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

Joel Robinson

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

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

WM Residences fills gap in Mordialloc townhouse market

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

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

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

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

NAB funds $1 billion Surfers Paradise apartment development, Palmera

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

First look: Aqualand joins St Leonards apartment party

Reserve Bank

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Minutes of the May Monetary Policy Meeting of the Reserve Bank Board

<html><body>
The following charts describes what the Reserve Bank of Australia knows about Australia's housing sector.
The charts show a slight dip in housing loan approvals for investors.
<a href="https://www.propertyobserver.com.au/images/2017/05/03/Screen%20Shot%202017-05-03%20at%2011.32.03%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/03/Screen%20Shot%202017-05-03%20at%2011.32.03%20AM.png" alt="" width="836" height="547">
For more information, go to the RBA website <a href="https://www.rba.gov.au" target="_blank">here</a>.
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j.ballantyne1990-6AQqhLzZaK

RBA's May chart pack gives insight to Australian housing loan approvals

<html><body>Leading experts and economists believe the Australian property market may have ‘peaked’, while the Reserve Bank decided to leave the cash rate at 1.5 percent, according to finder.com.au. In the latest <a href="https://www.finder.com.au/rba-cash-rate" target="_blank" rel="noopener noreferrer">finder.com.au RBA survey</a>, all 34 experts and economists correctly predicted the Reserve Bank would keep the cash rate at its current level of 1.5 percent this month. When panellists were asked what they thought the Bank should do this month, three respondents (Dr Andrew Wilson of Domain Group, Stephen Koukoulas of Market Economics and Nicholas John Gruen of Lateral Economics) claimed the RBA should decrease the rate. Interestingly, two experts and economists (Noel Whittaker of QUT and Clement Tisdell of UQ-School of Economics) said the Bank should increase the cash rate. In terms of the next cash rate move, 78 percent of experts and economists are expecting a rise. However, the majority of this group (81 percent, 22) are not predicting the rise to come until 2018. Graham Cooke, Insights Manager at finder.com.au says mortgage holders should protect themselves from future rate rises. “One strategy you can employ is to split your mortgage rate. This way, you can enjoy both the flexibility of a variable rate and the stability of a fixed rate,” he says. On the other hand, of the minority of panellists who are tipping the next move to be down, most believe the cash rate will dip no lower than 1.0 percent.  An investment bank recently said the Australian housing market has “peaked”. In response to this statement, economists were divided; 60 percent (15) agreed while 40 percent (10) disagreed. Mr Cooke says some capital city markets may have peaked, but it’s difficult to conclude whether the national market has peaked. "Prices in some capital city markets, such as Perth, have deflated - but the cyclical nature of markets means it’s unlikely prices in other cities will increase indefinitely at their current rate.  “However, anyone holding out for a major price adjustment may be waiting a while. The general feeling is that while recent adrenaline-fueled price growth is likely to slow, it’s not expected that prices will fall dramatically. Prices may just plateau for a given period,” he says. Recent inflation data indicated a 0.5 percent increase in CPI in the March quarter, but panellists were divided about the positivity of this news.  Most respondents (17, 57 percent) said current inflation figures did not indicate that the economy is improving. However, thirteen experts (43 percent) thought the latest inflation figures show the economy is heading in a positive direction.</body></html>

Prices have peaked, but rates could still fall: finder.com.au survey

<html><body>
GUEST OBSERVER
The RBA left the cash rate unchanged at 1.5 percent at today’s meeting.
The recent data flow, coupled with RBA commentary, suggests the decision to leave policy unchanged was straight forward.
We have the RBA on hold at 1.5 percent throughout 2017 and well into 2018.
The RBA’s decision to leave policy unchanged today was no surprise. Governor Philip Lowe has made it crystal clear that concerns around rapid dwelling price growth and the level of household debt mean that the cash rate is unlikely go lower unless there is a sustained loss of momentum in job creation.
The strong, albeit questionable, March employment report has allayed fears at the RBA that the labour market was softening given the weakness in the February data.
<a href="https://www.propertyobserver.com.au/images/2017/05/02/Screen%20Shot%202017-05-03%20at%208.21.28%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/02/Screen%20Shot%202017-05-03%20at%208.21.28%20AM.png" alt="">
There was very little to gain in the way of new insights in today’s Statement. In our view, the most noteworthy change was around the outlook for wages growth. Lowe expanded on last month’s assessment that “wage growth remains slow,” and added that, “this is likely to remain the case for a while yet.” We agree given the significant amount of slack in the labour market (see here).
The Governor commented on recent developments in the labour market and noted that although, “the unemployment rate has moved a little higher over recent months, employment growth has been a little stronger.” He also added that, “the unemployment rate is expected to decline gradually over time.” In other words, the Governor views the recent lift in the unemployment rate as temporary. We agree and would add that it was driven higher by rising participation.
On inflation, the Governor noted that the headline QI CPI, published last week, was “in line with the Bank’s expectations”. And that, “a gradual further increase in underlying inflation is expected as the economy strengthens”.
The rest of today’s Statement contained only cosmetic changes compared with the April Statement.
The outlook
Our monetary policy call has the RBA on the sidelines in 2017 and well into 2018. We see jobs growth sufficient enough for policy to remain on hold. But the risk lies with another cut given very weak wages growth, below target core inflation and an expected further downturn in hard commodity prices. In our view, the recent additional measures announced by APRA to address risks in the housing market marginally lower the hurdle for another rate cut. In that context, market pricing, which implies a 13 percent chance that policy is eased again, is a fair assessment of the balance of risks.
The near term focus for the monetary policy outlook turns to Thursday when Governor Lowe will speak at a luncheon. The title of his speech, “Household Debt, Housing Prices and Resilience” – suggests the Governor will once again emphasise the RBA’s reluctance to cut the cash rate from here.
On Friday the RBA publishes its quarterly Statement on Monetary Policy (SMP). The Bank’s near-term GDP forecasts may be nudged up a little, but underlying CPI projections are expected to remain unchanged.
Gareth Aird is economist at Commonwealth Bank and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/gareth-aird/14/790/905">here</a>.
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mick.cee-iDmgDDAmu8

RBA's neutral bias reaffirmed: Gareth Aird

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GUEST OBSERVER
The Reserve Bank has left the cash rate at a record low of 1.50 percent for the ninth straight month (eighth meeting).
The Reserve Bank has maintained its “neutral stance” – meaning that rate hikes are as likely as rate cuts in the period ahead.
What does it all mean?
The Reserve Bank Board was seemingly a little downbeat on the economy at the April meeting. Not so at the May meeting.
The Reserve Bank has confirmed that economic growth will strengthen over the next couple of years to above 3 percent – faster than the “speed limit” of just under 3 percent. And inflation will increase as the economy strengthens. In short, don’t expect a cut in official rates.
But while rate cuts are off the agenda, the Reserve Bank is by no means flagging rate hikes. The Reserve Bank Board could have highlighted a lift in “upstream” business inflation, but it stayed silent. So for now the Reserve Bank is happy with where the economy is, and where it is going. 
There also seems a quiet confidence about the outlook for home prices, with the Reserve Bank of the view that the additional supply of apartments coming on stream will rebalance supply with demand in eastern capital cities.
Perspectives on interest rates
The Reserve Bank has left the cash rate at 1.50 percent. The previous move was a rate cut in August 2016 (25 basis points). There have now been 12 rate cuts since November 2011, with the Reserve Bank cutting rates from 4.75 percent to 1.50 percent.
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 percent to 4.75 percent.
<a href="https://www.propertyobserver.com.au/images/2017/05/02/Screen%20Shot%202017-05-03%20at%208.00.11%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/02/Screen%20Shot%202017-05-03%20at%208.00.11%20AM.png" alt="">
What are the implications of today’s decision?
The next move in interest rates is more likely to be a rate hike than a rate cut. But in our view, policy settings are unlikely to change over 2017, so any rate hike is still some way off. The Reserve Bank believes inflation will consolidate in the 2-3 per cent target band. And economic growth is expected to lift over the year.
The forecasts are updated on Friday. Add in the fact that growth rates of home prices are still firm in many capital cities and it is clear that rate cuts are off the agenda.
Then there is the global environment. Global economic growth continues to improve and deflationary risks have receded. The US is lifting interest rates. And there are early signs that the Euro zone will reduce stimulus later this year. So the global environment supports the domestic policy leaning.
The Reserve Bank is expected to maintain its neutral policy stance for now. Inflation is still low, economic indicators are more mixed and the higher Australian dollar is acting as a modest cap on economic growth. 
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx">CommSec</a>.
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Reserve Bank expects stronger growth and prices: Craig James

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At its meeting today, the Board decided to leave the cash rate unchanged at 1.5 percent.
Conditions in the housing market continue to vary considerably around the country, the board noted.
"Prices have been rising briskly in some markets and declining in others.
"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 recently announced supervisory measures should help address the risks associated with high and rising levels of indebtedness."
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.
Tim Lawless, head of research, CoreLogic said the decision was widely expected. 
"While a broad range of economic factors would have been discussed at the meeting, the housing market would have been front and centre in the conversation," he said.
"Capital city dwelling values have increased by almost 10 percent since the latest round of rate cuts in May and August last year, led by gains of around 13 percent in Sydney and Melbourne. 
"Since the latest round of rate cuts, inflation has edged higher, with headline inflation moving back into the RBA’s target range of 2 percent to 3 percent for the first time since the September 2014 quarter.
"However inflation increases were driven largely by forces that are exogenous to domestic demand, including a 6 percent increase in the price of fuel, and a 2.5 percent administered increase in electricity prices.
"Coupled with continued low wage growth, this indicates that private and household demand may still be weak despite the higher inflation figures, warranting the maintenance of a low cash rate.
"Meanwhile, the surge in housing prices and rebound in investment related credit growth has caused some concern. 
"Importantly, CoreLogic’s home value indices showed capital city dwelling values were virtually flat over the month of April; a stark change from the previously strong growth trend and perhaps hinting that the housing market could be moving through its peak rate of growth. 
"The softer housing market result comes after mortgage rates have been rising since September last year, despite the stable cash rate setting. 
"According to the latest RBA data, the average discounted variable mortgage rate for investor loans has shifted 25 basis points higher since August last year, which is equivalent to a typical RBA rate hike. 
"The three year fixed rate for investor loans is 30 basis points higher and discounted variable rates for owner occupiers have also shifted 10 basis points higher since August. 
"Further rises in mortgage rates are a potential outcome, considering the renewed focus from the Australian Prudential Regulation Authority (APRA) on curbing interest only lending, and maintaining their 10 percent speed limit on investment credit growth.
"With household debt levels at record highs, and the large majority of this debt related to housing, higher mortgage rates have the potential to take some heat out of the market, particularly from the investor segment. 
"A housing market slowdown would relieve one of the key concerns the RBA has relating to financial stability, however the Reserve Bank would likely be seeking confirmation of a slowdown from a longer trend of slower capital gains and lower credit growth."
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Steady for 8th meeting, RBA holds at May 2017 meeting

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Statement by Philip Lowe, Governor: Monetary Policy Decision
At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.
There has been a broad-based pick-up in the global economy since last year. Labour markets have tightened further in many countries and forecasts for global growth have been revised up. 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 improvement in the global economy has contributed to higher commodity prices, which are providing a significant boost to Australia’s national income. Australia’s terms of trade have increased, although some reversal of this is occurring.
Headline inflation rates have moved higher in most countries, partly reflecting the higher commodity prices. Core inflation remains low. Long-term bond yields are higher than last year, although in a historical context they remain low. Interest rates have increased in the United States and there is no longer an expectation of additional monetary easing in other major economies. Financial markets have been functioning effectively.
The Bank’s forecasts for the Australian economy are little changed. Growth is expected to increase gradually over the next couple of years to a little above 3 per cent. The economy is continuing its transition following the end of the mining investment boom, with the drag from the decline in mining investment coming to an end and exports of resources picking up. Growth in consumption is expected to remain moderate and broadly in line with incomes. Non-mining investment remains low as a share of GDP and a stronger pick-up would be welcome.
Indicators of the labour market remain mixed. The unemployment rate has moved a little higher over recent months, but employment growth has been a little stronger. The various forward-looking indicators still point to continued growth in employment over the period ahead. The unemployment rate is expected to decline gradually over time. Wage growth remains slow and this is likely to remain the case for a while yet.
The outlook continues to be supported by the low level of interest rates. Lenders have announced increases in mortgage rates, particularly those paid by investors and on interest-only loans. 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.
Inflation picked up to above 2 per cent in the March quarter in line with the Bank’s expectations. In underlying terms, inflation is running at around 1¾ per cent, a little higher than last year. A gradual further increase in underlying inflation is expected as the economy strengthens.
Conditions in the housing market continue to vary considerably around the country. Prices have been rising briskly in some markets and declining in others. 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 recently announced supervisory measures should help address the risks associated with high and rising levels of indebtedness.
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.
 
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Watch the additional east coast capital city apartment supply: RBA Governor Philip Lowe's May 2017 statement

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GUEST OBSERVER
This will be the traditional Board meeting being held one week before the Commonwealth Budget on May 9.
The Board is certain to hold rates steady.
In fact Westpac has argued consistently since May last year that, after an expected cut in August 2016, rates would be held steady for the remainder of 2016 and 2017.
Earlier this year we extended that view with the expectation that the Bank would also hold rates steady through 2018. 
In the minutes to the April Board meeting the Bank surprised somewhat by emphasising the importance of the major competing forces on rates: “The Board judged that developments in the labour and housing markets warranted careful monitoring over coming months.”
Since that statement key news items have been around the employment report and the inflation report.
The employment report for March printed much stronger than expected – 60,900 jobs added including a 74,500 rise in full time jobs. However the unemployment rate remained at 5.9 percent – well above the 5.0 percent level accepted as 'full employment'.
That theme of excess capacity was prominent in the March inflation report. The report was highlighted by falling prices for clothing &amp; footwear; household contents &amp; services; cars; audio visual &amp; computing; and international travel. Underlying inflation rose just 0.4 percent for an annual pace of 1.8 percent.
Overall, while the employment report may have been somewhat welcome to the spectre of spare capacity in the economy weighing on inflation; labour markets and wages would still be a concern for the authorities.
The situation around housing markets is more unclear with uncertainty around the impact of new macro prudential policies – a 30 percent cap on the proportion of new loans that are 'interest only' (currently 62 percent of investor loans and 23 percent of owner occupier loans are interest only).
The last time macro prudential policies were adopted, in 2015, they were very successful in slowing house price growth. These earlier measures included slowing annual growth in investor housing credit to a 10 percent target and were complemented by an effective increase in the mortgage rate of 27bps. Sydney dwelling price inflation slowed from 20 percent to 0 percent (on a 6mth annualised basis) while Melbourne prices slowed from 14 percent to 5 percent. This impact was curtailed by the May and August rate cuts in 2016.
Arguably the Board might regret those cuts given the resurgence in house price growth through the second half of 2016 and 2017.
Our call for steady rates assumes the persistence of the excess capacity in goods; services; and labour markets as exemplified in recent data releases without any threatening collapse in house prices – rather a gradual slow down through the remainder of 2017 and 2018. A sharp retraction along the lines of 2016 is still highly unlikely to draw further rate cuts from the Bank given the experience of 2016/17.
Our major interest will be in the growth and inflation forecasts along with some more colour to the risks.
Key growth forecasts in the February SoMP were: GDP growth in calendar 2017: 2.5 percent -3.5 percent; GDP growth in calendar 2018: 2.75 percent- 3.75 percent.
We believe the Bank will see growth prospects as unchanged since February although there may be a 'one off' adjustment for the impact of cyclone Debbie in the June quarter (some official estimates of a 0.25 percent 'hit' have been mentioned).
Of more importance will be the 3.25 percent (mid- point) forecast for 2018. Westpac is surprised at the Bank's persistent optimism. We expect the housing construction cycle to have clearly 'rolled over' by then with the terms of trade also in retreat. We expect growth in 2018 of around 2.5 percent.
Other factors that are also likely to weigh on growth in 2018 are the impact on business and household balance sheets of high energy prices, and intensifying political uncertainty. A lower AUD will contribute a welcome offset (USD 0.65 'target' in 2018).
The IMF recently released upward revised growth forecasts for Australia – 3 percent in 2017 and 3 percent in 2018 (year average measures). The 2017 forecast is higher than the RBA’s year average forecast of 2.5 percent but we expect the Bank to hold its forecasts steady. 
We do, however, expect that the Government will adopt a higher growth forecast in the May 9 Budget, raising the 2017-18 financial year number from 2.75 percent to 3 percent, in line with the IMF.
Inflation forecasts are also expected to be unchanged: current underlying inflation is running at 1.8 percent annual. RBA forecasts are 1.5-2.5 percent in both 2017 and 2018. These forecasts are 0.5 percent below the target 2-3 percent but not sufficiently awry to demand a policy change, particularly since the forecast to June 2019 indicates a return to the 2-3 percent target band.
Underlying assumptions around the AUD are also unlikely to warrant any forecast changes with the February forecasts using USD 0.76 compared to the likely USD 0.75 in the May forecasts. 
In the February SoMP the discussion on 'housing risks' centred on the downside: "history shows that sentiment can turn quickly.” Of course prices have continued to boom in the interim – we expect ongoing nervousness in the May SoMP emphasising the risks associated with a further intensification of macro prudential controls.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>. 
 
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Expect ongoing emphasis on housing risks: Westpac's BIll Evans

Minutes of the April Monetary Policy meeting of the Reserve Bank Board

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GUEST OBSERVER
Given the Reserve Bank’s intense concentration on stability issues, including the introduction of new guidelines from APRA, the April Stability Review is of particular interest.
Our interest is twofold. Firstly to gauge the degree of concern with which the Bank views the current risks and secondly whether it has released any new research which sheds more light on the issues.
Evidence on the first issue confirms the Bank’s concerns. “Risks to household balance sheets and housing markets have increased.” Compare that assessment with the previous Review in October last year, “Risks to financial stability from lending to households have lessened a little over the past 6 months.”
The risk that was emphasised back in October – “risks around the projected large increases in supply in some inner city apartment markets are coming to the fore, especially in Brisbane and Melbourne” - is still seen to be a major consideration - “concerns about an oversupply of apartments in pockets of Melbourne and in parts of Brisbane.”
Current risks around household balance sheets are seen to be macroeconomic in nature rather than direct risks to the stability of financial institutions. The key dynamic is seen to be “a highly indebted household sector is likely to be more sensitive to declines in income and wealth and may respond by reducing consumption sharply”.
Of most interest is the investor. While the Bank recognises that arrears data shows that investors have historically performed better than owner occupiers, this observation has not been tested “in a severe downturn.”
The recent guideline from APRA to limit the interest only component of new lending to 30 percent appears to be aimed at investors. Only around 23 percent of owner occupier loans are interest only whereas 64% of investor loans are interest only. IO loans have a higher average indebtedness over the loan than principal and interest; while after the IO period expires (typically 5-10 years) repayments are considerably higher.
Since the October Review, household indebtedness has increased further primarily due to rising levels of housing debt and weak income growth.
The Bank has emphasised in the past that offset accounts and redraw facilities have increased considerably (at around 17 percent of outstanding balances or around 2.5 years of scheduled repayments at current interest rates).
But around one third of borrowers have either no accrued buffer or a buffer of less than one month’s repayments. For the vulnerable “highly indebted households”, which represent the top 10 percent on the household debt to disposable income ratio measure, only 40 percent hold any kind of buffer.
Presumably as new lending lifts this ratio will continue to rise since minimal buffers are dominated by newer mortgages or lower income or lower wealth households. This ratio strongly debunks the assertion that the “buffer” is an important source of stability.
However, in previous Reviews a much more relaxed Bank has emphasised the point that those borrowers with the high leverage tend to be the high income earners who can best manage debt. The Review takes a revised look at “Highly Indebted Households”.
The aggregate household debt to income ratio has increased further in recent years up to 160 percent, but 30 percent of households have no debt.
In assessing the characteristics of highly indebted households the Bank uses information on the distribution of debt, income, and wealth which is available in the Household, Income, and Labour Dynamics Survey (HILDA). Unfortunately this data is only available to 2014. In fact it is only collected every 4 years with the next survey due for 2018 – an interminable wait for an update to the critical issue of whether debt is accumulating with those borrowers who are the most vulnerable.
The Household Debt to Disposable Income ratio has risen from around 150 percent to over 160 percent (latest available). The Bank defines a “highly indebted” household as one with debt to income ratio in the top 10 percent. Over the 10 years to 2014, households in that group had a debt to income ratio above 550 percent and represented 35-40 percent of total household debt. Around 30 percent of the “highly indebted” households’ debts were investor loans.
Of some concern is that around 25 percent of the highly indebted households are in the bottom two quintiles for income and wealth, although this group only owes 12 percent of the debt owed by the highly indebted households.
These “ratios” confirm the Bank’s previous position that much of the debt held by highly indebted households is owed by households with high income and wealth. However, the lift in household indebtedness since 2014, coupled with the lack on any significant “buffer” for the highly indebted borrower, must be presenting reasons for the Bank and APRA to raise concerns.
The other issue is around the risks of relying on “averages” . Even though the 2014 data indicated that only 12 percent of the debt of highly indebted borrowers is held in the two bottom income quintiles, that still represents nearly 5 percent of total household debt .
The policy challenge for the Bank is clear. It’s most comforting “defence” of the risks associated with Australia’s high household debt is that high debt levels are associated with those in the best position to deal with them – high income / high wealth. But this data is already three years out of date and an update will not be available for another year at least. Household debt to disposable income ratios have lifted from 150 percent to above 160 percent over that time period and appear to be rising further.
Vulnerable borrowers with limited buffers appear to be growing. The higher risk aspects of interest only loans may be exacerbating that issue.
All the Bank can really do is focus on slowing the rise in household debt without really having much comfort about the risks they face.
For our part we remain reasonably relaxed about these risks, not because of the distribution of the debt, but because we see that Australia has sufficient flexibility around policy; its exchange rate and strong banking system to ameliorate the impact of shocks.
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/">Westpac</a>. 
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