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

Joel Robinson

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

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

[smartcode_project:default project_id=150017 project_image_fid=374052]

The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.

Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.

[smartcode_project:default project_id=150017 project_image_fid=372547]

The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.

The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.

[smartcode_project:default project_id=150017 project_image_fid=374054]

Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.

Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.

[smartcode_project:default project_id=150017 project_image_fid=370962]

While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

[smartcode_project:default project_id=146527 project_image_fid=366550]

That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

[smartcode_project_cta:default project_id=150017]

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

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

Elevated amenity anchors daily life at Aeris, Melrose Park

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

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

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

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

Rba Rate Decision

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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.
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Low interest rates necessary to support growth: RBA September minutes 

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EXPERT OBSERVATION
Australian GDP rose by 0.5% in the June quarter and annual growth slowed to 1.4%, which was right on market forecasts but below the RBA’s forecasts for a 0.8% rise in the quarter.
GDP growth is very weak and at its lowest level since the Global Financial Crisis (see chart below) which is why there is all the talk of a recession in Australia lately and why conditions in some pockets of the economy may feel recession-like.
<a href="https://www.propertyobserver.com.au/images/2019/9/4/GDP.png" target="_blank">Click here</a> to enlarge: 
<img src="https://www.urban.com.au/images/2019/9/4/GDP.png" alt="">
Source: ABS, AMP Capital
The weakness in the Australian economy that started in mid-2018 has continued well into 2019.
The make-up of growth still remains a concern as private demand fell again in the June quarter (by 0.1%) with large increases in public spending and net exports “saving” the economy.
With consumer spending still struggling to lift noticeably, falling residential construction, moderate business investment growth, the private sector side of the economy will likely remain weak.
A softer global environment may also infiltrate further into Australia’s external sector. So the risk of an Australian recession remains and can’t be ignored.
However, this is not our base case partly because we expect more RBA interest rate cuts, possibly quantitative easing, and more fiscal stimulus which should help lift growth.
If the improvement in home prices continues it would also be positive for household wealth and provide some boost to inflation.  
The key components of the June quarter data are:
<ul>
<li>Consumer spending rose by 0.4%, contributing 0.2 percentage points to the June quarter GDP.</li>
</ul>
Consumer spending growth is still declining, with annual growth falling to 1.4%.
The household saving ratio declined to 2.3% (from 3%) after increasing in prior quarters.
While there may be some more downside to consumer spending growth due to the low wages environment, the bottoming in national home prices means that the negative wealth effect is waning.
Tax cuts to low and middle income earners should also have a positive boost to consumption over coming months, although the fall in July retail sales is concerning.
The declining household saving ratio tells us that the buffer for consumer spending is declining.
<ul>
<li>Housing investment continues to decline and detracted 0.2 percentage points from GDP growth.</li>
</ul>
New residential construction fell by 5.9% and alterations and additions were down by 1.4%.
Ownership transfer costs (a proxy for housing turnover activity) improved by 4.3%.
Building approvals continue to fall so there is still further downside to residential construction over the next year.
<ul>
<li>Underlying business investment (which takes into account asset transfers between the private and public sector) fell by 0.4% and made no contribution to growth.</li>
</ul>
Non-residential building was down by 5% and engineering construction dropped by 4.7% but is down 19.6% year on year.
Non-residential building approvals have been mixed over the past few months so there may be some more weakness to come for building activity.
The capital expenditure survey indicated that business investment growth will be positive albeit modest over the next year as mining investment is slowly improving, manufacturing investment is lifting and spending in the services industry is still trending up.
<ul>
<li>Underlying government spending (which takes into account asset transfers between the private and public sector) was up strongly by 1.4% and contributed 0.3 percentage points to growth.</li>
</ul>
Government consumption rose by 2.7% but investment fell by 2.3%. State and Federal government spending on infrastructure has been driving public spending over the past few years.
While the pipeline of projects in construction is peaking, the slow pace of project completions due to delays or other issues means that the peak in government infrastructure spending keeps on being pushed out which is a positive for GDP growth (but maybe not a positive for traffic congestion!).
<ul>
<li>Inventories collapsed and detracted 0.5 percentage points from growth which means that production did not keep up with sales.</li>
</ul>
The inventory to sales is at a record low of 0.581 and is unlikely to fall much further from here which means that inventories are likely to add to GDP in coming quarters.
<ul>
<li>Net exports boomed and contributed 0.6 percentage points to growth.</li>
</ul>
Export growth is solid which is a good sign of demand for goods and services but the collapse in imports (especially in consumption imports) is a bad sign for consumer spending.
<ul>
<li>Productivity growth is still poor with the “GDP per hour worked in the market sector” flat over the June quarter and down by 0.6% over the year.</li>
</ul>
Weakness in productivity growth reconciles the divergence between strong employment growth and weak GDP numbers. 
Implications
While the RBA kept the cash rate unchanged yesterday, despite knowing the weakness in July retail sales and anticipating a low June quarter GDP number, we still expect rate cuts in October and November taking the cash rate to 0.5% as global data remains weak, the unemployment rate increases and global central banks (the ECB and Fed) cut interest rates (and restart asset purchases in Europe) in September which may influence the RBA’s decision to do more monetary stimulus lest the Australian dollar rises.
SHANE OLIVER is Head of Investment Strategy and Chief Economist AMP Capital.
DIANA MOUSINA is an Economist at AMP Capital.  
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RBA to cut the cash rate to 0.5% by the end of the year: Shane Oliver & Diana Mousina 

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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>
 
 
 
 
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wdavis-8cCN98p7xp

The four charts that prompted the RBA to keep rates on hold in September

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EXPERT OBSERVER
As expected, the Reserve Bank Board decided to leave the cash rate unchanged at 1.0% at today’s meeting.
The all-important final paragraph is slightly changed from the previous August decision statement and the minutes of the August meeting (“The board will continue to monitor developments, including in the labour market, and ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time”).
Given that Westpac is expecting the Board to cut rates by a further 25bps at the next meeting in October, we would have liked to have seen the term “if needed” excluded from the decision statement. As discussed in our preview to today’s decision, the term “if needed” could be interpreted as requiring more time than one month to decide on the next cut. However (realistically) the Board should not lock itself into a specific strategy one month out from the next meeting. By maintaining the “if needed” qualification, it provides itself with flexibility.
General commentary in the decision statement is very similar to the August decision statement. The most important changes are to be somewhat guarded on housing markets, “further signs of a turnaround in established housing markets”, but to also point out that construction activity has weakened.
There is also less apparent confidence in the growth and unemployment forecasts. The 2½ per cent forecast for GDP growth in 2019, which was explicitly noted in August, was not mentioned, although the expected return to trend growth “over the next couple of years” is noted. In August, the Governor’s decision statement specifically referred to the unemployment rate edging back to 5% “over the following couple of years”. That forecast was also not repeated in today’s decision statement.
Other themes that are consistent with the August statement are: risks are tilted to the downside for the global economy; “further monetary easing is widely expected” for a number of central banks; “Australian dollar is at its lowest level of recent times” (USD 0.6770 in August, down to USD 0.6700 in September); main source of domestic uncertainty remains the outlook for consumption; a further gradual lift in wages growth would be a welcome development; and “inflation pressures likely to remain subdued for some time yet” (new description).
Conclusion
With less confidence around the economic forecasts and recognition about the weakening activity in the residential construction sector, this decision statement is marginally more downbeat than the statement in August.
With the emphasis consistently on the labour market in both statements, the monthly employment reports remain important. However, other factors are also key to the October decision.
Firstly, it is likely that tomorrow’s GDP report for the June quarter will show the economy had less momentum than had been expected by the RBA at the time of the August meeting (detailed forecasts imply a GDP growth rate of 0.8% was expected for the June quarter). And while the Governor backs away from the 2½ per cent growth forecast for 2019, there still appears to be a heavy dose of optimism around the general growth outlook. If Westpac’s forecast for GDP growth in the June quarter of 0.5% proves to be correct, then the RBA is likely to need to revise down its growth forecast of 2½ per cent for 2019 and reasonably review the 2¾ per cent forecast for 2020
Secondly, it is clear that the RBA values the weakening of the AUD. We expect that by the time of the October meeting, the US Federal Reserve will have further cut the federal funds rate, and, in turn, lessening the impact on the AUD of recent rate cuts by the RBA, clearly signalling the need for further action.
Thirdly, a cut in October leaves options open for a further cut in December should conditions, particularly in global markets, point to the need for even lower rates. Leaving the next move to November reduces the RBA’s flexibility, given that a cut in December would represent back-to-back moves. As measured by the Westpac-MI Consumer Sentiment index, the back-to-back moves in June and July unnecessarily unnerved households.
All these arguments, on balance, point to another cut in October being the best way for the RBA to stay ahead of the curve and provide further downward pressure on the AUD.
BILL EVANS is the Chief Economist for Westpac 
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bevans-rYk9SxEa4r

RBA slightly more downbeat, October likely the next cut: Bill Evans

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EXPERT OBSERVER
The RBA remained on hold at a record low cash rate of 1% at its September board meeting as widely expected. This followed 0.25% rate cuts in June and July.
The Bank’s post meeting statement was little changed which was a bit surprising given the further escalation of the US-China trade war over the last month and the run of soft economic data in Australia. Nevertheless the statement remained dovish:
<ul type="disc">
<li>referring to the downside risks to global growth from the trade war and associated uncertainty;</li>
<li>although it still sees growth strengthening to around trend, this is only expected to occur “gradually”;</li>
<li>noting that the outlook for consumer spending remains the main domestic uncertainty;</li>
<li>noting that wages growth remains subdued with little upwards pressure; and</li>
<li>indicating that inflation will likely be subdued for some time yet.</li>
</ul>
The final paragraph repeated Governor Lowe’s recently used forward guidance to expect an “extended period of low interest rates” and noted that the Board stands ready to ease monetary policy again if needed, indicating that the Bank retains an easing bias.
The RBA is still waiting to see what sort of boost to growth the rate cuts of June and July and the Federal Government’s tax cuts for low and middle income earners provide.  However, while these will help avoid recession we doubt that they will be enough to generate decent growth and the evidence from July is not that encouraging!
While house prices in Sydney and Melbourne may be bouncing higher, growth looks to have been far weaker than the RBA expected in the June quarter with only trade and public spending keeping the economy from going backwards, the growth outlook remains weak with the housing construction downturn gathering pace and threat from Trump’s trade war increasing, and there is no sign of any pick up in wages growth and inflation with unemployment looking more likely to drift up than down.
So while the RBA is content to wait for now, we continue to see two more rate cuts this year taking the cash rate down to 0.5%, with the next cut likely coming next month.
While the rebound in the Sydney and Melbourne property markets could present a problem for the RBA in terms of cutting rates further, the RBA will likely do what it believes is right for the “average” of Australia rather two cities’ property markets. But it may have to resort to tighter regulatory controls again if it needs to cool the Sydney and Melbourne property markets once more for financial stability reasons.
SHANE OLIVER is the Head of Investment Strategy and Chief Economist for AMP Capital
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soliver-smf6LQXgW9

RBA still set to cut to 0.5% by years end: Shane Oliver

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<div>
<div class="rss-mr-content">
At its meeting today, the Board decided to leave the cash rate unchanged at 1.00 per cent.
The outlook for the global economy remains reasonable, although the risks are tilted to the downside. The trade and technology disputes are affecting international trade flows and investment as businesses scale back spending plans due to the increased uncertainty. At the same time, in most advanced economies, unemployment rates are low and wages growth has picked up, although inflation remains low. In China, the authorities have taken further steps to support the economy, while continuing to address risks in the financial system.
Global financial conditions remain accommodative. The persistent downside risks to the global economy combined with subdued inflation have led a number of central banks to reduce interest rates this year and further monetary easing is widely expected. Long-term government bond yields have declined and are at record lows in many countries, including Australia. Borrowing rates for both businesses and households are also at historically low levels. The Australian dollar is at its lowest level of recent times.
Economic growth in Australia over the first half of this year has been lower than earlier expected, with household consumption weighed down by a protracted period of low income growth and declining housing prices and turnover. Looking forward, growth in Australia is expected to strengthen gradually to be around trend over the next couple of years. The outlook is being supported by the low level of interest rates, recent tax cuts, ongoing spending on infrastructure, signs of stabilisation in some established housing markets and a brighter outlook for the resources sector. The main domestic uncertainty continues to be the outlook for consumption, although a pick-up in growth in household disposable income and a stabilisation of the housing market are expected to support spending.
Employment has grown strongly over recent years and labour force participation is at a record high. The unemployment rate has, however, remained steady at 5.2 per cent over recent months. Wages growth remains subdued and there is little upward pressure at present, with strong labour demand being met by more supply. Caps on wages growth are also affecting public-sector pay outcomes across the country. A further gradual lift in wages growth would be a welcome development. Taken together, recent labour market outcomes suggest that the Australian economy can sustain lower rates of unemployment and underemployment.
Inflation pressures remain subdued and this is likely to be the case for some time yet. In both headline and underlying terms, inflation is expected to be a little under 2 per cent over 2020 and a little above 2 per cent over 2021.
There are further signs of a turnaround in established housing markets, especially in Sydney and Melbourne. In contrast, new dwelling activity has weakened. Growth in housing credit remains low. Demand for credit by investors continues to be 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.
It is reasonable to expect that an extended period of low interest rates will be required in Australia to make progress in reducing unemployment and achieve more assured progress towards the inflation target. The Board will continue to monitor developments, including in the labour market, and ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time.
</div>
</div>
<div class="box-enquiries"> </div>
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jrobinson-rf4aSBido9

Further signs of property turnaround especially in Sydney and Melbourne: RBA September meeting

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The RBA have decided to hold the official cash rate at a record low one per cent at its September meeting today.
CoreLogic research director Tim Lawless said the <a href="/expert-insights/buying/sydney-and-melbourne-house-and-apartment-prices-power-ahead-in-august-corelogic">resurgence in Sydney and Melbourne housing values</a> was likely a key topic of conversation amongst the RBA Board at today’s meeting. 
"In line with rate cuts in June and July, housing values in Australia’s two largest cities have recorded a lift, with dwelling values rising 1.9% and 1.8% in Sydney and Melbourne over the past three months.  
"August data showed CoreLogic’s national index recorded its first month on month rise since October 2017 and five of the eight capital cities saw dwelling values increase.  
"Clearly housing market conditions are responding to lower interest rates as well as the recent loosening of loan serviceability rules from APRA and the positive influence of the stable federal election outcome.  
Lawless noted that the recovery trend is still very early and there is the potential for the pace of growth to slow as advertised stock levels rise in line with spring.
"If the recent acceleration in housing value growth is sustained over coming months, we could potentially see additional credit policy levers pulled, aimed at keeping a lid on household debt. 
"Limiting lending to borrowers on high debt to income ratios could be one option, or introducing hard limits on high LVR lending could be another mechanism that would reduce the risk of a further build up in household debt whilst at the same time allow borrowers to access housing credit and take advantage such low interest rates."
The Finder RBA Cash Rate Survey saw 95 per cent of their 41 experts and economists surveyed predict a cash rate hold in September.
Craig Emerson, of Craig Emerson Economics, said the RBA will save its last few bullets for now, but he predicts and October cut.
"The RBA will be reluctant to use up its little remaining ammunition," Emerson said.
Westpac's Bill Evans also recently suggested we <a href="/expert-insights/finance/rba-to-hold-next-week-but-expect-october-rate-cut-bill-evans">should be looking to October</a> for the cut.
Griffith University economics professor Tony Makin is one of 61 per cent of experts in the survey who believe the RBA will wait until November.
"Previous RBA research suggested it takes up to 18 months for the effects of official interest rate changes to feed through to the wider economy," Makin said.
“The RBA should therefore be waiting a little longer before cutting further, especially in light of the weaker dollar of recent weeks."
 
 
 
 
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RBA holds rates at September meeting

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EXPERT OBSERVER
The minutes of the Reserve Bank Board meeting for August have provided one significant surprise.
In both the Governor's decision statement following the meeting and the Statement on Monetary Policy( similar version), the conclusion included "the Board would continue to monitor developments in the labour market closely and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time".
In these minutes, the emphasis has changed to the following "the Board judged it appropriate to assess developments in the global and domestic economies before considering further change in the setting of monetary policy. Members would consider a further easing of monetary policy if the accumulation of additional evidence suggests this was needed to support sustainable growth in the economy and the achievement of the inflation target over time".
So the message here is that policy could be eased in response to an unexpected deterioration in the global economy without the labour market providing an adequate justification for a rate cut.
Clearly, the Board has become more concerned about the global outlook: "trade and technology disputes had increased the downside risks to the global outlook", "uncertainty around trade policy had already had a negative effect on investment in many economies", and "a number of central banks had reduced interest rates this year and further monetary easing was widely expected".
This is not to say that concerns around the labour market have eased. As we observed with the increase in the RBA's unemployment forecasts and the downward revision to wage growth forecasts, the Board has noted: "there appeared to have been more spare capacity in the labour market than previously appreciated", and there is "a more subdued outlook for wages than three months earlier".
There appears to be a somewhat positive spin on the outlook for the real economy: "Although, the outlook for consumption remained uncertain, the risks around the outlook were more balanced than they had been for some time", "evidence that conditions in housing markets were showing signs of a turnaround had strengthened in July", and "signs of a turnaround in housing markets suggested there were some upside risks to dwelling investment later in the forecast period".
This commentary is consistent with the growth forecasts which anticipate GDP growth lifting from 2½ per cent in 2019 to 2¾ per cent in 2020. Westpac's forecasts are for 2.25% in 2019 and 2.5% in 2020. However, Westpac sees the clear downside risks to these forecasts coming from global developments, and it appears that the RBA Board is harbouring similar concerns.
As we saw in the Governor's testimony to the parliamentary economic committee, the Board has been briefed on unconventional monetary policy measures. The minutes cover the various measures that have been adopted overseas, but correctly qualify the assessment since "full evaluation could not been undertaken as many of these measures were yet to be unwound". It also noted that "effectiveness depended upon the specific circumstances and the nature of the financial system".
As we saw in the Governor's testimony, at this stage the Board seems to favour purchasing government bonds which were expected to flow through to lower interest rates for private borrowers. It also noted that "a package of measures tended to be more effective than measures implemented in isolation".
Conclusion
We do not think that after emphasising the labour market as the key factor for policy in the May, June and July minutes, the importance of the labour is in any way diluted. However, as a small open economy, a responsible central bank could not be seen to dissociate policy from global developments given the alarming signals around the world economy.
It is also important to be clear that the forecasts in the Statement on Monetary Policy, on which these minutes are based, assume market pricing for the cash rate path. At the time of the forecasts, the market pricing discounted two further rate cuts — one by the "end of this year", and a second in the "first half of 2020".
Despite this rate path, the forecasts indicate a lower profile for wages growth (reaching only 2.4% in 2021), an increase in the unemployment rate forecast (from 5% to 5.2% in December 2020), and the trimmed inflation rate forecast now below 2% by end 2020 (at 1.9%). These forecasts indicate that despite two more rate cuts, the RBA still does not expect the unemployment rate to go remotely close to its stated desired 4.5% over the forecast horizon, or reach the 2-3% target band for inflation before 2021.
Consequently, we remain comfortable with our forecast that the RBA will next cut the cash rate in October by 25bps and wait until early 2020 (February) for the second cut of 25bps.
BILL EVANS is Westpac's Chief Economist
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Reserve Bank Board highlights global risks for policy: Bill Evans

Strengthened property turnaround evidence seen by RBA: August RBA minutes

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Unemployment ticked slightly higher in July, but remained steady on a seasonally adjusted basis, firm over July, according to the latest figures form the ABS.
The unemployment rate was predicted to remain unchanged at 5.2 percent in July, seasonally adjusted, with an increase of around 14,000 jobs tipped.
In trend estimates however, unemployment rose to 5.3 percent.
There were 41,100 jobs added over the month.
Full time employment increased by 34,500, with part time employment rising 6,700.
IFM Investors economist Alex Joiner said employment growth was strong with the amount of jobs added over the month. There had been just 500 jobs added in June.
"The unemployment rate tracked sideways at 5.2% despite rising participation, potentially giving the RBA another month to assess the data," Joiner said. 
To enlarge, <a href="https://www.propertyobserver.com.au/images/2019/8/15/Unemployment%20by%20state.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/2019/8/15/Unemployment%20by%20state.jpg" alt="">
South Australia now has the highest unemployment rate in the country, seasonally adjusted at 6.9 percent.
Unemployment declined in New South Wales, Queensland and Tasmania.  
ABS chief economist Bruce Hockman said Australia's trend unemployment rate increased to 5.3 per cent in July 2019, the same level as this time last year. "The trend participation rate increased further to 66.1 per cent, while employment growth continues to show strength," Hockman added.
Former RBA economist Callam Pickering says Australia still has a two speed labour market.
"Unemployment rate in NSW (4.5%) and VIC (4.8%) much better than in other parts of the country. SA (6.3%), QLD (6.4%) and TAS (6.7%) particularly troubling," he said.
Over the past year, trend employment increased by 339,200 persons (2.7 percent) which was above the average annual growth over the past 20 years (2.0 percent).
Australia doesn't come close to making it into the top 16 countries for unemployment rate.
South Africa has an unemployment rate of nearly 30 percent, while Portugal, who are 16th on the list, have 6.8% of the population unemployed.
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