in Sydney</a>. 
"The typical lags between the sale and construction of new dwellings imply that the decline in dwelling investment will continue for some time, despite the recent signs of stabilisation in the established housing market," Debelle noted.
Debelle admitted the RBA were surprised at the decline in construction activity, with 2020 now looking to be the low year for the residential construction sector.
"Given the large size of the pipeline, we had expected construction activity to remain at a pretty high level for most of this year, but it turned down sooner and by more than we had expected," Debelle said on Thursday morning.
"Even so, much of the downturn in construction activity is still ahead."
 <img src="https://www.rba.gov.au/speeches/2019/images/sp-dg-2019-10-17-graph02.gif" alt="Graph 2: Residential Dwelling Pipeline">
He said long lead times on higher-density construction mean the supply response is likely to be slow, and the tight conditions on lending to developers may mean it is even more protracted.
The housing construction cycle clearly turned down at the end of last year, which brought to an end a long upswing at the national level that started in 2012, Debelle stated.
Debelle did add however that the RBA can "see through the trough to the other side."
"Demand is still continuing to increase given population growth," Debelle said.
He said that the recent price turned in Melbourne and Sydney will probably bring investors back into the market.
Debelle believes investors left the market due to falling house prices, more so than the impact of tighter lending conditions.
He suggested it was possible that the 11 and 15 per cent declines in Melbourne and Sydney triggered some demand, as well as lower mortgage rates and APRA's changes to the interest rate threshold.
<h1>Housing Turnover Rate</h1>
Housing turnover decline to historically low levels earlier in the year before a slight uptick in recent months.
<img src="https://www.rba.gov.au/speeches/2019/images/sp-dg-2019-10-17-graph05.gif" alt="Graph 5: Housing Turnover Rate">
" In the past, housing prices and turnover have moved in lock step so it has been difficult to determine the impact of each channel," Debelle said.
"But with prices starting to grow again now, but turnover so far only picking up a little from its lows, we may get a better sense of which has been the bigger drag on consumption – wealth or turnover – and hence what the outlook for consumption might be now the housing price cycle has turned."
Debelle concluded his speech by saying that inflation and unemployment were a big concern.
"Unemployment is a little higher than it was at the beginning of the year, and there has not been much upward pressure on wages.
"In turn, this has contributed to the extended run of inflation outcomes below the medium-term target range.
"As a result, the Board has decided to ease monetary policy in recent months.
"We are seeking to make more assured progress towards both full employment and the inflation target."
<div class="image-graph"> To read Guy Debelle's full speech, <a href="/news/the-evolution-of-the-housing-market-and-its-effect-on-the-economy-rbas-guy-debelle">click here</a>.</div>
<div class="image-graph"> </div>
 
</body></html>

2020 to be the low year for residential construction: RBA's Guy Debelle

The evolution of the housing market and its effect on the economy: RBA's Guy Debelle

<html><body>
EXPERT OBSERVER
There are two very important aspects to the minutes of the October meeting of the Reserve Bank Board.
The first one relates to the conclusion to the minutes, “the Board would continue to monitor developments, including in the labour market, and was prepared to ease monetary policy further, if needed…”
This language is consistent with the July minutes following the cut at that meeting, “The Board would continue to monitor developments  in the labour market and adjust monetary policy if needed …”.
There was no move in August but this conclusion left the door open.
This compares with the August minutes, where the minutes concluded: “Having eased monetary policy at the previous two meetings, the Board judged it appropriate to assess developments in the global and domestic economies before considering further change to the setting of monetary policy. Members would consider a further easing of monetary policy if the accumulation of additional evidence suggested this was needed to support sustainable growth in the economy and the achievement of the inflation target over time.”
This indicated a clear message that rates would be on hold in September.
However,  consider the September minutes: “Members would assess developments in both the international and domestic economies, including labour market conditions, and would ease monetary policy further if needed…”
This clearly left the door open for a move in October which subsequently eventuated.
We were expecting the conclusion to the October minutes to look like the August conclusion, which would have indicated that the Board intended to pause in November as they gathered more information. That conclusion  was not used, and the conclusion looked like July.
The conclusion in October, “was prepared to ease”, is not as strong as the September conclusion “would ease”. It is  like the July conclusion, no strong commitment and allowing some flexibility.
However, it is surprising that the Board did not choose to close off the option of another move so soon after October.
The second important aspect of these minutes is a very detailed justification of the decision to cut in October and a general argument as to why lower rates still work in Australia. Firstly, the Board noted that it was the level of rates rather than the change that was the important determinant. Holding back rate cuts in anticipation of a negative shock was not the best policy. Instead, it is better to cut ; strengthen the economy immediately if deemed necessary so that the economy would be better placed to absorb a negative shock.
The Board also discussed whether  low interest rates might impact confidence. That was left as an open question, it still saw the transmission through the exchange rate channel working effectively and noted the positive effects of lower interest rates on aggregate household cash flows.( confidence issue is whether households decide to spend the improved cash flow.)
Finally, it noted that asset prices were part of the transmission mechanism of policy, including via encouraging home building. At this stage, it assessed that higher asset prices were unlikely to present a risk to financial stability and members saw only a limited risk of excess borrowing.
There is no doubt that this discussion can be seen as a justification of the decision that was made in October. As we have noted before, central banks will always provide robust arguments to support their decisions. However, these arguments seem to go beyond merely justifying the decision in October and laying the foundation for even lower rates.
There is no discussion at this point as to whether an effective lower bound exists for the cash rate. We do not think we should interpret this discussion as contemplating negative rates or even zero rates.
The commentary on the domestic economy further lowers the RBA’s assessment of the strength of the economy. This could be expected given the decision to cut rates.
In particular, the residential construction downturn was now expected to continue for some time, “the decline in dwelling investment for the June quarter was greater than had been expected a few months earlier”, and “the Bank’s liaison program continued to report weak pre-sales for higher density developments”. Members also noted that conditions in retailing are reported to have been very weak, and there had not been a pick- up in household spending following the tax cuts and cash rate reductions. Employment growth was likely to moderate over the subsequent few quarters.
On the positive side strong exports growth; and public demand was noted, while strong employment growth had boosted growth in labour income.
Unusually, the minutes did not confirm the current forecast that GDP growth in 2020 would be around trend. This might imply that the Bank is preparing to lower its GDP forecast for 2020 when it releases the revised forecasts on November 8.
Conclusion
We were surprised that the Board did not indicate more clearly that it was planning to take some time, given the decision in October, to assess the timing of the next cut. That indication would have been consistent with the wording used in August.
However, the language that is used is similar to July , following the cut at that meeting and, of course, there was no follow up move in August. 
The Board is clearly leaving itself the flexibility to move in November but we believe the hurdle is high and while the minutes leave us with little doubt that another cut is expected we are holding to the view we adopted in July that the next moves would be in October and February.
BILL EVANS is the Chief Economist for Westpac
</body></html>

bevans-rYk9SxEa4r

The RBA minutes make a strong case for lower rates: Bill Evans

j.ballantyne1990-6AQqhLzZaK

Bumps, Lumps and Waves in the Australian economy: Luci Ellis

<html><body>
The RBA Governor Philip Lowe speaking after the RBA cut the official cash rate to 0.75 per cent.
Good evening. On behalf of the Reserve Bank Board I would like to thank you for joining us at this community dinner. The Board held its monthly meeting here in Melbourne today. This was the first meeting that we have held in our new offices on Collins Street after last year selling our building on the corner of Collins and Exhibition Streets. So even if we are in a different location, it is really good to be back in Melbourne.
As you are probably aware, at our meeting today, the Board decided to cut the cash rate by a quarter of one per cent to 0.75 per cent.
This decision followed a detailed assessment of both global and domestic developments.
Globally, the main issue at the moment is the uncertainty generated by a series of geopolitical events, particularly the US–China disputes over trade and technology. Understandably, this uncertainty is causing many firms around the world to sit and wait before proceeding with costly investment decisions. At the same time, many businesses are having to deal with disruptions to their supply chains. The result of all this is that after a period of reasonable growth in the global economy, the risks are clearly to the downside.
Central banks are responding to these downside risks by lowering interest rates. With inflation low – and expected to remain low – they are seeking to take out some insurance against the possibility of a noticeable slowdown in economic growth.
From a longer-term perspective though, central banks have for some time been responding to fundamental shifts in the global appetite to save and invest. The underlying explanation for low interest rates globally is that the global appetite to save is high relative to the global appetite to invest.
Like many things in economics it comes down to supply and demand. When the global supply of savings is high relative to the global demand for funding to invest in new capital, the price of savings – or the global interest rate – is going to be low. There are certainly other factors at play as well, but savings and investment decisions are at the heart of the issue.
This means that the key to a return to more normal interest rates globally is addressing the factors that are leading to the low appetite to invest, relative to the appetite to save. This is mainly a task for governments and businesses, not for central banks. Whether or not this will happen, only time will tell. But as a central bank in a small open economy we have to take the world as we find it. While we might wish it were otherwise, we can't ignore these global trends and their impact on our economy. So, the Board is watching these global developments.
Domestically, the Board today discussed how the Australian economy appears to have reached a gentle turning point. The economy has been through a soft patch recently, but we are expecting a return to around trend growth over the next year. There are a number of factors that are supporting this outlook. These include the low level of interest rates, the recent tax cuts, ongoing spending on infrastructure, signs of stabilisation in some established housing markets, and a brighter outlook for the resources sector. Together, these factors provide a reasonable basis for expecting that the economy will remain on an improving trend from here.
The Board has also been paying close attention to the labour market. Over recent years, employment growth has consistently surprised on the upside, which is good news. At the same time, the strong demand for workers has been met with strong growth in the supply of available workers, with the participation rate now at a record high. Partly as a result of this flexibility on the supply side, unemployment is a little higher than it was at the beginning of the year, and there has not been much upward pressure on wages. In turn, this has contributed to the extended run of inflation outcomes below the medium-term target range.
In considering these developments today, the Board decided that it was appropriate to ease monetary policy further. We are seeking to make more assured progress towards both full employment and the inflation target. We still expect to make progress on both fronts, but that progress is slower than we would like. Today's decision will help.
In reaching that decision, the Board recognises that the impact of monetary policy on the economy has changed over time, and that there can be some undesirable side effects from low interest rates. The many people who write to me saying how low interest rates are hurting their finances serve as a constant reminder of this.
But, importantly, the Board also recognises that monetary policy still works. It works to support employment, jobs and income growth across the economy. Today's decision, together with our decisions in June and July, will assist on each of these fronts. In doing so, these decisions will promote the collective economic welfare of the Australian people, which we need to remember is the ultimate goal of monetary policy.
Even so, my earlier point about the solution to low interest rates globally is relevant here in Australia too. We will all be better off if businesses have the confidence to expand, invest, innovate and hire people. Given Australia's strong longer-term fundamentals this should not be out of our reach, but it does require constant effort. One part of this effort could be a renewed focus on structural measures to lift the nation's productivity performance.
At our meeting today, as well as considering monetary policy, the Board had its six-monthly deep dive into financial stability issues. On Friday, the Bank will be releasing the results of this in our <cite>Financial Stability Review</cite>. Ahead of that, I would highlight three issues we discussed.
The first is that internationally, there seems to be a disconnect between the uncertainty that investors feel about the economic situation and the compensation that they require for holding risk. Normally when people feel uncertain about the future, they want to be compensated for taking on risk. At the moment though, despite the uncertainty, credit spreads are low and asset prices are generally high. At our meeting today we talked about the possibility that a shock somewhere in the global system could cause a recalibration, leading to a disruptive repricing of risk.
The second issue is that the resilience of Australia's financial system has steadily improved over recent times. The core capital ratios of our banks are now well within the top quartile of banks around the world. Our banks are well placed to withstand a wide range of shocks and their position will be further strengthened as they meet requirements to increase their loss absorbing capacity further over the next few years.
Lending standards have also been strengthened, although in some areas the pendulum may have swung a bit too far. It is important that our financial institutions support small businesses in particular. Lenders should not be so scared of making a loan that goes bad that they don't provide the credit that the economy needs.
One other risk area that we are paying close attention to is cyber and technology risks. Banks' systems have become more complex and digital platforms are now key to banking. We need to make sure that these systems are safe and resilient.
The third issue is that while the Australian household sector has a high level of debt, it has also built up substantial buffers. All up, the balances in mortgage offset accounts and redraw facilities amount to 16 per cent of outstanding housing debt. This is equivalent to around 2½ years of required mortgage payments at current interest rates. It is important to recognise though that this figure masks a lot of variation across households. We estimate that around a quarter of households with a mortgage have either no buffer or a very small one.
Loan arrears remain low, although they have risen over recent years. Also, we estimate that for almost 4 per cent of borrowers their current loan balance exceeds the value of their property. Over half of these borrowers are in Western Australia where there has been a large and persistent decline in housing prices. So this is an area that bears watching.
On a completely different matter, I would like to draw your attention to the fact that we will be releasing the new $20 note next week, on 9 October. This note is printed here in Melbourne, at our printing works in Craigieburn. I have brought along a few notes tonight hot off the presses for you to have a look at.
I sometimes get asked why the Reserve Bank is replacing the existing series of banknotes, especially when more of us are moving to electronic payments. People also wonder with contactless payments now so ubiquitous, do we still need banknotes?
Given these questions, it might surprise you then to know that the demand for banknotes in Australia is still strong. The stock of banknotes on issue, relative to the size of the economy, is close to the highest it has been in 50 years. It is possible that low interest rates are part of the story here. All up, there are 14 $100 notes on issue for every Australian, 30 $50s, and 7 $20s. That makes for around $3000 worth of banknotes on issue for every Australian. I, for one, don't have anywhere near that amount.
At the RBA, we have recently undertaken some work to understand the whereabouts of all these banknotes. It is hard to know exactly, but we estimate that around a quarter are used to make legitimate day-to-day transactions within Australia.<a id="r1" href="https://www.rba.gov.au/speeches/2019/sp-gov-2019-10-01#fn1">[1]</a> It also appears that between half and three-quarters are held as a store of value in safes, under beds and at the back of cupboards, both here in Australia and elsewhere around the world. We estimate that a further 4 to 8 per cent are used in the shadow economy, either to hide transactions from the tax office or to undertake illegal transactions. Finally, it appears that between 5 and 10 per cent of banknotes are either simply lost, maybe at the beach, or destroyed, perhaps in a natural disaster. So, as best we can tell, that is where all the banknotes are.
One indicator of the decline in the use of banknotes for day-to-day transactions is the fact that the value of cash withdrawals through ATMs has fallen by a quarter over the past decade. Australians have clearly embraced the convenience of contactless payments. We are also increasingly embracing payments through Australia's fast 24/7 payment system, the New Payments Platform. If you have not already got your PayID to use the simple addressing feature of this new system, I encourage you to get one. If your bank is not offering this new fast payment service to you, I encourage you to ask them why. And if you are not happy with the answer, give some thought to switching banks.
Before finishing I would like to return to the question of why we have been issuing a new series of banknotes. The main answer is to keep ahead of the counterfeiters. We have long had one of the safest and most secure currencies in the world. The level of counterfeiting in Australia is low and declining, with around 15 counterfeits detected per million banknotes in circulation in recent times. This compares with rates above 50 for some other major currencies. But the counterfeiters don't stand still and we need to stay ahead. So we have added new high-tech security features to the new banknotes so that they remain safe, secure and reliable. For those of you who still use banknotes for your spending, it would be good to see a bit more use and spending out there.
Finally, I would like to thank you again for joining us this evening. We are looking forward to hearing directly from you about how things are going here in Victoria.
The article was originally posted on www.rba.gov.au.
To read the original article, <a href="https://www.rba.gov.au/speeches/2019/sp-gov-2019-10-01" target="_blank">click here</a>.
</body></html>

RBA Governor Philip Lowe's Reserve Bank board dinner speech

<html><body>
The RBA have cut rates for the third time this year, bringing the official cash rate down to a historic low 0.75 per cent as consumption remains the main concern along with the unemployment rate and the slow wage growth. 
The cut comes hours after CoreLogic released their September Home Value index which showed <a href="/news/sydney-and-melbourne-compete-to-lead-the-recovery-as-perth-struggles-continue-corelogic-september-update">national dwelling values rose 0.9 per cent over September</a>. 
RBA Governor Philip Lowe noted after the meeting that "there are further signs of a turnaround in established housing markets, especially in Sydney and Melbourne.
"In contrast, new dwelling activity has weakened and growth in housing credit remains low.
"Demand for credit by investors is subdued and credit conditions, especially for small and medium-sized businesses, remain tight.
"Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality."
Within 15 minutes of the announcement, the likes of Athena Home Loans and Homestar finance have passed on the full 25 basis point cut.
Reduce Home Loans passed on 20 basis points.
The lowest rate owner occupier variable home loans, according to Canstar. To enlarge, <a href="/expert-insights/finance/rba-bow-to-economic-pressures-and-cut-rates-for-third-time-in-2019">click here</a>.
<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/2019/10/1/Canstar%20variable.jpg" alt="">
Dan White, the managing director of Ray White, said today’s rate cut by the RBA is a win for anyone looking to make a move in the property market, provided it's passed on by banks and lenders to its customers.
“The optimism on the ground across the country for both buyers and sellers is palpable right now and that’s highlighted in our auction clearance rates," White says.
CoreLogic head of research Tim Lawless said the recent evidence of a strong rebound in Sydney and Melbourne housing values wasn’t enough to stave off a rate cut.
"A trend towards higher unemployment and a slowdown in jobs growth were likely the primary factors in the RBA’s decision to cut rates to a new low, as well as concerns around persistently weak household spending, subdued wages growth and low inflation," Lawless noted.
"Lower interest rates together with a subtle loosening in credit policies and improved housing sentiment has seen national housing values recover 1.7% of the 8.4% peak to trough decline in value, with a substantially larger bounce in Sydney and Melbourne. 
Lawless said the rebound in housing conditions should help to support an improvement in economic conditions as higher housing prices translate to a wealthier and more confident household sector who will hopefully be inclined to spend more.  
"Stronger housing conditions should also support the residential construction sector where approvals dropped through the housing downturn. 
"Both household spending and residential construction activity have weighed on economic growth, so a turnaround in these sectors would be a welcome turn of events. 
"Although the housing recovery is likely to add to Australia’s economic momentum, it comes amidst record levels of household debt and ongoing affordability challenges. 
Lawless suggested there is a risk that lower interest rates could fuel a further rise in household indebtedness as housing credit picks up and investors once again become more active, while higher housing prices are likely to curb participation from first home buyers despite the lower cost of debt. 
In this month’s Finder RBA Cash Rate Survey <a href="/expert-insights/finance/over-half-of-economists-surveyed-predict-cash-rate-cut-finder">45 experts and economists made their predictions</a>, with 55% (25/45) correctly predicting an easing of the rate.
They cited the recently released data on employment, retail sales and consumer sentiment as the main drivers of the cut.
Graham Cooke, insights manager at Finder, said nearly three-quarters (72%, 26/36) of experts predicted that the cash rate will reach 0.50% before it starts to increase.
“The RBA uses each cut like a defibrillator to zap the economy back to life but as the rate gets closer to zero, they are running out of options," Cooke said.
“An injection of cash [quantitative easing] and the potential of a negative cash rate may be the only option to stimulate the economy."
Cooke said that lenders are likely to pass on most, but not all of the 25 basis point rate cut if recent history is any indication.
“From across the market, we’ve seen more than 8,700 loan products reduced since June 2019.
“Some lenders have passed on the full 50 point reduction (from the June and July cuts), but most have not.
“After today’s cut, you can expect to see more lenders offering variable rate loans that start with a ‘2’, so if yours doesn’t start with at least a ‘3’ it’s time to shop around,” Cooke said.
</body></html>

RBA bow to economic pressures and cut rates for third time in 2019

Why further monetary easing may well be required: RBA governor Philip Lowe

<html><body>
SEPTEMBER RBA MINUTES
Members commenced their discussion of the global economy by noting that business conditions in the manufacturing sectors in many economies had remained subdued. They discussed the escalation of the US–China trade and technology disputes, which had intensified the downside risks to the global outlook. By contrast, conditions in more domestically focused sectors had generally continued to be resilient, supported by ongoing strength in labour markets. Employment growth had remained robust in the major advanced economies, although it had eased a little in some economies in recent months, and unemployment rates had remained low. Although wages growth had picked up, year-ended inflation had remained below target in the major advanced economies. Members noted that inflation in the United States had increased in recent months.
The main development over the previous month had been the escalation of the US–China trade and technology disputes. The United States had announced higher tariffs on most imports from China, including consumer goods that had not previously been subject to the tariff increases, to take effect over the remainder of 2019. Members noted that recent and prospective increases in tariffs could increase consumer price inflation in the United States by between ¼ and ½ percentage point over the following few years, based on a range of published estimates. In response to the US announcements, China had suspended purchases of US agricultural products and had announced plans to increase tariffs on around one-half of the value of US imports. In value terms, US exports to China had contracted by around 20 per cent over the year to June, while US imports from China had been around 3 per cent lower. Members also noted that some other east Asian economies were benefiting from the diversion of US imports away from China.
More generally, global trade volumes had fallen over the previous year, reflecting both the escalation of trade tensions and slower growth in Chinese domestic demand. Weak external demand had been reflected in slowing growth in global industrial production and below-average conditions in the global manufacturing sector. Recent indicators suggested trade-related activity would remain weak for some time.
Members noted that weak external demand and heightened geopolitical uncertainty had contributed to lower growth in business investment in many economies, including the United States, the euro area and the United Kingdom. These economies had also recorded declines in investment intentions. By contrast, in the United States the household sector had been resilient, but overall GDP growth had slowed in the June quarter. GDP growth had also slowed in most euro area countries in the June quarter; Germany had recorded a small contraction in GDP. By contrast, GDP growth in Japan had been moderate, supported by consumption brought forward ahead of a scheduled increase in the consumption tax in October, as well as ongoing growth in investment, bolstered by the need to address labour shortages.
Recent data suggested that growth in China had eased further. Most indicators of economic activity had slowed in July, including in components being supported by recent policy measures, such as infrastructure investment. The level of steel production had declined slightly. Retail sales growth had resumed its downward trend, after having received a boost from strong growth in car sales in recent months ahead of tighter emission standards coming into effect. In India, recent indicators had also pointed to output growth slowing.
Weak global trade had continued to weigh on growth in east Asia. Trade within the region and with China had contracted further in June. Growth in industrial production and survey measures of manufacturing conditions had remained weak. Political unrest had weighed on economic conditions for businesses and households in Hong Kong, while an ongoing dispute with Japan had disrupted South Korean production of electronics. However, domestic demand elsewhere in the region had held up, supported by government policies in some cases.
Iron ore prices had declined since the previous meeting, but were around 40 per cent higher than a year earlier. Market reports had attributed these declines to a number of factors, including concerns about the outlook for steel demand in China following the escalation of the disputes between the United States and China in early August, lower steel prices and an easing in supply concerns. The prices of coal and rural commodities had been somewhat lower over the prior month, while oil and base metals prices had been little changed, except where there had been disruptions to the supply of specific metals.
Domestic Economic Conditions
The main information on the domestic economy received since the previous meeting had been on the labour market as well as partial indicators of output growth in the June quarter in the lead-up to the publication of the national accounts. Quarterly GDP growth was expected to be around ½ per cent, supported by a strong recovery in resource exports from earlier supply disruptions.
The ABS capital expenditure (Capex) survey suggested that mining investment had grown in the June quarter, driven by an increase in machinery &amp; equipment investment. The Capex survey suggested there had also been an increase in machinery &amp; equipment investment by the non-mining sector in the June quarter, while non-residential construction was expected to have declined. Investment intentions for 2019/20 had been positive for the mining sector, but had been modestly lower for the non-mining sector. Members noted that the outlook for the construction sector was particularly weak.
Members recognised that, overall, Australian businesses had not appeared to have been affected by the weak trade environment to the same extent as businesses in other advanced economies. This was partly because Australia's exports are more exposed to Chinese domestic demand and less integrated in global supply chains.
Consumption growth was expected to have remained low in the June quarter. Retail sales volumes had been weak in the June quarter and the value of retail sales had fallen in July. The low- and middle-income tax offset (LMITO) was expected to boost household income, and thus support consumption growth, in coming quarters. However, the Bank's liaison with retailers suggested that this had yet to lift spending noticeably. Members noted that even if the LMITO was used to pay off debts, this would still bring forward the point at which households could increase their spending.
Established housing market conditions had steadied in recent months. Reported housing prices in Sydney and Melbourne had risen noticeably in August and auction clearance rates had increased further, although volumes had remained low. Housing market conditions had been subdued elsewhere, although there were signs of housing prices stabilising in Brisbane. Housing turnover had remained low. Consequently, spending on home furnishings and other housing-related items was not expected to contribute to consumption growth in the near term. Indicators suggested that dwelling investment had declined further in the June quarter and indicators of earlier stages of residential building activity had remained weak; building approvals had declined further in June and other measures of early-stage activity and buyer interest had remained at low levels.
Employment growth had remained strong in July, but the unemployment rate had remained at 5.2 per cent. Employment growth over preceding months had been broadly based across states and had predominantly been in full-time work. Strong employment growth had been accompanied by a further increase in the participation rate, which had recorded another all-time high. Members noted that the increase in participation had been particularly notable for New South Wales. Forward-looking indicators had continued to suggest that employment growth would moderate over the following six months. Information from liaison suggested employment intentions had remained weak in the residential construction sector but positive among services firms.
Wages growth had remained low and the upward trend in wages growth appeared to have stalled. The wage price index had increased by 2.3 per cent over the year to the June quarter. Private sector wages growth had been unchanged in the quarter, while public sector wages growth had been a little higher. Most of this increase had been the result of a one-off adjustment to equalise the wages of nurses and midwives in Victoria with those in New South Wales.
Financial Markets
Members commenced their discussion of financial markets by noting that government bond yields had declined and were at record lows in many countries, including Australia. Volatility and risk premiums in global financial markets had increased in August, following the escalation of the disputes between the United States and China and disappointing economic data releases in Germany and China. The persistent downside risks to the global economy, combined with subdued inflation, had led a number of central banks to reduce interest rates in recent months and further monetary easing was widely expected.
In the United States, market pricing implied that the federal funds rate was expected to decline by around 100 basis points over the following year. Market participants also expected the European Central Bank to provide additional monetary stimulus in the near term, including renewed asset purchases and a reduction in its policy rate further into negative territory. Central banks in a number of other advanced economies had also eased policy, or signalled that they were prepared to do so, in response to subdued inflation, moderating activity and downside risks to growth. For similar reasons, central banks in emerging markets had also been easing policy over recent months and had signalled the possibility of further easing.
Financial conditions for corporations remained accommodative globally. This reflected market participants' ongoing expectations that central banks were likely to deliver further monetary easing to sustain the global economic expansion. Corporate bond spreads had increased a little in August, but remained low. Equity prices had declined somewhat, reflecting concerns about the outlook for growth, but remained substantially higher over the year to date. In Australia, equity prices were 5 per cent below the record high reached in late July. Australian listed companies' profits had risen, driven by the resources sector. At the aggregate level, companies had increased their dividends over the preceding year, although this reflected higher dividends in the resources sector in particular.
In China, the authorities had intervened to support three small banks in preceding months, and the People's Bank of China had continued to maintain a high level of liquidity in the banking system. While funding conditions for smaller banks had tightened this year, money market rates and corporate and government bond yields in China had generally remained low and market participants were expecting further easing in monetary policy in the period ahead.
In foreign exchange markets, the Chinese renminbi had depreciated against the US dollar in August following the escalation of the US–China disputes, while the Japanese yen had appreciated over the month. The Australian dollar had been little changed at around its lowest level in some years.
In Australia, borrowing rates for both businesses and households were at historically low levels, as were banks' funding costs. Variable mortgage rates had declined broadly in line with the reductions in the cash rate in June and July. Fixed mortgage rates had also declined substantially over the preceding six months. Financial market pricing continued to imply that the cash rate was expected to be lowered by another 25 basis points by November 2019, with a further cut expected in the early part of 2020.
Growth in housing credit had been little changed over the year to July, having declined steadily through 2018. Credit to investors had declined slightly over previous months. Meanwhile, housing loan approvals to both owner-occupiers and investors had increased for the second consecutive month in July. This pick-up in loan approvals had followed a significant decline over the preceding two years and was consistent with the signs of stabilisation in the established housing market. Borrowing by large businesses had continued to grow at a relatively strong pace. In contrast, small businesses' access to finance remained difficult, and had become more difficult over the preceding year as banks had tightened their lending practices. While new sources of non-traditional finance had been growing, including equity funding from family offices and private equity funds, they remained a small share of business funding.
Members had a detailed discussion of the ways in which financial conditions abroad affect Australia. They discussed how shifts in world interest rates and global risk premiums flow through to domestic financial conditions. While Australia's floating exchange rate means that monetary policy can be set largely according to domestic considerations, members discussed the large shifts in savings/investment decisions globally, which were affecting the level of interest rates everywhere, including in Australia. Members also noted the critical role that the exchange rate had played over many years as a shock absorber for the Australian economy. One important factor here has been that Australian entities raising offshore funding are able to do so in Australian dollars, either directly or via hedging markets.
Considerations for Monetary Policy
Turning to the policy decision, members observed that the news on the international economy had confirmed that the risks to the global growth outlook were to the downside. The trade disputes between the United States and China had escalated and growth in China had continued to slow. There had been further indications that these developments were affecting trade and investment decisions in overseas economies, although businesses had continued hiring and labour market conditions had remained tight.
Against this backdrop and with ongoing low inflation, a number of central banks had reduced interest rates over recent months and further monetary easing was widely expected. Long-term government bond yields had declined and were at record lows in many countries, including Australia. Borrowing rates for both businesses and households were also at historically low levels, and the Australian dollar exchange rate was at the lowest level that it had been in recent times.
Domestically, members considered a number of developments over preceding months that had a bearing on the monetary policy decision. First, employment had continued to grow strongly and the participation rate was at a record high. However, the unemployment rate had remained steady at around 5.2 per cent over recent months. At the same time, wages growth had remained low and there were few indications that wage pressures were building. Members noted that a further gradual lift in wages growth would be a welcome development. Taken together, recent outcomes suggested that spare capacity remained in the labour market and that the Australian economy could sustain lower rates of unemployment and underemployment.
Second, there had been further signs of a turnaround in established housing markets, especially in Sydney and Melbourne, although housing turnover had remained low. Housing credit growth had remained subdued, although mortgage rates were at record low levels and there was strong competition for borrowers of high credit quality. Data on residential building approvals and information from the Bank's liaison program suggested that there was likely to be further weakness in dwelling investment in the near term; members recognised that this could sow the seeds of an upswing in the housing price cycle at some point, particularly given the lengthy stages in the construction of higher-density residential housing. Demand for credit by investors continued to be subdued and credit conditions, especially for small and medium-sized businesses, remained tight.
Finally, based on partial indicators, GDP growth in the June quarter was expected to have been around ½ per cent. The largest contributions to growth were expected to have been from exports and public demand. Private final demand, which includes consumption, business investment and dwelling investment, was expected to have been weak.
Looking forward, the outlook for output growth was being supported by the low level of interest rates, recent tax cuts, signs of stabilisation in some established housing markets and a brighter outlook for the resources sector. A key uncertainty continued to be the outlook for consumption growth, which was expected to increase over time, supported by a gradual pick-up in growth in household disposable income and improvements in conditions in the housing market. Inflation pressures remained subdued, but inflation was expected to increase gradually to be a little above 2 per cent over 2021 as output growth picked up and the labour market tightened.
Based on the information available, members judged that it was reasonable to expect that an extended period of low interest rates would be required in Australia to make sustained progress towards full employment and achieve more assured progress towards the inflation target. Members would assess developments in both the international and domestic economies, including labour market conditions, and would ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time.
The Decision
The Board decided to leave the cash rate unchanged at 1.00 per cent.
</body></html>

Low interest rates necessary to support growth: RBA September minutes 

<html><body>
The RBA decided to keep the official cash rate on hold at a record low one per cent at its September meeting.
It follows a hold last month.
The charts came out on the RBA learning that GDP growth slid to 1.4 per cent over the June quarter, the slowest in a decade.
The result was in line with economists' expectations.
Today the RBA have released their chart pack, which highlights key factors in the Australian economy.
Property Observer takes a look at four key charts which will have been strong influencers in the decision to cut the official interest rate.
HOUSE PRICES CONTINUED TO REBOUND
To enlarge, <a href="https://www.propertyobserver.com.au/images/2019/9/4/House%20Prices.jpg" target="_blank">click here</a>.
<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/2019/9/4/House%20Prices.jpg" alt="">
 
House prices continued their uptick, <a href="/expert-insights/buying/sydney-and-melbourne-house-and-apartment-prices-power-ahead-in-august-corelogic">driven by Sydney and Melbourne</a>.
In his meeting statement, RBA governor Philip Lowe noted the further signs of property turnaround, <a href="/expert-insights/finance/further-signs-of-property-turnaround-especially-in-sydney-and-melbourne-rba-september-meeting">particularly in Sydney and Melbourne</a>.
CONSUMER SENTIMENT REMAINS RELATIVELY STRONG
To enlarge, <a href="https://www.propertyobserver.com.au/images/2019/9/4/Consumer%20sentiment.jpg" target="_blank">click here</a>.
<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/2019/9/4/Consumer%20sentiment.jpg" alt="">
Westpac's Matthew Hassan noted that consumer confidence is <a href="/news/housing-sentiment-at-its-most-positive-in-over-5-years-matthew-hassan">at its highest in five years</a>.
Westpac research broke down <a href="/expert-insights/buying/a-state-by-state-housing-sentiment-rundown-matthew-hassan">where sentiment was growing</a> state by state.
LABOUR MARKET NOT HITTING TARGETS
To enlarge, <a href="https://www.propertyobserver.com.au/images/2019/9/4/LABOUR%20MARKET.jpg" target="_blank">click here</a>.
<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/2019/9/4/LABOUR%20MARKET.jpg" alt="">
The labour market is one of the key indices which the RBA are keeping their eye on.
In July the unemployment rate <a href="/expert-insights/investing/unemployment-rate-meets-forecasts-and-remains-at-5-2">remained unchanged</a> at 5.2 per cent. 
Richard Holden says our progress on wages and unemployment <a href="/expert-insights/investing/amid-talk-of-recessions-our-progress-on-wages-and-unemployment-is-almost-non-existent">is almost non-existent</a>.
BUILDING APPROVALS CONTINUE DECLINE
To enlarge, <a href="https://www.propertyobserver.com.au/images/2019/9/4/Building%20approvals.jpg" target="_blank">click here</a>.
<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/2019/9/4/Building%20approvals.jpg" alt="">
 
Building approvals across the country continue to decline, led by New South Wales.
JLL noted Sydney apartment approvals <a href="/expert-insights/buying/sydney-apartment-approvals-down-30-in-one-year-jll">were down 30 per cent</a>. 
There was a sharp 9.7 per cent drop in July across the country, taking <a href="/expert-insights/buying/australian-dwelling-approvals-lurch-lower-matthew-hassan">approvals to a six and a half year low.</a>
 
 
 
 
</body></html>

Rba Insights

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Rba Insights

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News