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

Joel Robinson

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

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

Sammut secures approval for debut Brisbane apartment development in Toowong

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

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

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

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

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

WM Residences fills gap in Mordialloc townhouse market

Rba Rate Decision

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The RBA cash rate decision came out at 2.30pm today - and rates were held again.
The bank's last move saw it go to 1.5 percent at the August 2016 meeting, so rates have been held steady for 13 meetings.
It is not the longest run of steady rates as there were 16 meetings (inclusive) between their August 2013 meeting and December 2014 where they held at 2.5 percent. There was another run of 16 meetings between July 2002 and October 2003 where rates were held at 4.75 percent.
The board noted conditions in the housing market continue to vary considerably around the country.
"Housing prices have been rising briskly in some markets, although there are signs that conditions are easing, especially in Sydney.
"In some other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years."
It noted rent increases remain low in most cities. Investors in residential property are facing higher interest rates.
"There has also been some tightening of credit conditions following supervisory measures to address the risks associated with high and rising levels of household indebtedness.
"Growth in housing debt has been outpacing the slow growth in household incomes."
CoreLogic head of research Tim Lawless commented the ongoing evidence of slower housing market conditions were likely one of the key topics of conversation for the RBA when they held the cash rate at the historically low level of 1.5% in September. 
CoreLogic home value figures released last Friday confirmed that the pace of capital gains has slowed in Sydney and Melbourne. 
These are the two housing markets that have caused the most concern for policy makers because of the previously high rates of capital gain that had been running since early 2012, coupled with record high levels of household debt and high concentrations of investment.
With growth conditions across the housing sector moving back to a more sustainable level of growth, the likelihood of a cash rate hike in 2017 appears highly unlikely, Lawless said. 
Record high household debt remains a key concern for policy makers.
Furthermore, wages growth is continually subdued, he noted. 
With the household debt to income ratio tracking at 190%, households have become more sensitive than ever to the cost of debt and the RBA will likely be very mindful of the capacity for Australian households to service their debt without a broader dent on household consumption. 
Mortgage rates are already pushing higher for investors and interest only borrowers, which is likely a key contributor to the slower housing market conditions in Sydney and Melbourne. 
Importantly, mortgage rates for owner occupiers are generally unchanged, and for some products have actually fallen over recent months. 
Lawless said the hold decision will be welcome in markets outside of Sydney and Melbourne where growth conditions have generally been mild to negative and the macro prudential conditions being imposed nationally due to the strength of these two cities is generally seen as a negative for other housing markets across the country.
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jchancellor-FAypfDUnLy

Housing prices easing - especially Sydney - so another hold at September 2017 RBA meeting

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Following a recent series of scandals, Australian economists and industry experts are calling for banks to improve their public image to win back consumers, while a cash rate rise is not as close as initially expected, according to new research by finder.com.au - the site that compares virtually everything.  The economists and experts shared their views in the latest finder.com.au RBA Survey, the largest of its kind in Australia, will all 33 panellists unanimous in forecasting the cash rate will hold at 1.5% at tomorrow’s (5 September 2017) Reserve Bank board meeting.
The last change to the cash rate was a 0.25% decrease in August 2016.  The panel were also largely in agreement that banks should improve their public image, with 79% of those surveyed on this topic (19) saying banks are not doing enough to win the trust of consumers.  “The banks have themselves acknowledged that there is a trust disconnect with consumers. Rate movements out of synch with the RBA exacerbate the problem, especially when reporting season comes along and billion dollar profits are the norm,” said panellist Leanne Pilkington of Laing+Simmons.  When asked about the next cash rate move, the majority of experts (80%, 24) are forecasting the next cash rate move to be up, with most of that group (60%, 13), not expecting a rise until the second half of 2018.  Graham Cooke, Insights Manager at finder.com.au, said while a rate rise is looking likely, this is expected to happen later than first thought.  “There’s been no cash rate movement over the last 12 months, however we have seen the estimated date of the next rise push further into 2018, potentially giving some Aussie borrowers breathing space for longer,” he said. That said, one in three experts expect a potential rise earlier than this, with two economists – Dr Andrew Wilson of Domain Group and Noel Whittaker of QUT – flagging a pre-Christmas rise in November 2017.  Recent cuts to savings rates by various banks are adding to the speculation, said Mr Cooke.  “If we were to see a rise in November, this would not be a good Christmas present for homeowners.
“Some banks, including Westpac, RaboDirect, ME Bank and ING, have recently reduced their savings rate out of cycle, which may indicate they foresee an impending rise,” he said.  A report released last week from The Committee for Economic Development of Australia suggested housing affordability will be a long-term issue in Australia.
The report’s proposals that relaxing council planning restrictions and replacing stamp duty with a land tax went down well, with 80% of experts surveyed by finder.com.au approving of both recommendations. Less popular were the proposal to change tenancy laws to favour long-term tenants (68% approval) and increasing capital gains tax, which 58% of experts disagreed with. With a cash rate rise on the cards, homeowner are being urged to take a closer look at their mortgage rates.
One in two of finder.com.au’s expert panel recommend homeowners check their rates annually, with one in four recommending a more regular quarterly assessment.  “It’s not a matter of if, but when – rates are set to rise. So now is a great time to lock in a low rate on your home loan.
“We’re seeing many sub-4% rates so if you’re paying more than this, you’re paying too much. Look for a rate with a three in front of it to know you’re getting a good deal,” said Mr Cooke.  Here’s what our experts had to say: Jordan Eliseo, ABC Bullion (Hold): "Latest economic data released, including todays CAPEX results, will give the board confidence that the economy is stabilising and set to continue on its trajectory of steady if not spectacular growth. As a result, they'll be confident that they have the appropriate monetary policy in place for now." Tim Nelson, AGL Energy (Hold): "[The] latest RBA statement on monetary policy states: 'The Bank’s forecasts are little changed from those published in the May Statement on Monetary Policy." Shane Oliver, AMP Capital (Hold): "The RBA and rates are stuck between a rock and hard place - solid business conditions and labour market indicators along with the RBA's expectations for strong growth argue against a rate cut but subpar growth at present, risks around consumer spending, low wages growth and inflation and the rise in the $A argue against a rate hike." Alison Booth, ANU (Hold): "The available data do not suggest that any change  is warranted at this stage." John Hewson, ANU (Hold): "Hard to read [the] economy." Darryl Gobbett, Baillieu Holst Ltd (Hold): "Continued concerns at strength of Australian economic recovery and weak wages and inflation outlook in conjunction with financial system issues of increasing household debt." Peter Munckton, Bank of Queensland (Hold): "Interest rates are at the correct level." Richard Robinson, BIS Oxford Economics (Hold):"Inflationary and wage pressures are weak. RBA would prefer to have a lower dollar, so there is a rationale to cut rates. But RBA fears heating up residential property markets, so it will hold rates." Paul Dales, Capital Economics (Hold): "Interest rates are stuck in the mud, with financial stability concerns preventing more cuts and the weakness of economy/inflation preventing hikes." Craig James, CommSec (Hold): "Interest rates are at a level that will gradually see inflation rise to within the 2-3% target zone." Dr Andrew Wilson, Domain Group (Hold): "Reserve Bank is maintaining an optimistic medium-term view of the economy despite recent negatives of high dollar, sharply falling home building approvals and subdued wages growth." Saul Eslake, Economist (Hold): "Inflation still below target; unemployment and underemployment below where the RBA wants them to be; currency starting to get into "uncomfortable" territory; but (on the other hand) monetary policy already highly accommodative (and RBA worries about financial stability risks associated with easing further)." Mark Brimble, Griffith University (Hold): "The economy remains fragile and in need of some support, however other concerns will keep the RBA on the bench for some time in relation to cash rates." Peter Haller, Heritage Bank (Hold): "The state of the economy means that the RBA is content to leave rates on hold for now." Shane Garrett, Housing Industry Association (Hold): "There is no pressing need to move rates at this time." Alex Joiner, IFM Investors (Hold): "No economic reason to shift policy, economic growth and inflation do not require tighter policy and downside risks to the economy currently do not present any case for further easing." Michael Witts, ING (Hold): "Still very little reason to move on rates." Leanne Pilkington, Laing+Simmons (Hold): "We think the hold pattern remains appropriate. The reasonably strong Aussie dollar, encouraging employment figures and credible results from the reporting season all point to a steady economy, leaving little impetus to tinker with the cash rate at this time." Nicholas Gruen, Lateral Economics (Hold): "Because it's convinced itself it shouldn't cut more, and it obviously shouldn't raise rates." Mathew Tiller, LJ Hooker (Hold): "Little discernible change to economic indicators over the past month. Price growth across most east coast property market has moderated and listing number have begun to rise in the run up to spring." Michael Yardney, Metropole (Hold): "The RBA can't raise rates as it would stifle our fragile economy and would lead to a higher AU$. Similarly, it can't lower rates as this would fuel the Sydney and Melbourne property markets. So rates are likely to be on hold for a while." Mark Crosby, Monash Business School (Hold): "Aside from political tensions in North Asia nothing to move the RBA in either direction. Weakening of the USD makes the case for imminent rises less compelling, and no reason to cut." Chris Schade, MyState Bank (Hold): "Interest rate settings remain appropriate. Economy is performing a little below trend, inflation remains well contained, and the Aussie dollar is higher than the RBA would like. Holding rates at their current highly accommodative level is appropriate to allow the economy to continue to gain momentum over the coming couple of years." Alan Oster, NAB (Hold): "Still too early to change.  Economy and labour market doing well but house prices still strong - especially Sydney / Melbourne." Jonathan Chancellor, Property Observer (Hold): "The board will be happy to take their hold position into the second year as there's no elevated cause to move one way of the other." Matthew Peter, QIC (Hold): "Lack of wage growth and inflationary pressure combined with weak economic growth could justify a rate cut. However, until the housing market shows sustained signs of slowing, the RBA can't lower rates." Noel Whittaker, QUT (Hold): "I don't think they are ready to lift yet – but they will be thinking about it." Nerida Conisbee, REA Group (Hold): "Economic data continues to be too mixed to move either way." Christie Williams, Smarter Property Investing (Hold): "Our Big 4  financial institutions are at or under APRA's 30% investor home loan limit whilst continuing to grow their home and investor loan books." Brian Parker, Sunsuper (Hold): "Nothing in the data or the RBA's commentary that points to a move." Richard Holden, UNSW (Hold): "Their multiple objectives (inflation, housing prices, AUD, wages growth, gdp) are moving in conflicting directions. Other participants: Bill Evans, Westpac (Hold).
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jonathanchancellor-7SQnKwU6yx

Banks not doing enough to win trust of consumers, say experts

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The Reserve Bank of Australia will leave the cash rate at a record low of 1.50 percent when it meets tomorrow.
RateCity.com.au’s analysis of 22 domestic and economic indicators found 17 were pointing to the RBA leaving the cash rate on hold, where it has been since August 2016.
RateCity.com.au money editor Sally Tindall said there was no compelling reason for the Reserve Bank to change monetary policy.
“The RBA would like to hike rates, but the high Australian dollar, combined with low wages growth and low inflation will keep rates grounded in the short-term,” she said.
<a href="https://www.propertyobserver.com.au/images/2017/09/04/image002.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/04/image002.png" alt="">
“The economy is moving steadily rather than spectacularly, so the logical option is for the Board to hold fire until there are major changes in the key economic indicators.
“This means the RBA is currently playing a waiting game.
“They won’t want to move rates until families get some relief from the current cost of living pressures. With little relief in sight, they’re likely to hold off until next year.
“The other complicating factor is that the banks already increased rates in the first half of this year so we’ve actually experienced an unofficial tightening of monetary policy, despite no official change in the cash rate,” said Ms Tindall.
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j.ballantyne1990-6AQqhLzZaK

RBA set to leave cash rate at 1.50 percent

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GUEST OBSERVER
The minutes of the monetary policy meeting of the Reserve Bank Board on August 1 show a change in the balance of risks on which the Bank is clearly focussed.
In July, the key concluding paragraph noted “developments in the labour and housing markets continued to warrant careful monitoring”.
In August, “members regarded conditions in the housing market and household balance sheets as continuing to warrant careful monitoring”.
In addition, the August minutes refer to “the need to balance risks associated with higher household debt in a low inflation environment”.
A reasonable conclusion from this change in emphasis is that the Bank is certainly more comfortable with the outlook for the labour market - “indicators of labour demand have pointed to further employment growth”, and by the end of the forecast period, “the unemployment rate was expected to be just below 5 ½ per cent, slightly lower than forecast in May”.
There was also the hint of more confidence around a lift in wage inflation, “information from liaison indicated that some employers were finding it harder to attract workers with particular skills”.
On the other hand, commentary around inflation seemed to be more downbeat.
In particular, it was pointed out that” the Australian Bureau of Statistics intends to update the weights in the CPI in the December quarter 2017 CPI release … this was expected to lead to lower reported CPI inflation because the weights of items whose prices have fallen were likely to be higher”.
The additional commentary on inflation highlights the Bank’s dilemma with regards to achieving its underlying target.
“The inflation forecast partly reflected an expectation of a modest increase in wage growth … working in the opposite direction were the effects of additional competition in the retail industry; the dampening effect of housing supply on rents; and recent exchange rate appreciation”.
While we can be extremely confident about the three latter dampening factors, the expectation of rising wages is tenuous.
Even the minutes refer to international experience where labour markets with much less spare capacity than Australia have been unable to generate wage pressures.
As discussed, the minutes highlight household balance sheets as warranting careful monitoring.
It is pointed out that housing credit growth has been growing at a much faster pace than incomes, exacerbating this imbalance.
Whereas the July minutes indicated that the impact of the macroprudential policies were yet to have their full effect, the August minutes do not continue that theme.
Commentary on the Sydney and Melbourne housing markets pointed out that conditions have eased somewhat although price growth remained relatively strong, this was despite the observation that Banks had now broadly achieved the lending guidelines around interest-only loans that were announced earlier in the year.
It was not clear that the Bank expects a further softening in house prices in Sydney and Melbourne (and an associated slowdown in credit growth) given that the regulatory guidelines had now been enacted.
Sensibly, the Bank has not tried to “jawbone” the Australian Dollar.
That can only be effective if the market believes that the Bank is prepared to take some action.
Given concerns around household balance sheets and a well-known reluctance to intervene, markets are totally confident that the Bank will not take any action to deal with the high Australian Dollar.
We saw in the Statement on Monetary Policy that despite the 3% appreciation in the TWI between May and August, the Bank chose not to adjust its growth and inflation forecasts in 2018 and 2019.
However, it now specifically states in the minutes “a further appreciation of the exchange rate would be respected to result in a slower pick-up in inflation and economic activity than currently forecast”.
It is our view that the AUD will drift back down to USD 0.76 by the time of the next forecast review (November), so the AUD will not represent a risk to the forecasts.
On the other hand, if we are wrong, we should take this comment on face value and expect an even lower forecast for inflation and economic activity.
In particular, the current inflation forecast sits at 2% for 2018, the bottom of the target band.
Most central banks would be uncomfortable forecasting a further miss in the inflation target in 2018.
Commentary around the international economy is mainly pertinent for the Bank’s China view.
In that regard, despite better than expected conditions in 2017, the Bank continues to assert that “growth in China was expected to ease in 2018 and 2019 because of structural factors such as a declining working-age population as well as policies to address financial risks”.
These minutes contained a few more surprises than we had originally expected – a clear lift in confidence around the labour market but a stronger emphasis on the risks associated with household debt.
The extensive discussion around inflation also implies less certainty around the current view that inflation will lift through 2018 and 2019.
Key to much of this discussion is around wages growth.
This will impact incomes and potential household debt ratios; inflation conditions; and the capacity of the household sector to lift its spending, thereby signalling a better environment for businesses and lifting employment and investment.
Given the evidence overseas, for countries with less spare capacity in their labour markets than Australia, we are much more cautious about the wages outlook and therefore expect that the case for higher rates next year will gradually fade.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Renewed concern around household debt as labour market gains more confidence: Bill Evans

RBA welcomes noticeable decline in interest only loans: August 2017 minutes

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The Minutes of the August Board meeting were a low key affair, as anticipated.
There has been plenty of communication from the RBA over the past two weeks including the August Statement on Monetary Policy (SMP) and RBA Governor Philip Lowe’s appearance before the House of Representations Standing Committee on Economics.
In that context, today’s Minutes were unlikely to contain any major surprises.
On Friday, the Governor endorsed market pricing that the next move in rates is up when he said, “the current market pricing implies a greater probability of a rate rise than a rate reduction, I think they are reasonable assumptions and I don't want to dissuade them.”
<a href="https://www.propertyobserver.com.au/images/2017/08/15/Screen%20Shot%202017-08-15%20at%201.12.37%20pm.jpg" target="_blank">Click to enlarge</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/2017/08/15/Screen%20Shot%202017-08-15%20at%201.12.37%20pm.jpg" alt="">
This view was backed up in today’s Minutes as the Board dropped their reference from the July Minutes around developments in the labour market continuing to warrant careful monitoring.
For the record, in the July Minutes it was stated that: “the outlook for growth and inflation meant that developments in the labour and housing markets continued to warrant careful monitoring.”
In the August Minutes that statement was tweaked to, “members regarded conditions in the housing market and household balance sheets as continuing to warrant careful monitoring”. This is a less dovish stance.
But we don’t think it materially changes the outlook for rates; it simply validates current market pricing.
The Board continues to sound relatively upbeat on recent developments in the global economy.
In particular, it was noted that, “economic conditions had strengthened over the prior year and the improvement had broadened beyond international trade.”
A gradual increase in global inflation is forecast despite wage growth and core inflation remaining “subdued” as labour market have tightened.
<a href="https://www.propertyobserver.com.au/images/2017/08/15/Screen%20Shot%202017-08-15%20at%201.12.46%20pm.jpg" target="_blank">Click to enlarge</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/2017/08/15/Screen%20Shot%202017-08-15%20at%201.12.46%20pm.jpg" alt="">
The Bank’s assessment of the domestic economy contained nothing new compared with the August SMP.
But on the outlook for inflation, the Board noted that some forthcoming ABS rejigging with the CPI weightings will lead to slightly lower reported inflation from Q4 2017.
This information was incorporated into the RBA’s latest inflation forecasts and doesn’t appear to have meaningfully impacted their numbers.
On housing, the Board suggested that, “conditions had eased since late 2016” in Sydney in Melbourne.
We are not as convinced as the Board.
<a href="https://www.propertyobserver.com.au/images/2017/08/15/Screen%20Shot%202017-08-15%20at%201.12.57%20pm.jpg" target="_blank">Click to enlarge</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/2017/08/15/Screen%20Shot%202017-08-15%20at%201.12.57%20pm.jpg" alt="">
In our view there is very little evidence that conditions in the Sydney and Melbourne housing markets have cooled. In fact, after a seasonal slump in prices in May, the annual growth rates of dwelling prices have accelerated in Australia’s two largest cities.
From a monetary policy perspective, today’s Minutes were never going to be the most important event on the domestic economic this week.
Updates on wages {Wage Price Index (16/8) and Average Weekly Earnings (17/8)} and employment (17/8) are more significant.
There has been some genuine strength in the monthly employment reports over the past four months which means there has been a gradual tightening in the labour market.
But it remains to be seen if it will generate any lift in wages growth.
As a result, the data to come over the next 48 hours is particularly important.
<a href="https://www.propertyobserver.com.au/images/2017/08/15/Screen%20Shot%202017-08-15%20at%201.13.06%20pm.jpg" target="_blank">Click to enlarge</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/2017/08/15/Screen%20Shot%202017-08-15%20at%201.13.06%20pm.jpg" alt="">
From our vantage point, we think that we are still some way from labour market slack being eroded sufficiently to put genuine upward pressure on wages.
As a result, we see policy on hold until deep into 2018.
Gareth Aird is a senior economist at the <a href="https://www.commbank.com.au" target="_blank">Commonwealth Bank</a>.
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Cash rate to stay steady this year and into next: CBA's Gareth Aird

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<h4>Statement by Philip Lowe, Governor: Monetary Policy Decision</h4>
At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.
Conditions in the global economy are continuing to improve. Labour markets have tightened further and above-trend growth is expected in a number of advanced economies, although uncertainties remain. Growth in the Chinese economy has picked up a little and is being supported by increased spending on infrastructure and property construction, with the high level of debt continuing to present a medium-term risk. Commodity prices have generally risen recently, although Australia's terms of trade are still expected to decline over the period ahead.
Wage growth remains subdued in most countries, as does core inflation. Headline inflation rates have declined recently, largely reflecting the earlier decline in oil prices. In the United States, the Federal Reserve expects to increase interest rates further and there is no longer an expectation of additional monetary easing in other major economies. Financial markets have been functioning effectively and volatility remains low.
The Bank's forecasts for the Australian economy are largely unchanged. Over the next couple of years, the central forecast is for the economy to grow at an annual rate of around 3 per cent. The transition to lower levels of mining investment following the mining investment boom is almost complete, with some large LNG projects now close to completion. Business conditions have improved and capacity utilisation has increased. Some pick-up in non-mining business investment is expected. The current high level of residential construction is forecast to be maintained for some time, before gradually easing. One source of uncertainty for the domestic economy is the outlook for consumption. Retail sales have picked up recently, but slow growth in real wages and high levels of household debt are likely to constrain growth in spending.
Employment growth has been stronger over recent months, and has increased in all states. The various forward-looking indicators point to continued growth in employment over the period ahead. The unemployment rate is expected to decline a little over the next couple of years. Against this, however, wage growth remains low and this is likely to continue for a while yet.
The recent inflation data were broadly as the Bank expected. Both CPI inflation and measures of underlying inflation are running at a little under 2 per cent. Inflation is expected to pick up gradually as the economy strengthens. Higher prices for electricity and tobacco are expected to boost CPI inflation. A factor working in the other direction is increased competition from new entrants in the retail industry.
The Australian dollar has appreciated recently, partly reflecting a lower US dollar. The higher exchange rate is expected to contribute to subdued price pressures in the economy. It is also weighing on the outlook for output and employment. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.
Conditions in the housing market vary considerably around the country. Housing prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease. In some other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases remain low in most cities. Investors in residential property are facing higher interest rates. There has also been some tightening of credit conditions following recent supervisory measures to address the risks associated with high and rising levels of household indebtedness. Growth in housing debt has been outpacing the slow growth in household incomes.
The low level of interest rates is continuing to support the Australian economy. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
To go to the RBA website <a href="https://www.rba.gov.au/media-releases/2017/mr-17-13" style="font-size: 12.16px;">click here</a>.
 
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Investors facing higher rates warns RBA Governor Philip Lowe's August 2017 statement

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The RBA held at the August 2017 meeting.
The central bank last moved on rates in August 2016, when it cut rates to 1.5 percent. Rates have stayed at the record low of 1.5 percent since.
Investors in residential property are facing higher interest rates, said the RBA.
It said there has also been some tightening of credit conditions following recent supervisory measures to address the risks associated with high and rising levels of household indebtedness.
It warned that growth in housing debt has been outpacing the slow growth in household incomes.
"Conditions in the housing market vary considerably around the country. Housing prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease," the RBA Governor Philip Lowe said in a statement.
"In some other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases remain low in most cities." 
REINSW President John Cunningham said the decision sees interest rates remain steady for the past 12 months after the RBA last cut interest rates in August 2016.  “While the RBA has not acted over the last year, there has been considerable activity from the banks," he said.
“The Sydney property market has settled down after a whirlwind period of growth but solid competition remains and will continue into the normally strong spring market. 
“Buyers must prepare themselves for several interest rate rises in the future, but the outlook remains positive,” Mr Cunningham said.  The RBA will next meet on September 5. 
Even though the RBA held rates, but the bottom of the market has already passed for fixed rate mortgages, according to RateCity.com.au.
RateCity research showed that fixed rates across the board bottomed out in November of last year.
RateCity money editor Sally Tindall said funding cost pressures and increased government regulation had taken their toll on the fixed rate market.
 
 
 
 
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Investors facing higher rates, as the RBA holds at August 2017 meeting - a full year without any movement up or down

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GUEST OBSERVER
The most important result from the minutes of the monetary policy meeting of the RBA Board was to finally nominate the Bank’s estimate of the “new neutral real interest rate for Australia”.
In other countries it has been recognised for some time that the neutral rate has fallen particularly since the global financial crisis in 2007.
Prior to that, it had generally been accepted that the neutral nominal cash rate was around 5%.
The minutes highlight that the Bank now believes that the neutral nominal cash rate is around 3.5% indicating a neutral real rate of 1% on the basis that medium term inflation expectations are around 2.5%.
Consequently any move back to neutral would involve around 200 basis points in tightening.
Note that the analysis refers to the “neutral nominal cash rate”.
So, for instance, the increases in mortgage rates that we have recently seen (average of 0.28% across the whole book including 0.76% for interest-only investors) would not be taken into account as part of the 200 basis points in tightening.
If the mortgage rate increased by a further 200bps, the evidence of 2011 suggests that house prices would likely fall – hardly what one might assess as a neutral policy stance.
Overall, in the current circumstances, this neutral rate, looks too high.
Arguably, the discussion around the neutral rate can be interpreted as laying the foundation for a tightening cycle.
However with uncertainty around wages and inflation; the consumer; and, of course, the labour market and housing it would be inappropriate to over interpret this signal.
Our specific  interest in the minutes is around the revised assessment of the housing market; the labour market and possibly the exchange rate.
Certainly the final paragraph in the “Considerations for Monetary Policy” section notes that “nevertheless they assess that current economic conditions in Australia and the outlook for growth and inflation meant that developments in the labour and housing markets continued to warrant careful monitoring”.
The commentary around the labour market is definitely more confident.
Not only do the minutes refer to “employment growth had been strong in May for the third consecutive month” but it is also noted that “forward looking indicators of labour demand … had remained positive and generally consistent with the patterns of employment across states and industries”.
This commentary suggests that the Board is reasonably comfortable that the recent upswing in employment can be sustained.
The only note of caution around the recent developments is that “the underemployment rate … had remained elevated”.
We are aware that subdued wages growth is a significant concern for the Bank.
That remains a consideration.
However, the minutes did point out that the recent Fair Work Commission decision to increase award wages and the national minimum wage by 3.3% (affecting around 40% of workers) was markedly higher than the 2.4% awarded in 2016.
Commentary around the housing market continued to note that conditions vary across the country, although the “auction clearance rates in Sydney and Melbourne had softened recently suggesting that conditions in these markets had eased somewhat”.
It was also noted that the impact of the prudential supervision measures were yet to have their full effect.
At the time of the board meeting, the Australian Dollar was trading at around USD 0.76.
Not surprisingly, the minutes therefore retain the standard terminology “an appreciating exchange rate would complicate this adjustment”.
With the currency now at USD 0.78, the Board is likely to be more concerned about its impact on the rebalancing process.
As the minutes point out, financial market pricing for RBA policy has “shifted to indicate some probability of an increase in the cash rate by mid-2018”.
The most important development behind this outlook is the improved conditions in the labour market.
As noted, the Bank is encouraged that lead indicators continue to point to further improvements in conditions.
The unemployment rate is now only 0.5% above the generally accepted full employment rate for Australia.
A sustained move towards 5% would certainly encourage the Bank to consider higher rates.
However, there would need to be some evidence that wage pressures were also responding since underlying inflation remains anchored below 2%.
The implications for policy from the housing market are less clear.
The macroprudential policies have already resulted in higher mortgage rates, and as noted in the minutes, pressures in the housing market appear to be easing.
However, until the full impact of the macroprudential policies can be assessed, raising interest rates might prove to be premature.
Recall that the Bank’s current forecasts for GDP growth in 2018 are an above trend 3.25%. That contrasts with our own forecast of only 2.5%.
Our forecasts envisage ongoing caution from the consumer; no significant recovery in non-mining investment and detraction in growth from housing construction.
Today’s minutes do not really indicate that the Bank is sufficiently confident that this profile will be averted .It will need a lot more time to confidently make that assessment.
Furthermore, the growth profile which we described is unlikely to be consistent with sustained improvement in the labour market.
While the short-term outlook may be positive, we expect that the unemployment rate will edge back towards 6% over the course of 2018.
The Bank will be cautious to confirm its positive outlook before the need to raise rates.
Despite a more confident Bank and its decision to set out its new so-called “neutral target”, our forecasts remain consistent with the cash rate staying on hold throughout 2017 and 2018.
Bill Evans is the chief economist at <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
<a href="https://www.rba.gov.au/monetary-policy/rba-board-minutes/2017/2017-07-04" target="_blank">Link to minutes</a>
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Reserve Bank's estimate of the 'new neutral real interest rate for Australia': Bill Evans

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Statement by Philip Lowe, Governor: Monetary Policy Decision
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At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.
The broad-based pick-up in the global economy is continuing. Labour markets have tightened further in many countries and forecasts for global growth have been revised up since last year. Above-trend growth is expected in a number of advanced economies, although uncertainties remain. In China, growth is being supported by increased spending on infrastructure and property construction, with the high level of debt continuing to present a medium-term risk. The rise in commodity prices over the past year has boosted Australia's national income.
Headline inflation rates, having moved higher over the past year, have declined recently in response to lower oil prices. Wage growth remains subdued in most countries, as does core inflation. Further increases in US interest rates are expected and there is no longer an expectation of additional monetary easing in other major economies. Financial markets have been functioning effectively and volatility has been low.
As expected, GDP growth slowed in the March quarter, partly reflecting temporary factors. The Australian economy is expected to strengthen gradually, with the transition to lower levels of mining investment following the mining investment boom almost complete. Business conditions have improved and capacity utilisation has increased. Business investment has picked up in those parts of the country not directly affected by the decline in mining investment. At the same time, consumption growth remains subdued, reflecting slow growth in real wages and high levels of household debt.
Indicators of the labour market remain mixed. Employment growth has been stronger over recent months. The various forward-looking indicators point to continued growth in employment over the period ahead. Wage growth remains low, however, and this is likely to continue for a while yet. Inflation is expected to increase gradually as the economy strengthens.
The outlook continues to be supported by the low level of interest rates. The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment.
Conditions in the housing market vary considerably around the country. Housing prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease. In some other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases are the slowest for two decades. Growth in housing debt has outpaced the slow growth in household incomes. The recent supervisory measures should help address the risks associated with high and rising levels of household indebtedness. Lenders have also announced increases in mortgage rates for investor and interest-only loans.
Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
To go to the RBA website <a href="https://www.rba.gov.au/media-releases/2017/mr-17-13" target="_blank">click here</a>.
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