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

<html><body>
GUEST OBSERVATION
The Reserve Bank board minutes make for interesting reading, although there was no significant surprise in views.
Board members were upbeat about the improvement in the global economy – particularly China and were also aware of the likelihood of the weaker domestic September quarter economic growth result.
Interestingly, policymakers highlighted a couple of concerns at the time of the December 6 Board meeting – in particular the complications of “an appreciating exchange rate” on rebalancing the economy and “uncertainty about the moment in the labour market”.
Since the board meeting the Australian dollar has lost well over two cents (2.4%) against the US dollar and is even 1.3% lower against the trade weighted index.
Importantly the latest round of employment data showed a substantial rebound in full-time employment.
No doubt it is still early days but the improvements would give policymakers a degree of comfort.
Looking forward it is likely that the lift in commodity prices should support medium-term employment in the commodity states.
The focus for central bank official would be on how the business investment profile shifts over the coming year.
It is clear that a lift in non-mining business investment will be need to support broader economic growth.
Overall inflation remains well contained despite the lift in commodity prices.
Simply interest rate settings are likely to remain stable until well into 2017.
<a href="https://www.propertyobserver.com.au/images/2016/12/20/ComUpdate-7.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/2016/12/20/ComUpdate-7.jpg" alt="">
Members noted that the international environment had been more positive in recent months, while observing that significant risks to the outlook for global activity persisted.
The Chinese economy had remained resilient, supported by expansionary fiscal policy and rapid growth in financing.
“There was still considerable uncertainty about the momentum in the labour market,” the minutes said.
The unemployment rate had declined over the past year, as had measures of excess capacity that accounted for the number of additional desired hours of work.
Part-time employment had grown strongly over the previous year, but employment growth overall had slowed.
Members noted that there was expected to be excess capacity in the labour market for some time, which was consistent with further indications of subdued labour cost pressures.
This suggested that inflation would remain low for some time before returning to more normal levels.
“Members noted that these factors had assisted the economy in its transition following the mining investment boom and that an appreciating exchange rate could complicate the adjustment.”
“Housing market conditions had strengthened overall over preceding months, although there was considerable variation across the country and between houses and apartments. Housing credit growth had picked up a little, particularly for investors.”
“Prices for a number of Australia's key commodities, including coking coal, iron ore and base metals, had increased noticeably over the June and September quarters, which had contributed to the increase in Australia's terms of trade of about 6% over that period.
“3Commodity prices had risen further over November, suggesting that an increase in the terms of trade in the December quarter was likely.
“Taking into account the information that had become available over the previous month, and having eased monetary policy earlier in the year, the Board judged that holding the stance of policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time.”
<a href="https://www.propertyobserver.com.au/images/2016/12/20/ComUpdate-8.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/2016/12/20/ComUpdate-8.jpg" alt="">
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
CommSec expects the Reserve Bank to remain on the interest rate sidelines for an extended period.
Could the next move in interest rates be a rate hike rather than a rate cut? It’s important not to get too far ahead of ourselves.
Inflation is still historically low. And while there is speculation of growth-focussed policies in the US, they haven’t been fleshed out.
However you get a sense that inflation has reached an inflexion point.
Savanth Sebastian is senior economist with CommSec.
</body></html>

j.ballantyne1990-6AQqhLzZaK

RBA board members upbeat about improvment in global economy: Savanth Sebastian

<html><body>
GUEST OBSERVATION
The new governor of the Reserve Bank Philip Lowe has used the minutes to the December board meeting to clearly lay out his delicate policy challenge over the next year.
We have been used to monetary policy being largely driven by changes in the inflation outlook or prospects for economic growth.
While these factors remain entirely relevant for the bank, the minutes note that the board members took time to assess the policy decisions made since the latest easing cycle began in late 2011.
The key issue for discussion was around the impact of lower interest rates on asset prices and borrowing decisions.
The definitive quote is: “Over recent years the board had sought to balance the benefits of lower interest rates in supporting growth and achieving the inflation target with the potential risks to household balance sheets. Members recognised that this balance would need to be kept under review.”
I think this observation, which figures so prominently in the minutes, is signalling that the hurdle to even lower rates which would be aimed at boosting demand is very high.
With housing markets in the south-east remaining vibrant the risks of further cutting rates appear to be quite concerning for the board.
That view has certainly been a key aspect of our view that the cash rate was likely to remain on  hold for an extended period following the (inflation-motivated) rate cut in August.
Observations around the economy were broadly in line with the governor’s statement on December 6.
At the time of the meeting the board was unaware that the Australian economy contracted by 0.5% in the September quarter.
However it was aware that growth in the September quarter was likely to be weak and certainly weaker than had been expected at the time of the November statement on monetary policy.
However, as we saw in the government’s mid-year economic and fiscal outlook which printed yesterday the official forecasts (not necessarily exactly held by the RBA) imply average quarterly growth rates of 0.8% in the December(2016), March ( 2017) and June (2017) quarters.
Hence the minutes still refer to “growth picking up to be above potential later in the forecast period”.
The views on the labour market are less confident than we saw in the last set of minutes – “there was still considerable uncertainty about the momentum in the labour market”.
Having noted this quote it is however interesting that the detailed discussion on the labour market seeks to align the fall in the unemployment rate with a similar hours-based measure, providing more credibility to that fall.
The commentary on the housing market remains upbeat while recognising that there was considerable variation across the country and between houses and apartments.
There is also some positive commentary around the consumer.
We now know that consumer spending in the September quarter was well below average but the minutes point out that since then retail sales have grown at an above average pace and liaison with retailers suggested that trading conditions had remained “steady”.
The minutes are also seeking to paint a better picture for non-mining investment than the downbeat capital expenditure survey that printed in late November – “Over the past few years the national accounts had tended to report stronger outcomes [than the capex survey]”.
The commentary around China remains unchanged with activity being supported by accommodative policy although longer term risks associated with rising debt remain elevated.
The minutes had no real insights into the outlook for the US or markets. Uncertainty around Mr Trump’s policy agenda remains the challenge.
With the negative GDP print for September not being known at the time of the meeting this was always going to be a difficult set of minutes to write.
In the event the board has chosen to highlight in the minutes aspects of the discussion that provide a reasonably upbeat assessment of the economy: growth is expected to bounce back; spare capacity in the labour market, while ongoing, appears to have been reduced; the housing market has strengthened; consumer spending and non- mining investment prospects have improved.
However of most significance is the policy commentary that, I believe, implies a fairly clear signal that monetary policy is now representing asymmetric forward risks with the benefits to spending from the lower rates not compensating for instability in asset markets. Of most concern here are the elevated levels of household debt.
It has been Westpac’s view for some time that rates are likely to remain on hold through 2017 and 2018 and the discussion in these minutes gives no reason to qualify that view.
Bill Evans is the chief economist with Westpac.
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bevans-rYk9SxEa4r

RBA won't risk financial stability with another rate cut in 2017: Bill Evans

<html><body>
Minutes of the Monetary Policy Meeting of the Reserve Bank Board
Sydney – 6 December 2016
Members Present
Philip Lowe (Governor and Chair), Guy Debelle (Deputy Governor), John Akehurst, Kathryn Fagg, John Fraser (Secretary to the Treasury), Ian Harper, Allan Moss AO, Heather Ridout AO, Catherine Tanna
Others Present
Christopher Kent (Assistant Governor, Economic), Chris Ryan (Acting Assistant Governor, Financial Markets), Luci Ellis (Head, Financial Stability Department), Alexandra Heath (Head, Economic Analysis Department)
Anthony Dickman (Secretary), Andrea Brischetto (Deputy Secretary)
Domestic Economic Conditions
Members commenced their discussion of the domestic economy by noting that the unemployment rate was unchanged at 5.6 per cent in October, somewhat more than ½ percentage point below its peak in mid 2015.
Despite a rise in full-time employment in October, all of the growth in employment over 2016 had been in part-time employment, with an increased share of people in the labour force reporting that they would like to work more hours.
Members discussed various measures of labour underutilisation, including those that account for the number of hours sought by the unemployed and the additional hours desired by those who are underemployed (and who are also recorded as actively searching for additional hours).
Such hours-based measures of underutilisation had declined to a similar extent as the unemployment rate since late 2015 and, unlike the heads-based measure, had not increased recently.
Wage growth had remained low and continued to be lower than implied by the historical relationship with the unemployment rate.
The wage price index (WPI) had increased by a little less than expected in the September quarter and year-ended growth in the WPI had eased a little further.
Although there had been some evidence from enterprise agreements that growth in construction wages had picked up recently, these agreements covered a relatively small share of the total workforce.
Members noted that the September quarter national accounts would be released the day after the meeting.
Based on recent data, GDP growth was likely to be weaker than expected at the time of the November Statement on Monetary Policy and lower in year-ended terms than estimates of potential growth.
Consumption growth was expected to have remained below average in the September quarter.
The volume of retail sales, which represent around one-third of total consumption, had been little changed in the quarter, pointing to continued weakness in growth of goods consumption.
In contrast, in recent months, the value of retail sales had grown at an above-average pace and liaison with retailers suggested that trading conditions had remained steady.
Households' perceptions of their personal finances had remained at above-average levels.
Members noted that the work done on residential construction had fallen in the September quarter, suggesting that the national accounts measure of dwelling investment was likely to have declined in the same period.
Although residential building approvals had declined sharply in October, the significant amount of work in the pipeline suggested that the level of dwelling investment activity would remain high.
Nevertheless, the contribution of dwelling investment to growth was expected to decline over the forecast period.
Overall, conditions in the established housing market had strengthened over recent months. Members noted, however, that supply and demand conditions had continued to vary across the country.
In Sydney and Melbourne, housing price inflation had picked up and auction clearance rates were at high levels.
Outside of Sydney, increases in prices of apartments had generally been smaller than increases in prices of detached houses.
Investor housing loan approvals had picked up noticeably and credit growth had also increased a little over recent months, particularly in New South Wales.
In contrast, housing market conditions had remained weak in Perth. Rental markets had been subdued overall and continued to be particularly weak in Perth.
Business investment looked to have been a little weaker than expected in the September quarter.
The ABS capital expenditure survey and separate data on non-residential building work done had suggested that mining investment fell in the quarter. Further falls were anticipated, but the subtraction from GDP growth in 2016/17 was expected to be smaller than in 2015/16.
Capital expenditure for the non-mining activity covered by the survey, which is less than half of the activity covered in the national accounts measure of non-mining business investment, was little changed over the year to September.
Capital expenditure survey data on investment intentions continued to point to a decline in non-mining investment in 2016/17.
Members also noted that, over the past few years, the national accounts had tended to report slightly stronger outcomes for non-mining business investment than implied by the data on capital expenditure intentions.
Non-residential building approvals had increased in recent months, but the pipeline of non-residential construction work was low.
Private sector survey measures of business conditions and non-mining capacity utilisation had been above their long-run averages, but had eased since earlier in the year.
Export volumes increased in the September quarter, led by service exports.
Prices for a number of Australia's key commodities, including coking coal, iron ore and base metals, had increased noticeably over the June and September quarters, which had contributed to the increase in Australia's terms of trade of about 6 per cent over that period.
Commodity prices had risen further over November, suggesting that an increase in the terms of trade in the December quarter was likely.
Oil prices had increased over recent months, partly in response to announcements by OPEC about reductions to supply.
International Economic Conditions
Growth in GDP of Australia's major trading partners had picked up a bit over recent months, although growth remained a little below average.
Members noted that there had been a general improvement in survey measures of global business conditions.
They also noted that the downside risks to global inflation appeared to have diminished somewhat, in part because commodity prices had increased significantly over 2016 to date.
Prospects for fiscal expansion in some countries had also contributed to expectations that inflation would increase.
However, inflation had remained below most central banks' targets and monetary policies had continued to be accommodative.
Economic activity in China had continued to be supported by accommodative financial conditions and public spending, particularly on infrastructure.
However, high and rising levels of debt remained a risk to the outlook over the longer term.
Members observed that measures had been introduced to dampen housing price inflation in a number of cities and that this posed an additional risk that growth in housing market activity might be lower in the period ahead.
Producer prices had increased over the preceding year, following declines over several years, and measures of consumer price inflation had edged higher.
In the United States, GDP growth had been around estimates of potential over the past year.
While business investment had been weak, consumption growth had continued to be supported by strong labour market outcomes.
Members noted that it was too early to know much about the effect of the outcome of the US Presidential election on the outlook for US economic activity and inflation, or the potential spillovers to other economies.
There was uncertainty about the policy agenda of the incoming administration.
A range of estimates suggested that the plans for fiscal policy could provide a boost to economic activity over the next few years and place some upward pressure on inflation.
Working in the other direction, however, if policies were enacted to restrict trade, there could be significant adverse effects on the economic outlook in the United States and beyond.
Economic activity in the euro area had continued to recover. Members noted that some economies in the euro area were facing larger structural challenges than others.
In Italy, the level of GDP remained lower than it had been prior to the global financial crisis, non-performing loans had remained at a high level and gross public debt was around 135 per cent of GDP.
Labour market conditions had continued to tighten in most advanced economies. In the United States, this had led to a modest pick-up in nominal wage growth, but unit labour costs had been rising at an above-average rate.
Growth in wages and unit labour costs had also been above average in Japan.
In the United States, core inflation had been only a little below the Federal Reserve's goal during 2016, while core inflation in Japan had moderated over the course of the year to date and inflation expectations had remained relatively low.
In the euro area, inflation had remained lower than the target of the European Central Bank, but measures of longer-run inflation expectations had stabilised.
Financial Markets
Members commenced their discussion of financial markets by noting that there had been some large market movements following the outcome of the US Presidential election, but that movements had been generally orderly and the increase in volatility had been short-lived.
US Treasury yields had risen sharply following the outcome of the US Presidential election, reflecting the assessment in financial markets that the Trump administration's policies overall were likely to boost growth and inflation, although there was considerable uncertainty around this.
Sovereign bond yields had also increased in the other major economies, though by less than in the United States. Members observed that the increase in US Treasury yields, while large, was not as large as some other movements in recent decades and yields remained very low by historical standards.
The US Federal Open Market Committee (FOMC) left the policy rate unchanged at its November meeting. Members noted that markets had fully priced in an increase in the policy rate at the FOMC's December meeting and expected a steeper, although still gradual, path for future rate increases owing, in part, to the fiscal stimulus expected to be pursued by the Trump administration.
European sovereign bond spreads to German Bunds had widened ahead of the Italian referendum and upcoming elections in some other countries.
There had been little movement in corporate bond spreads in the major economies in the previous month.
Share market indices in the United States fell immediately following the outcome of the US Presidential election, but very quickly recovered to be higher over November as a whole.
The sectoral pattern of movements across US stocks reflected the expected effects of the Trump administration's policies as well as higher oil prices.
In Japan, the depreciation of the yen and better-than-expected growth had contributed to a rise in share prices. European share prices had declined slightly in November.
Emerging market bonds and equities were generally sold off following the outcome of the US Presidential election, reflecting market expectations of a possible increase in trade protection and increased US dollar debt-servicing costs for firms in emerging market economies, given higher US yields and exchange rate depreciations against the US dollar.
The depreciation of the Mexican peso against the US dollar was particularly marked. Several emerging market central banks had intervened in the foreign exchange market. The US dollar had also appreciated against most advanced economy currencies.
A notable exception was the appreciation of the UK pound against the US dollar during November.
The Chinese renminbi had appreciated on a trade-weighted basis over November, but had depreciated against the US dollar.
Net private sector capital outflows had increased over the September quarter and the Chinese authorities had recently introduced a number of measures to increase scrutiny of capital outflows.
Members noted that the Australian dollar had depreciated by 2 per cent against the US dollar since the previous meeting but had appreciated against the yen and some other Asian currencies, to be little changed on a trade-weighted basis.
Australian government bond yields and share prices rose in November.
As in other markets, resource stocks had outperformed the broader market, reflecting higher commodity prices, while high-dividend yielding stocks had fallen owing to higher bond yields.
Australian banks' bond issuance was above average in November and strong in 2016 overall.
Banks had issued more longer-term bonds in recent years in response to increased demand from investors searching for yield and the forthcoming introduction of new prudential requirements.
Members noted that banks' deposit rates had been little changed during November.
While the cost of new bond issuance had increased, it remained below that seen at the start of 2016.
Some banks had announced increases to advertised lending rates, mostly for housing and in particular to investors.
Pricing in domestic financial markets indicated that market participants did not expect a reduction in the cash rate at the December meeting.
Considerations for Monetary Policy
In considering the stance of monetary policy, members discussed the policy decisions made throughout the easing phase since late 2011, during which the cash rate had been lowered in aggregate by 3¼ percentage points.
The lower rates had helped support the economy in the transition following the mining investment boom and, more recently, had been in response to lower-than-expected inflation.
Members discussed the effect of lower interest rates on asset prices and the decisions by households to borrow, particularly given the already high levels of household debt.
Over recent years the Board had sought to balance the benefits of lower interest rates in supporting growth and achieving the inflation target with the potential risks to household balance sheets.
Members recognised that this balance would need to be kept under review.
Turning to the policy decision for the December meeting, members noted that the international environment had been more positive in recent months, while observing that significant risks to the outlook for global activity persisted.
The Chinese economy had remained resilient, supported by expansionary fiscal policy and rapid growth in financing.
International financial markets had interpreted the outcome of the US election, specifically the implications for infrastructure spending, as being positive for growth and inflation in the United States.
At the same time, there were increased expectations that the Federal Reserve would increase policy rates at the next meeting of the FOMC.
Rising commodity prices had also contributed to an assessment that the outlook for global inflation was more balanced than it had been for some time, although inflation remained below most central banks' targets.
Domestically, data that had become available over the previous month indicated that GDP growth in the September quarter was likely to be lower than the forecast at the time of the November Statement on Monetary Policy.
Year-ended growth was expected to decline before picking up to be above potential later in the forecast period, supported by low interest rates and the lower exchange rate since 2013.
Members noted that these factors had assisted the economy in its transition following the mining investment boom and that an appreciating exchange rate could complicate the adjustment.
Falls in mining investment were expected to subtract less from GDP growth over time and resource exports were expected to continue to make a substantial contribution to growth.
There was still considerable uncertainty about the momentum in the labour market. The unemployment rate had declined over the past year, as had measures of excess capacity that accounted for the number of additional desired hours of work.
Part-time employment had grown strongly over the previous year, but employment growth overall had slowed.
Members noted that there was expected to be excess capacity in the labour market for some time, which was consistent with further indications of subdued labour cost pressures.
This suggested that inflation would remain low for some time before returning to more normal levels.
Housing market conditions had strengthened overall over preceding months, although there was considerable variation across the country and between houses and apartments.
Housing credit growth had picked up a little, particularly for investors.
The supervisory measures that had strengthened lending standards in the housing market had led some lenders to take a more cautious attitude to lending in certain segments.
At the same time, the increase in global bond yields had led some lenders to increase their rates on fixed-interest rate loans.
Taking into account the information that had become available over the previous month, and having eased monetary policy earlier in the year, the Board judged that holding the stance of policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time.
The Decision
The Board decided to leave the cash rate unchanged at 1.5 per cent.
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jchancellor-FAypfDUnLy

Rental markets remain subdued for investors: RBA December board minutes

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The RBA Chart Pack summarises macroeconomic and financial market trends in Australia and provides some information about developments for our main trading partners. 
The graphs in the Chart Pack are updated monthly. 
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jonathanchancellor-7SQnKwU6yx

RBA's December 2016 Chart Pack shows housing lending rates slide

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Home borrowers may be hit with higher mortgage repayments by the big four banks next year, says one leading financial expert.
ABC News has reported that this is because of the net stable funding ratio – an international regulation to increase financial security of the banks by boosting the amount they hold in deposits.
This will decrease the reliance major banks have on overseas money markets by moving the focus to Australian customer deposits.
Speaking with the ABC, Brett Le Mesurier, banking analyst at Velocity Trade, said that the banks may need to reduce the discount they offer to certain borrowers by close to 2%.
“The banks have a standard variable rate, and then when customers go for a mortgage, they will be offered some level of discount,” he said.
“The discount can be anywhere up to 1.5% or more. It may be manifested by a reduction in the rate of discount that's being offered.”
With banks ultimately maintaining their margins, this will result in higher mortgage repayments for borrowers from as early as next year, Le Mesurier said.
“If they're paying more for their funding, [maintaining] the margin necessarily means that mortgage rates go up.”
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Big four banks could hike mortgage repayments in 2017

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RBA Governor Philip Lowe's November 2016 RBA statement.
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At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.
The global economy is continuing to grow, at a lower than average pace. Labour market conditions in the advanced economies have improved over the past year, but growth in global industrial production and trade remains subdued. Economic conditions in China have steadied recently, supported by growth in infrastructure and property construction, although medium-term risks to growth remain. Inflation remains below most central banks' targets.
Commodity prices have risen over recent months, following the very substantial declines over the past few years. The higher commodity prices have supported a rise in Australia's terms of trade, although they remain much lower than they have been in recent years.
Financial markets are functioning effectively. Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative. Government bond yields have risen, but are still low by historical standards.
In Australia, the economy is growing at a moderate rate. The large decline in mining investment is being offset by growth in other areas, including residential construction, public demand and exports. Household consumption has been growing at a reasonable pace, but appears to have slowed a little recently. Measures of household and business sentiment remain above average.
Labour market indicators continue to be somewhat mixed. The unemployment rate has declined this year, although there is considerable variation in employment growth across the country. Part-time employment has been growing strongly, but employment growth overall has slowed. The forward-looking indicators point to continued expansion in employment in the near term.
Inflation remains quite low. The September quarter inflation data were broadly as expected, with underlying inflation continuing to run at around 1½ per cent. Subdued growth in labour costs and very low cost pressures elsewhere in the world mean that inflation is expected to remain low for some time.
Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 has been helping the traded sector. Financial institutions are in a position to lend for worthwhile purposes. These factors are assisting the economy to make the necessary adjustments, though an appreciating exchange rate could complicate this.
The Bank's forecasts for output growth and inflation are little changed from those of three months ago. Over the next year, the economy is forecast to grow at close to its potential rate, before gradually strengthening. Inflation is expected to pick up gradually over the next two years.
In the housing market, supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments. Turnover in the housing market and growth in lending for housing have slowed over the past year. The rate of increase in housing prices is also lower than it was a year ago, although prices in some markets have been rising briskly over the past few months. Considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in rents is the slowest for some decades.
Taking account of the available information, and having eased monetary policy at its May and August meetings, the Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
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Rental growth slowest in decades: RBA Governor Philip Lowe's Cup Day November 2016 statement

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The thinking behind yesterday's RBA cash rate decision is illustrated by today's RBA chart pack.
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5 insights from the RBA on the Australian housing market: RBA chart pack

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GUEST OBSERVER
With no major economic developments in the last month, September quarter inflation due later this month and new Governor Philip Lowe at the helm presumably wanting to demonstrate a degree of policy continuity it was no surprise to see the Reserve Bank of Australia leave rates on hold at 1.5 percent at its October meeting. 
While Philip Lowe did make a few changes to the RBA’s post meeting Statement these don’t appear to signal any major changes in the RBA’s economic forecasts. In short the RBA continues to see the global economy continuing to grow at a below average pace, financial markets functioning effectively, the Australian economy continuing to growth, inflation expected to remain low and an appreciating $A complicating the adjustment in the economy. 
Two areas where there were more substantial changes in commentary were in relation to the labour market and the housing market. In terms of the labour market the RBA has highlighted significant variation across the country  in jobs growth and the divergence between part time and full time employment but seems reasonably relaxed about the employment outlook. 
On the housing market the RBA remains relatively sanguine but has acknowledged a strengthening in some markets recently (presumably Sydney and Melbourne), suggesting that it may be becoming a bit less relaxed.
The RBA seems to remain comfortable in waiting for the surge in apartment supply to cool property prices. Given the recent rebound in auction clearance rates, Sydney and Melbourne property prices continuing to growth solidly after huge gains over the last four years (6 percent in Sydney, 40 percent in Melbourne) and the risk that the apartment building boom will go way beyond the point of being healthy, my view remains that the RBA is a bit too relaxed about home prices and at least a bit of “jawboning” would be appropriate at present.
The fact that the RBA did not repeat its July meeting reference to upcoming inflation data – with September quarter inflation data due later this month – suggests that unlike in July its bias on interest rates is neutral.
However, we remain of the view that the RBA will cut rates again at its November meeting when it reviews its economic forecasts after the release of the September quarter inflation data in late October. The near term risks to inflation are on the downside thanks to competitive pressures globally and record low wages growth domestically and the $A is still too high and at risk of further appreciation given the Fed’s endless delays in raising rates again.
However, with economic growth holding up very well, commodity prices and national income looking like it has bottomed and the new Governor perhaps preferring a period of stability, this is a close call and is critically dependent on seeing a lower than expected September quarter inflation result. Either way a cut in the cash rate to 1 percent or below and the adoption of quantitative easing remains very unlikely in Australia.
<a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author" target="_blank">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home" target="_blank">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds.
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RBA a bit more realistic on the property market: Shane Oliver

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The Reserve Bank has left the cash rate at a record low of 1.50 per cent. The Reserve Bank is expected to await the September quarter inflation data in late October to decide the next move in rates.
What does it all mean?
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<li>Will the Reserve Bank Cut rates again? Reserve Bank Governor Philip Lowe raised doubts on future rate cuts when giving testimony just over a week ago. “The global sense is that monetary policy is not working as effectively as it might have in previous years. I think there are three possible responses to that. The one we have been doing is to just do more monetary policy: if it is not working, do a bit more until it does work. This is why we have found ourselves in some countries with interest rates in negative territory and unprecedented balance sheet expansion. You can keep doing more of something in the hope that it finally works, and my judgement is that that has not been particularly useful.”</li>
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<li>So it is now a case of waiting for the inflation data on October 26. Growth in underlying inflation in the quarter would need to be 0.4 per cent or below for the Reserve Bank to discuss cutting rates again.</li>
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The Reserve Bank has maintained the neutral policy stance. That means, the Reserve Bank is not leaning in favour of rate cuts or rate hikes.</div>
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<div class="column">There has been some additional text added to the statement, but nothing substantive. Additional information has been provided on the job market, highlighting the strength of part-time jobs compared with full-time positions. In terms of housing, the RBA does note “Growth in rents is the slowest for some decades.” Perspectives on interest rates
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  The Reserve Bank has left the cash rate at 1.50 per cent. The previous rate cut was in August 2016 (25 basis points).
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<li>  There have now been 12 rate cuts since November 2011, cutting rates from 4.75 per cent to 1.50 per cent.</li>
<li>  The Reserve Bank had previously lifted rates seven times from October 2009 to November 2010 – a total of 1.75 percentage points, from 3.00 per cent to 4.75 per cent.</li>
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What are the implications of today’s decision?
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<li>  Investors need to work on the premise that the low inflation/low interest rate world will be around for a while yet. And this is very much a global phenomenon. Consumers can buy goods whenever they want and wherever they are, keeping downward pressure on prices. So yield is still king when investors are assessing alternative financial assets.</li>
<li>  Note that Reserve Bank may continue to tolerate a low inflation outcome. Remember that the target band is expressed as a medium-term objective: “Both the Reserve Bank and the Government agree that a flexible medium-term inflation target is the appropriate</li>
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Will the Reserve Bank cut rates again? CommSec's Craig James

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At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 percent.
The global economy is continuing to grow, at a lower than average pace. Labour market conditions in the advanced economies have improved over the past year, but growth in global industrial production and trade remains subdued. Actions by Chinese policymakers have been supporting growth, but the underlying pace of growth in China has been moderating. Inflation remains below most central banks' targets.
Commodity prices have risen over recent months, following the very substantial declines over the past few years. The higher commodity prices have supported a rise in Australia's terms of trade, although they remain much lower than they have been in recent years.
Financial markets have continued to function effectively. Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative. Government bond yields are near their historical lows.
In Australia, the economy is continuing to grow at a moderate rate. The large decline in mining investment is being offset by growth in other areas, including residential construction, public demand and exports. Household consumption has been growing at a reasonable pace, but appears to have slowed a little recently. Measures of household and business sentiment remain above average.
Labour market indicators have been somewhat mixed. The unemployment rate has fallen further, although there is considerable variation in employment growth across the country. Part-time employment has been growing strongly, while growth in full-time employment has been subdued. The forward-looking indicators point to continued expansion in employment in the near term.
Inflation remains quite low. Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time.
Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 has been helping the traded sector. Financial institutions are in a position to lend for worthwhile purposes. These factors are all assisting the economy to make the necessary economic adjustments, though an appreciating exchange rate could complicate this.
Supervisory measures have strengthened lending standards in the housing market. Separately, a number of lenders are also taking a more cautious attitude to lending in certain segments. Growth in lending for housing has slowed over the past year. Turnover in the housing market has declined. The rate of increase in housing prices is lower than it was a year ago, although some markets have strengthened recently. Considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in rents is the slowest for some decades.
Taking account of the available information, and having eased monetary policy at its May and August meetings, the Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
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