ANZ believes the Reserve Bank is in no rush to move again.

Following the release of the May Monetary Policy Board Minutes, ANZ has taken the view that the RBA is now firmly in a holding pattern, with the cumulative impact of previous rate hikes giving the Board scope to assess how the economy evolves from here.

That positioning, in ANZ’s view, makes a June rate hike unlikely.

The bank continues to expect the cash rate to remain unchanged at 4.35 per cent for an extended period, with the RBA adopting what is effectively a wait-and-see approach.

The Minutes point to a Board that sees financial conditions as already restrictive, but without a clear read on just how restrictive they are. That uncertainty has shifted the focus away from immediate policy action and toward monitoring both domestic conditions and global developments, particularly the conflict in the Middle East.

As ANZ interprets it, the Board is deliberately avoiding strong forward guidance.

Instead, it is allowing itself flexibility, acknowledging that monetary policy has limited ability to influence the near-term trajectory of inflation, while also recognising that economic growth is likely to remain below potential for some time.

Despite that pause in momentum, ANZ notes that the Board still carries a tightening bias.

The Minutes reveal that, in weighing up its decision, the Board seriously considered another 25 basis point increase. The key debate centred on the trade-off between inflation and activity, particularly in the context of global uncertainty.

Ultimately, most members leaned toward the inflation side of that equation.

Underlying inflation is still expected to remain above target for an extended period, regardless of how external risks evolve. That has led to a view within the Board that the risks to its inflation objective have increased, and that the current cash rate may not be sufficiently restrictive to fully contain those pressures.

That’s important.

While the decision, for now, is to hold, the underlying tone of the Minutes suggests the door to further tightening has not been closed.

ANZ also points to commentary from Assistant Governor (Economic) Sarah Hunter, who highlighted the risk that inflation could pass through the economy more quickly and broadly than in previous cycles. Both Hunter and a majority of the Board expressed concern that inflation expectations could become less anchored after such a prolonged period above target.

That combination, persistent inflation and the risk of expectations shifting, is what continues to underpin the RBA’s cautious stance.

However, where ANZ diverges from the RBA is on the outlook for activity.

The Board appears relatively comfortable with current spending patterns, effectively downplaying recent declines in business and consumer sentiment. It notes that sentiment has historically been only weakly correlated with actual spending, and that feedback from its liaison program has not yet pointed to a meaningful slowdown in consumption.

ANZ is less convinced.

The bank believes the link between household disposable income, sentiment and spending is more direct than the RBA is currently acknowledging. With inflation continuing to erode real incomes, ANZ expects household spending to soften more materially than the central bank is forecasting.

That divergence matters because it shifts the balance of risk.

If activity weakens more than expected, the trade-off between inflation and growth changes. In ANZ’s view, that would reduce the need for further tightening and reinforce the case for the RBA to remain on hold.

It also suggests that the current policy setting may already be doing more work than the Board fully appreciates.

The broader takeaway from ANZ’s interpretation is that the RBA is walking a narrow path.

On one side sits the risk of inflation remaining elevated for longer than expected. On the other is the growing pressure on households and the potential for a sharper slowdown in activity.

For now, the Board is choosing to wait.

But it is a pause that still carries an underlying tightening bias, rather than a clear pivot toward easing.

In practical terms, that leaves the cash rate anchored at 4.35 per cent for the foreseeable future, with the next move still uncertain.

For borrowers, it reinforces the reality that relief is not imminent.

And for the broader economy, it highlights the delicate balance the RBA is trying to strike, between bringing inflation back to target and avoiding an unnecessarily sharp slowdown in growth.

According to ANZ, it is a balance that is becoming increasingly difficult to maintain.

Joel Robinson

RBA to hold rates for "prolonged period" rather than hikes: ANZ

<a href="https://www.apartments.com.au/developers/venturecrowd-property-projects">VentureCrowd</a> is down to the final Canopy Villa release at Cumulus Grand Villas in Carrara, as construction continues on the 59-residence gated community positioned above 100 hectares of natural savanna on the Gold Coast.

The remaining Canopy Villa forms part of one of four collections within the <a href="https://www.apartments.com.au/architects/bda-architecture">BDA Architecture</a>-designed community and has attracted interest from buyers seeking larger-format homes that combine privacy, security and low-maintenance living. Positioned within a private cul-de-sac and facing a protected black she oak forest, the four-bedroom villa includes a large private outdoor area suited to pet owners and families wanting more flexible space.

<a href="https://www.apartments.com.au/new-townhouses/cumulus-grand-villas-carrara-17-baltimore-court-carrara-qld-4211">Cumulus Grand Villas</a>, located at 17 Baltimore Court, comprises a mix of three and four-bedroom villas across the Skyline, Canopy, Savanna and Broadview collections. Prices currently range from $1.455 million to $1.895 million, with the final Canopy Villa priced from $1.825 million.

[smartcode_project:default project_id=135663 project_image_fid=360477]

The Canopy Collection villas offer four bedrooms, 2.5 bathrooms and approximately 245 sqm of internal space, alongside double garages and landscaped private areas. Expansive glazing, open-plan living spaces and private balconies have been designed to maximise natural light and outlooks toward the surrounding savanna landscape.

Construction is now underway across the fully funded development, which VentureCrowd says has become an increasingly important consideration for buyers assessing off-the-plan opportunities on the Gold Coast. The project is being delivered by <a href="https://www.apartments.com.au/builders/devcon">Devcon Property Group</a>, which has operated in South East Queensland since 1993 and delivered more than 1,000 homes across the region.

VentureCrowd Director of Property David Whitting previously said the project responds to changing buyer priorities in the prestige Gold Coast market.

“Flexible floorplans have proven particularly relevant for purchasers aged between 40 and 65, including next home buyers, downsizers and investors,” Whitting said.

[smartcode_project:default project_id=135663 project_image_fid=360505]

The buyer profile at Cumulus has reflected that shift toward owner-occupier-driven demand. Stuart Towns and Tracey Loynes recently purchased a Canopy Villa, drawn to both the lifestyle offering and the flexibility the home provided for their next stage of living together.

The couple, who met three years ago, sold their Robina home earlier this year after identifying what they saw as strong long-term investment potential at Cumulus while remaining within the same Gold Coast market. The villa’s private backyard was a major drawcard for their dog Luna, while proximity to golf courses including Emerald Lakes also aligned with their lifestyle interests.

Beyond the residences themselves, the community has been planned around shared lifestyle and recreation amenities. The Infinity Terrace will include a 20-metre heated pool, barbecue facilities, alfresco dining spaces and elevated retreat areas overlooking the surrounding landscape. Walking trails, a private nature reserve, orchard and herb garden are also integrated into the masterplan.

[smartcode_project:default project_id=135663 project_image_fid=360473]

BDA Architecture Director Darren Greenaway said the design approach was heavily influenced by the site’s outlook and secluded setting.

The practice sought to create what Greenaway described as a “little piece of paradise,” drawing inspiration from the elevated views, surrounding greenery and quiet location.

<a href="https://www.apartments.com.au/developments/carrara-qld-4211">Carrara</a> continues to attract buyers seeking larger homes within proximity to the coast but without direct beachfront pricing. Cumulus sits within easy reach of Broadbeach, Pacific Fair, Robina Town Centre and the M1, providing connections north to Brisbane and south toward the Gold Coast Airport and northern New South Wales.

The first stage of Cumulus Grand Villas is targeting completion in 2026.

[smartcode_project_cta:default project_id=135663]

VentureCrowd nears sell-out of Canopy Collection at Cumulus Grand Villas in Carrara

Waverley Council has made a call that many councils have been reluctant to make publicly. Growth is coming, regardless of who controls it.

The release of the Bondi Junction Vision and Master Plan is less about whether the Eastern Suburbs’ primary centre will change, and more about how that change is shaped, funded, and ultimately experienced on the ground. Waverley Council has released a 100-page plan which is effectively the first comprehensive blueprint for Bondi Junction in over two decades, and in doing so, signals a clear shift in how councils are positioning themselves in the current planning environment.

For the past 18 months, the conversation across New South Wales has been dominated by the State Government’s Low and Mid-Rise Housing reforms and the emergence of the Housing Delivery Authority pathway. Both have created faster, more centralised avenues for development approvals, particularly in well-located, infrastructure-rich areas like Bondi Junction.

Waverley Council’s response has been to move early, and decisively.

Rather than react to individual proposals as they come through the HDA or broader State-led reforms, Council has sought to establish a clear, place-based framework that sets the terms for how Bondi Junction evolves. The underlying position is relatively straightforward: if densification is inevitable, it should be tied to infrastructure, public domain improvements, and a cohesive vision for the centre, not delivered piecemeal through ad hoc applications.

<img alt="bondi junction" data-entity-type="file" data-entity-uuid="7f1f729c-ed99-4c6c-bf87-ffbce6991941" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-19%20at%209.58.16%E2%80%AFAM.png?VersionId=ULX4OlXKjeJ5BvNCNGL86evgXCjCfMih" />

At its core, the document is attempting to reposition Bondi Junction from what it largely functions as today, a transport interchange anchored by a major retail centre, into something far more layered. The ambition is to transform it into what the plan describes as the “civic and cultural heart of Sydney’s East,” a place that is active beyond commuting hours and capable of supporting a broader mix of uses, experiences and communities.

That repositioning is built around four key ambitions.

The first is to create a true destination. Bondi Junction already attracts significant foot traffic, with more than 86,000 daily transport users and millions of annual retail visits, but much of that activity is transient. People pass through, rather than stay.

The Master Plan seeks to change that dynamic. It leans heavily into the idea of an “18-hour economy,” extending activity well beyond traditional retail hours through dining, cultural programming, events, and a more active night-time offering. This is not just about adding more hospitality venues, but about fundamentally shifting how the centre operates, from a daytime shopping destination to a place that functions across the full span of the day and into the evening.

Oxford Street Mall sits at the centre of that shift.

Long seen as underperforming relative to its potential, the Mall is identified as one of the key catalyst projects in the plan. It is to be reimagined as a day-to-night spine, combining retail, dining, wellness and cultural uses in a way that creates a continuous flow of activity. Outdoor dining, rooftop venues, laneway activation and a curated events program are all part of the strategy, alongside significant public domain upgrades that aim to improve comfort, safety and usability.

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The second ambition is to transform Bondi Junction into a world-class interchange.

Despite being one of the most heavily used transport nodes in Sydney, the current experience is fragmented. Connections between the station, Westfield, Oxford Street Mall and surrounding streets are often unclear, and major roads create physical barriers that disrupt pedestrian movement.

The Master Plan proposes a more seamless, people-focused network. That includes clearer pedestrian links, improved wayfinding, better integration between transport modes, and a rethinking of how arrival into the centre is experienced. The aim is to shift the perception of Bondi Junction from a place people move through, to a place they arrive in.

The third ambition focuses on greening and open space.

One of the more consistent pieces of community feedback throughout the Vision phase was the need for more greenery, better public spaces, and a more comfortable urban environment. Despite being surrounded by major parks, Bondi Junction itself has relatively limited accessible open space, with much of the public realm dominated by hard surfaces and traffic infrastructure.

The plan responds with a network of new and upgraded public spaces, increased tree canopy, and what it terms the “Parkline,” a green link connecting Waverley Park through to Centennial Park. This is not just about aesthetics. It is about addressing heat, improving liveability, and ensuring that increased density is matched by access to high-quality outdoor space.

The fourth ambition is perhaps the most important from a development perspective: growth that gives back.

Bondi Junction is already the primary location for new housing supply in the Waverley LGA, and that is expected to continue. The area carries a target of 2,400 new dwellings by 2029, with further growth projected beyond that as demand for well-located housing continues to rise. The Master Plan does not seek to limit that growth. Instead, it attempts to shape it.

New housing is to be concentrated around transport, with stepped building heights designed to protect the character of surrounding neighbourhoods. At the same time, the plan introduces a more explicit link between development uplift and public benefit. This is where value capture becomes central.

The document outlines a framework where increased development potential is tied to contributions that fund public domain improvements, community infrastructure, open space, and affordable housing. It is an approach that recognises that much of the transformation of Bondi Junction will be delivered by the private sector, but seeks to ensure that the benefits of that growth are shared more broadly. The Civic Precinct is a key part of that equation.

Leveraging Council-owned land, the plan proposes a consolidated civic and cultural hub centred around Ebley Street. This would include new community facilities, cultural spaces, and potentially a new Council Chambers, creating a focal point for civic life that currently does not exist in Bondi Junction at scale.

It is one of several catalyst projects identified in the Master Plan, alongside the Oxford Street Mall transformation. These projects are intended to anchor change, acting as early interventions that unlock broader investment across the precinct.

Importantly, the Master Plan is not just a design document. It includes a delivery framework that sets out how these ambitions are intended to be realised.

Council is explicit in acknowledging that it cannot deliver the transformation alone. Implementation will require coordination between State agencies, private developers, landowners and the community, with a mix of planning agreements, infrastructure contributions and direct delivery mechanisms used to fund and stage improvements over time.

The plan outlines a mix of short-term, medium-term and long-term actions, from immediate public domain upgrades and planning controls, through to larger-scale projects that will unfold over the next decade or more. In practical terms, the next 12 to 24 months will be the most important.

This is when the Master Plan will move through exhibition, refinement and eventual adoption. It is also the period in which Council will seek to embed the framework into its planning controls, giving it weight in the assessment of future development applications.

Council officers have indicated that once the Master Plan is in place, it could be used as a benchmark when assessing Housing Delivery Authority proposals, and potentially reduce the need for further HDA declarations within Bondi Junction. In effect, it is an attempt to bring planning control back to the local level, while still aligning with State housing targets.

That tension between State-led reform and local planning control is not unique to Waverley. It is playing out across Sydney.

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If delivered as intended, Bondi Junction will become denser, more active, and more complex. It will support more residents, more workers, and a wider range of uses, extending beyond its current retail core into a more layered urban environment.

“The civic and cultural heart of Sydney’s East”: Bondi Junction masterplan revealed

Toorak's dress circle St Georges Road, home to some of the city's priciest homes, is set for a rare new apartment development.

Blood Diamond Group, an entity tied to Tina Brandi, wife of David Brandi who has been a prolific bidder on The Block over the years, has filed plans for an ultra-exclusive development across an amalgamated 3,662 sqm site at <a href="https://www.apartments.com.au/new-apartments/104-106-st-georges-road-toorak-vic-3142">104 and 106 St Georges Road</a>.

The proposal would replace two existing homes on the riverfront site with a five-level apartment building cascading down the steeply sloping land toward the Yarra River. Designed by Charles Wright Architects, the development has been carefully shaped around the site’s topography and river environs, with the upper levels stepping back to reduce visual bulk from both St Georges Road and the Yarra corridor.

Planning documents describe the proposal as “a site layout and building typology that is consistent with the emerging character of the area and which provides exceptional amenity for future residents without compromising that of neighbouring properties.”&nbsp;

<img alt="First look: Blood Diamond Group unveils riverfront apartment plans for Toorak Pavilion" data-entity-type="file" data-entity-uuid="ea19a17e-7528-4fa8-b727-05f2f7c025e5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Toorak%20pavilion%20a_0.png?VersionId=rZ2IjdoUL_UrRl1sZ4wZHnQXbYUaEmUQ" />

The scheme comprises 12 apartments, including 10 three-bedroom residences, one one-bedroom apartment, and a substantial split-level five-bedroom penthouse. A 624 sqm communal rooftop terrace will crown the building, while three undercroft levels embedded into the hillside will accommodate apartments and basement parking.

The design leverages the site’s dramatic northern outlook across the Yarra River, with living areas and balconies oriented toward the water. A central atrium running the full height of the building is intended to draw natural light deep into the residences and improve internal amenity.

Landscape architecture by <a href="https://www.apartments.com.au/landscape-architect/jack-merlo">Jack Merlo Design &amp; Landscape</a> will play a major role in softening the built form, particularly along the river edge where significant setbacks have been introduced. The proposal includes a minimum 30-metre setback from the Yarra River boundary, preserving a substantial landscaped buffer between the development and the waterway.

While a mature English Oak near the front of the site is proposed for removal, the plans retain a large English Elm closer to the riverfront, alongside other established vegetation in the lower section of the property.

<img alt="First look: Blood Diamond Group unveils riverfront apartment plans for Toorak Pavilion" data-entity-type="file" data-entity-uuid="ed3bf19b-5bc7-482f-bde7-41f709a13c3a" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Toorak%20pavilion%20b.png?VersionId=SG_kBGu4rOaSPY8FtVcmPJfSCrstuOfg" />

Architecturally, the building adopts strong horizontal forms with expansive glazing and curved balcony edges facing the river. Planning documents note the upper levels “adopt a receding form” to ensure the building responds appropriately to the Yarra River environs overlay controls.&nbsp;

The surrounding streetscape is characterised by large contemporary homes embedded into the hillside, many presenting as modest one or two-storey forms to the street before expanding toward the river frontage below. The planning report notes this established pattern heavily influenced the massing strategy for Toorak Pavilion.&nbsp;

Until the recent sale of the landmark Clendon Road mansion Coonac for around $130 million, St Georges Road held the state's most expensive home, the $80,000,088 derelict "Ghost House" mansion that was bought by crypto king Ed Craven.&nbsp;

Blair House, also on St Georges Road, sold for $74.5 million in 2022.

First look: Toorak Pavilions slated for dress circle St Georges Road

Six months after a development site on Kangaroo Point’s Shafston Avenue sold for $6.55 million, plans have been lodged for a 23-storey apartment tower.

A company named JMT Mega Capital, understood to be interstate investors when the 1,222 sqm double block traded late last year through Patona Property, is proposing an 84-apartment development in place of the existing low-rise buildings.

The slender tower at <a href="https://www.apartments.com.au/new-apartments/212-220-shafston-avenue-east-brisbane-qld-4169">212–220 Shafston Avenue</a>, overlooking the Brisbane River, has been designed by <a href="https://www.apartments.com.au/architects/aplus-design-group">Aplus Design Group</a>. It will comprise a mix of one-, two- and three-bedroom apartments above six basement levels, topped by rooftop resident amenities.

<img alt="First look: 23-storey Kangaroo Point tower planned for Shafston Avenue riverfront precinct" data-entity-type="file" data-entity-uuid="7e17ba9e-553e-42ef-92b6-22081671521a" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/podium_3.png?VersionId=hlVUf99vrOjUs.vhQs0qV0DhOncUy9T8" />

The development has been designed as a vertically articulated tower with recessed balconies, curved façades and planted edges intended to soften its scale within the evolving Shafston Avenue skyline. In the submitted Urban Design Report, Aplus Design Group said the tower had been “shaped with a slender vertical expression, articulated façades, recessed balcony zones, integrated planting and a clearly defined podium relationship, helping to reduce perceived bulk and create a more elegant contribution to the Shafston Avenue streetscape and broader Kangaroo Point skyline.”

The scheme comprises 84 apartments, including 25 one-bedroom units, 34 two-bedroom apartments and 25 three-bedroom residences. A total of 104 car spaces are proposed across six basement levels, including resident, visitor and accessible parking.

Residents will have access to rooftop communal open space and shared amenities, while the development also incorporates deep planting zones and subtropical landscaping throughout the podium and tower levels. The project includes 35 per cent communal space coverage across the site and a 17.5 per cent deep soil zone allocation to support urban greening outcomes.

The application exceeds the mapped building height under the Kangaroo Point Peninsula Neighbourhood Plan and is being assessed under Brisbane City Council’s impact assessment pathway. The design team argues the additional height is supported by the site’s strategic inner-city location, existing high-density zoning, and proximity to transport and employment hubs.

“The design has been developed to make better use of a well-serviced urban site within an established high-density residential setting, while improving the street presentation and overall quality of the public realm interface,” the report states.

<img alt="First look: 23-storey Kangaroo Point tower planned for Shafston Avenue riverfront precinct" data-entity-type="file" data-entity-uuid="1ab44b1e-ff45-4bf3-8da8-8aa0cd79db33" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/site_10.png?VersionId=tSxeGekZOqj1e9g3PEn_yFoC3taKDp3U" />

The proposal adds to a growing pipeline of apartment developments reshaping Kangaroo Point ahead of the 2032 Brisbane Olympic Games, with demand continuing to strengthen for new housing supply in well-connected inner-city precincts.

Mosaic has nearly sold out its under-construction <a href="https://www.apartments.com.au/new-apartments/the-bedford-by-mosaic-16-30-prospect-street-kangaroo-point-qld-4169">The Bedford by Mosaic</a>&nbsp;and <a href="https://www.apartments.com.au/new-apartments/the-carter-by-mosaic-77-linton-street-kangaroo-point-qld-4169">The Carter</a>,&nbsp;while Pikos recently completed <a href="https://www.apartments.com.au/buildings/skye-residences-by-pikos-kangaroo-point-8-river-terrace-kangaroo-point-qld-4169">Skye Residences</a> nearby. Pikos is also delivering <a href="https://www.apartments.com.au/new-apartments/gaia-kangaroo-point-108-lambert-street-kangaroo-point-qld-4169">Gaia</a>, over 230 three- and four-bedroom apartments on Lambert Street.

First look: 23-storey Kangaroo Point apartment tower planned for Shafston Avenue riverfront precinct

Spending

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GUEST OBSERVER
Household spending can be divided into three broad categories, services, retail trade, and non-retail goods. Where households spend has implications for overall economic activity. 
For example, spending in labour intensive services sectors, such as health, or restaurants, will typically have a larger impact on overall economic and jobs growth than spending on some retail goods, such as furniture and clothes, which are largely imported. In this note we look at the broad long- term trends in the three expenditure categories. 
Retail trade share of household spending has stabilised
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The retail trade share of household spending was on a long term downward trend but looks to have stabilised. In the early 1980’s retail trade accounted for over 40% of household spending compared to 31% today. The main beneficiary has been the services sector. Households have increased their share of spending on services from around 50 percent in the early 1980’s to around 60 percent now. 
The long run decline in the retail trade share of household spending reflects the fall in prices of retail goods relative to other goods and services. In volume terms, the retail trade share of total household spending has stayed very close to 30 percent since the data began in the early 1980’s.
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However, for the last three years the retail trade share of household spending has been flat. With volumes also being broadly steady, this shows that that the discounting of retail goods relative to other goods and services has eased. 
Part of the stabilisation of retail prices relative to services is due to the depreciation in the Australian dollar. This has helped to lift import prices in Aussie dollar terms. However RBA research shows that this lift has not been as large as would have been expected given the size of the depreciation. Increased competition is limiting the pass through from imported prices to sales prices. 
It also reflects a sharp slowing in services inflation since late 2013. Services inflation has typically been higher than for inflation for goods. However, both are now running at an annual rate of just 1.5 percent over the year to September. Inflation of market based services, such as meals out and hair cuts, has slowed more sharply to an annual rate of just 0.9 percent over the year to September. 
The slowing in services inflation, and inflation more generally, reflects a number of factors. Firstly there is spare capacity in the economy, which can be seen in the high rate of labour market underutilisation. Secondly, increased competition globally and advances in technology have reduced the pricing power in many markets.
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In a recent speech, RBA Governor Lowe spoke about how reduced pricing power was not just effecting the manufacturing sector, but service sectors too. Thirdly, job security fears have been heightened since the GFC. This means that workers are less inclined to push for wage increases, in sectors where part- time work is replacing full-time permanent positions.
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But services share is still increasing 
The share of household spending on services has increased over time. Spending on purely discretionary services, such as restaurants, accommodation and recreation, accounts for around 15% of household outlays. This share has been broadly stable over time. Contrary to popular perception, the share of spending on “meals out” has declined over time, now accounting for 5.2 percent of spending compared to 6.2 percent 30 years ago. 
So the upward trend has been driven by an increasing share of spending on non-discretionary services, such as rent, health, education, transport and communications. These categories account for 45 percent of household spending, having increased from around 30 percent 30 years ago. The shift in spending reflects relatively stronger price increases for these services as well as a change in preferences towards these areas. 
For example:
Insurance and other financial services – growth in this category is running at 6.5 percent over the year to June. As a share of housing spending, insurance and other financial services now accounts for 9.2 percent, compared to 8.4 percent three years ago.
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Growth in this category has been driven by an increase in the volume of spending. Excluding price effects, the proportion of spending on this category has also increased by a similar magnitude.
Consumers have shown a higher degree of caution around employment prospects in recent years. As a result they may be taking on a greater degree of insurance to guard against the loss of income, a decline in health or loss of other assets. There are also a larger number of products on offer.
Spending on health services rose by almost 10% over the year to June. The share of household spending continues to increase, accounting for around 5% compared to 4% ten years ago. The increase has been driven by both relatively strong price increases as well as an increase in volume of spending. The ageing population has also boosted spending on health and this trend will continue. A higher proportion of the population now has (subsidised) private health insurance which has boosted the number of elective procedures.
Education has also grown at an above average pace, with spending up 5.8% over the year. Education accounts for 4.7% of household spending compared to 3.5% 10 years ago. The increase in the share of spending is due to relatively strong price increases and also a larger volume of spending on this category. For example, a greater proportion of people are finishing year 12 and undertaking further education.
One category of discretionary services spending which has increased over time is overseas travel. As a share of household outlays, expenditure on travel has increased from 2.5 percent in the early 1980’s to around 3.7 percent now. The share of spending on flights has fallen as the relative cost has declined.
However outlays on overseas accommodation and other travel costs has increased.
Spending on non-retail goods is falling
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<div class="column">The retail trade share of household spending has stabilised in recent years. And the services share continues to increase. This means the share of spending on non-retail goods has declined. </div>
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 In particular, the share of spending on vehicles and their maintenance has fallen by 1 percent point over the past three years. There has been a long run downtrend in spending on these categories with the share of households spending around currently 7 percent compared to a peak of 11 percent in the 1980s. This largely reflects price falls – the price deflator for vehicles has declined by 25% since late 2007, while the deflator for the maintenance of vehicles is 7 percent lower over the past three years. Vehicles are cheaper, more reliable and can be funded via mortgage redraws at a lower cost.</div>
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 Summary</div>
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 Changes in relative pricing, which have reduced the price of goods relative to services, have contributed to some very long run trends in household spending. Households have spent an increasing share on the consumption of services, while spending on retail and other goods has declined.</div>
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 However the good news for retailers is that their share of household spending has been stable in recent years. This reflects a lower Australian dollar, which has lifted the price of some retail goods. However it also reflects a fall in the price of other consumption goods, such as cars, and a slowing in services inflation.</div>
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 With plenty of spare capacity in the labour market, wages growth and non- tradeables inflation are likely to remain soft for many years. This means the relative price of services is likely to remain subdued. And the upward trend in the services share of household spending may flatten out. </div>
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Kristina Clifton is economist, Commonwealth Bank, and can be contacted <a href="https://www.commbank.com.au" target="_blank">here</a>.
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Trends in household spending: CBA's Kristina Clifton

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GUEST OBSERVER
Consumer confidence slipped 2.2 percent in March seeing it continue to lag behind business confidence which is a bit more upbeat.
Both consumer and business confidence are around their long term averages though.
<a href="/images/2016/03/9/image004.png" target="_blank">Click to enlarge</a>
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Source: NAB, Westpac/MI, AMP Capital
Interestingly, all the talk of a crash in the Australian property market looks to have led to a sharp fall in the proportion of Australian’s nominating real estate as the wisest place for savings. It fell from 23.4% in December to 14.7% in March. With interest in shares also falling slightly and superannuation remaining low this saw a renewed spike in interest in bank deposits and paying down debt.
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Source: Westpac/MI, AMP Capital
Housing finance fell a greater than expected 3.4% in January with both finance to investors and particularly owner occupiers falling. The loss of momentum in lending to investors tells us that the APRA measures continue to impact and would probably be welcome by them and the RBA. The slowing in lending to owner occupiers may be more of an issue, but it’s dangerous to read too much into one month’s data. Nevertheless it is consistent with slower growth in housing related debt this year which in turn will likely see slower gains in Sydney and Melbourne property prices compared to last year.
Today’s consumer confidence and housing finance data while soft is unlikely to be enough to prompt the RBA to act on its easing bias just yet.
<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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Talk of a crash in the Australian property triggers sentiment shift to wiser investment places: Shane Oliver

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The NAB Online Retail Sales Index for the December 2015 quarter edition has estimated the Australian online retail market was worth $19.1bn in the 12 months to December 2015.
The survey noted month-on-month figures to December 2015 grew 2 percent, seasonally adjusted, driven in part by online sales growth on 2.5 percent. Australians spent an estimated $19.1 billion in retail online to December 2015. NAB report this level is equivalent to around 6.5% of the traditional bricks &amp; mortar retail sector.
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mick.cee-iDmgDDAmu8

Australian online retail market worth $19.1bn in 2015: NAB

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GUEST OBSERVER
Retail sales were largely flat in December after rising for the prior four months. Aussie retailers have certainly faced their share of headwinds over the past year. And while it’s pretty clear that December was a soft month in terms of retail activity, the December quarter was essentially in line with longer-term averages.
What the result highlights is a momentum shift. Activity levels were strong at the start of the quarter but seem to have pulled back over the Christmas spending period. Interestingly the soft result was also mirrored in the Commonwealth Bank Business Sales Index (which measures all the debit and credit transactions that are processed across CBA eftpos terminals).
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The Reserve Bank has slightly downgraded growth forecasts in 2017 and 2018. However it is important to note that the forecast changes are downward tweaks rather substantial cuts.
And rather than any serious signs of panic or concern, the downward revisions effectively opened the door to another rate cut if it becomes necessary. 
Interestingly, the accompanying commentary certainly suggests that Board Members remain uncertain about the near term outlook for the domestic economy but the longer term prospects remain relatively sound.
Importantly the weaker near term growth story is really driven by the uncertainty in non-mining business investment. However given the rather more positive view on the longer term prospects – particularly the expectations for an ongoing slide in unemployment it is by no means assured that another interest rate cut is on the cards.
Two key concerns dominate central bank thinking. The first include how the rebalancing of the domestic economy (away from mining investment) is keeping pace. And the second is the uncertain impact of the recent financial turbulence – it has the potential to see businesses and households pullback in terms of activity. Interestingly the weakness in non-mining business investment is the one area that continues to occupy policymakers thoughts. A lift in business investment is the key to supporting growth and in providing an overall lift in jobs.
The policy stance is clearly slanted towards the potential for further rate cuts rather than rate hikes. Subdued global growth, a lower terms of trade, coupled with a lack of non-mining investment are some of the risks to domestic growth.
The Reserve Bank intimated on Tuesday that the economic outlook was improving while at the same time noting inflation was lower than expected. Clearly that gives the Reserve Bank scope to cut rates, if it was needed. But the Reserve Bank is not giving any indication that it intends to act on that ‘easing bias ’ any time soon. In fact we expect the Reserve Bank to keep rates on hold over the rest of 2016.
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What do the figures show?
Retail trade – December month
Retail trade was flat in December after rising for the prior four months.  In trend terms, retail trade grew by 0.3 per cent in December.
Non-food retailing fell by 0.5 per cent in December after rising by 0.5 per cent in November. Non-food retail spending is up 4.6 per cent on a year ago.
Sales by chain-store retailers and other large retailers rose by 0.4 per cent in December to be up 6.4 per cent over the year.
Sales rose in five of the eight states and territories, led by the ACT (up 2.5 per cent), Northern Territory (up 0.3 per cent), Queensland and South Australia (both up 0.2 per cent), and NSW (up 0.1 per cent). Sales fell the most in Western Australia and Tasmania (both down 0.6 per cent), and Victoria (down 0.1 per cent).
Strongest growth in the month was by “Liquor retailing” (up 1.3 per cent) followed by “Footwear and other personal accessory retailing” (up 1.2 per cent) and clothing (up 1 per cent).
The biggest drop in sales in the month was recorded by “Electrical, Electronic &amp; Gas Goods Retailing” (down 1.7  per cent) followed by “Other recreational good retailing” (down 1.5 per cent) and “Hardware, building and garden supplies retailing” (down 1 per cent).
“Newspaper and book retailing”  (down 2.6 per cent) and “Department stores”  (down 0.9 per cent).
Retail trade – December quarter
In real (inflation-adjusted) terms, retail trade rose by 0.6 percent in the December quarter – marginally below the decade average of 0.7 per cent. In real terms sales were up 2.5 percent on a year ago – below the decade average of 2.9 percent.
Strongest growth in the quarter was by “Electrical, Electronic &amp; Gas Goods Retailing” (up 5.4 per cent – the best result in a year), followed by “Other recreational good retailing” (up 4.2 percent – the best result in two years.) and “Department stores” (up 1.8 per cent).
The biggest drop in sales in the quarter was recorded by “Other retailing – stationery goods, flowers, antiques” (down 4.4 per cent), followed by “Footwear and other personal accessory retailing” (down 2.8 per cent – the weakest quarterly result in three years), and “Other specialised retailing” (down 2.6 per cent).
Retail inflation lifted by 0.7 per cent in the December quarter – the biggest quarterly rise in two years. Retail prices are up 1.6 per cent over the year. Prices of goods at “Footwear and other personal accessory retailing” rose by 3.1 per cent, with “Other retailing – stationery goods, flowers, antiques” up 2.2 per cent, and “Supermarkets &amp; grocery stores” up 1.2 per cent.
Key take-aways from the Reserve Bank report
Below are our key “take-aways” from the Reserve Bank’s latest quarterly reviews. The full Statement on Monetary Policy can be found <a href="https://www.rba.gov.au/publications/smp/2016/feb/" target="_blank">here</a>: 
Forecasts: The RBA expects annual economic growth 2-3 cent and underlying inflation around 2.00 percent over the next few months.
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Economic outlook: “Forecasts for GDP growth are little changed from those presented in the November statement. Year ended GDP growth is forecast to be 2ó–3ó per cent over the year to December 2016, and to increase to 3–4 per cent over the year to June 2018.”
Inflation forecasts: “The December quarter inflation outcome was broadly in line with expectations in the previous Statement. The forecast for underlying inflation is little changed. Underlying inflation is expected to remain low over the forecast period...”
Non-mining business investment: “The outlook is for non-mining business investment to remain subdued in the near term. The ABS capital expenditure survey of firms’ investment intentions and the low level of non-residential building approvals suggest that the profile of nonmining investment will be a bit weaker than earlier”.
Labour market: “Labour market conditions have improved by more than expected at the time of the November Statement. Employment growth was above average over 2015 and the unemployment rate was around ó percentage point lower in the December quarter than earlier anticipated.”
“While employment growth is expected to slow somewhat from the rapid pace seen in the December quarter, it is forecast to remain strong enough to reduce the unemployment rate further. The participation rate is likely to rise further over coming years as individuals are encouraged to enter the labour market as employment opportunities improve.”
Foreign buyers: “ Information from the Bank’s liaison suggests that foreign buyers tend to have longterm motivations for investment and may be relatively unconcerned about temporary fluctuations in housing price growth.”
What is the importance of the economic data?
The Bureau of Statistics’  Retail trade publication contains the most current readings on the performance of consumer spending. The ABS surveys 500 ‘larger businesses’ and 2,750 ‘smaller businesses’. Retail trade covers spending at a broad range of retail outlets but excludes both petrol and motor vehicle sales. A weak retail trade result may point to a slowing economy as well weighing on the share prices of listed retail stocks. But retail trade estimates can’t be assessed in isolation – it is important to look at the influences determining future trends in consumer spending, such as income, employment and confidence levels.
The Reserve Bank releases its Statement on Monetary Policy each quarter. The Statement is the Reserve Bank’s assessment of economic and financial conditions and also contains the latest inflation views. The Statement is crucial is assessing the short-term outlook for interest rates.
What are the implications for interest rates and investors?
The outlook for retailers remains positive. Lower petrol prices, firm confidence levels, strong home construction and rising employment all serve to boost spending levels. The only area that could instil some hesitancy in the average consumer is the weaker performance of the sharemarket.
The Reserve Bank will closely monitor developments in China and financial markets more generally. Encouragingly the Reserve Bank has plenty of firepower to provide stimulus to the economy. CommSec expects no change in the cash rate over the next year.
 
Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a>
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Spending stalls, RBA tips lower jobless rate: Savanth Sebastian

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GUEST OBSERVER
Retail sales posted a 0.5% rise in Oct, mid-way between the consensus forecast of 0.4% and Westpac’s 0.6% (although at 0.549%, closer to Westpac’s call in unrounded terms).That follows 0.4% gains in Aug and Sep.
Store categories recorded a mixed month with solid gains for basic food (+0.6% off a soft Sep), household goods (1.1% but still subdued given housing strength) and a decent bounce for department stores (+3.5% more than reversing the 1.6% drop in Sep. These were partially offset by a dip in cafes and restaurants (–0.6%) and basically flat results for clothing and ‘other retail’.
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The state results ranged high to low from NSW (+0.8% after a quiet Aug-Sep), to Vic &amp; Qld (0.5%, the former after solid gains in Aug-Sep, the latter after back to back declines), SA (+0.3% holding at insipid growth rates), and WA (flat, implying worsening per capita cuts in spending).
The monthly trend sales estimate suggests a slight improvement with annual growth lifting from a 3.6% annualised mid-year to around 3.9%yr currently. 
On a 3mth rolling basis however, annual sales growth is still softening from a peak of 4.6%yr in Q2 to 4% currently. On a broad store-type basis, the slowdown is coming from more moderate growth in household goods retail and a marginal softening in basic food, the contribution from other categories lifting a little. By state, it is mainly centred on NSW &amp; ACT, where strong sales growth had been driving about half of the gains nationally up until earlier this year.
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A significant wedge is starting to emerge between large and small retailers with the latter struggling again (sales down 0.4%yr). Growth is particularly strong for large non-food retailers (+8.9%yr).
October was a poor month for retailers' sales via online channels, with non seasonally adjusted sales up just 3.5%yr, the first time sales in this channel have dipped below non- online retail since the ABS started providing a split in 2013. Over that short period, online retail has typically grown at 51⁄2 times faster than total retail (i.e. 20%yr+).
All up the pace of sales growth remains sub-par, particularly given that retailers should be indirectly benefitting from the lower AUD's boost to Australia's tourism sector and a consistently more upbeat picture from private sector business surveys. Some of this likely reflects continued aggressive price competition in a range of sub-sectors (the monthly figures are nominal and thus include the impact of both volume and price changes). Recent reads from the Westpac-Melbourne Institute Consumer Sentiment survey point to a more positive tone particularly around Christmas spending plans. Dec-Jan may see some better retail results.
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Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Australian retail sales on the up: Westpac's Matthew Hassan

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GUEST OBSERVER
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The latest data on economy-wide spending is best described as encouraging. Spending rose in September but slightly slower than the July and August results. Spending was mixed across sectors and states. But the good news is that the annual rate of economy-wide spending remains above longer-term averages.
While spending was up in the Business services category, it can prove volatile so it will be important to see a follow-up lift in sales. The large Retail Stores category (33% of economy-wide sales) rose by 0.5% in trend terms to be up 7.7% over the year – well above the long-term average growth pace of 5.7%.
There are few reasons to prompt the Reserve Bank to cut rates again. The economy is growing, sales are up, business and consumer sentiment are above average and our largest trading partner, China, is rebalancing from an industrial focus to a consumer spending focus and with some degree of success.
What does the data show?
The Commonwealth Bank Business Sales Indicator (BSI), a measure of economy-wide spending, recorded moderate sales growth in September, although down from previous months. The BSI lifted by 0.3% in September, the slowest growth in 35 months and down from 0.5% gains in July and August. Annual growth of spending eased for the third month to 6.8%, but still above the decade- average of 5.1%.
The seasonally-adjusted measure of sales posted a solid 2.8% gain in September – the strongest growth since May 2013. And annual growth lifted from 5.7% to a 10-month high of 8.9%. 
The Commonwealth Bank BSI is obtained by tracking the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities. And in line with the practice of the Bureau of Statistics with its retail trade data, seasonally adjusted and trend estimates of the BSI are obtained by applying statistical software. The seasonally adjusted and trend BSI results are derived from the same SEASABS statistical software. This allows analysis of the broader underlying trends that may be hidden in the raw data. 
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Across sectors, eight of the 19 industry sectors fell in trend terms in September. But encouragingly, spending in the volatile Business Services category rose by 5.3%. Also notably sales rose at Miscellaneous Stores (up 1.2%), Transportation (up 0.9%), Contracted Services (up 0.8%).
The large Retail Stores sector grew by 0.5% in September after rising between 0.6-0.7% per month over the previous seven months.
Among the weakest sectors in September were Airlines (down 3.6%); Government services (down 1.6%), and Utilities (down by 0.7%). Sales at Personal Service Providers, Service Providers and Mail Order/Telephone Order Providers all fell by 0.2%. 
In annual terms in September, five of the 19 industry sectors contracted including: Utilities, Mail Order/Telephone Order Providers, Automobile and Vehicle Sales and Airlines.
At the other end of the scale, sectors with strongest annual growth in September included: Hotels &amp; Motels; Miscellaneous Stores; Amusement &amp; Entertainment, Service Providers and Wholesale Distributors &amp; Manufacturers.
Sales rose in only four of the states and territories in September: Tasmania (up 1.0%), South Australia (up 0.5%), Western Australia (up 0.4%) and Queensland (up by less than 0.1%). Sales fell the most in Victoria (down 0.8%), ACT (down 0.7%), Northern Territory (down 0.5%) and NSW (down 0.1%).
In annual terms, three states and territories had sales below a year ago in September: Northern Territory (down 8.3%), NSW (down 4.7%) and Victoria (down 1.7%). At the other end of the scale, growth was strongest in Tasmania (up 9.1%) from the ACT and South Australia (up 8.4%), Western Australia (up 7.9%), and Queensland (up 5.9%).
What is the importance of the report?
The Commonwealth Bank releases its Business Sales Index around the 20th each month. The data provides a broader perspective of consumer spending. The Business Sales Indicator includes transactions made at traditional retail establishments such as supermarkets, clothing stores and cafes &amp; restaurants and as such is more comparable to the ABS Household Final Consumption Expenditure released on a quarterly basis. The Business Sales Indicator also covers businesses such as airlines, car dealers and utilities such as water and electricity companies as well as motels, business, professional and government services and wholesalers.
What are the implications for interest rates and investors?
The latest data adds to our view that the Reserve Bank will leave official rates unchanged in coming months. 
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Craig James is chief economist, CommSec and Savanth Sebastian is economist, CommSec. Both can be contacted <a href="https://www.commsec.com.au" target="_blank">here</a>.
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