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

Westpac

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Conditions remain bleak across the WA housing market, with Perth’s five year price correction re-acclerating in 2018 and buyer sentiment still not gaining traction, according to Westpac.
Its Housing Pulse May 2019 did suggest there are positives as the pace of monthly price declines is moderating, the glut in rental markets looks to have disappeared, and mining regions have seen a lift.
However, with the economy still looking soft, mortgage arrears rising and the clear threat of ‘negative equity’ problems highlighted in our last report, downside risks are likely to persist.
Curtin University school of economics, finance and property associate professor Steven Rowley recently noted the bottom of the market had been called for three years now.
Perth valuer Gavin Hegney believes that the bottom has yet to come.
“If you are looking for the bottom out in the overall median price, you are not going to see that until the end of the year,” he told Domain.
“And you are not going to see that until rents rise and the tenants of today become the purchasers of tomorrow on the basis they can get money, and that will seem to balance and lessen the rental pressure and see purchasing pressure and recovery in the lower end of the market
“That’s the reality but within the market there are always things on the move, and while outer areas and the lower end are seeing properties sell for well below replacement price, some of the upper end of the market – not the ultimate prestige – but what they call the upper end mortgage market if you like, is doing quite well.”
<a href="https://www.propertyobserver.com.au/images/2019/5/29/WA%201%20.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/5/29/WA%201%20.jpg" alt="">
Prices across the Perth market are down 8.7% annually, the fastest pace of decline since the GFC.</div>
<div class="column"> </div>
<div class="column">Following an extended correction, prices are now at a 13 year low.</div>
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<a href="https://www.propertyobserver.com.au/images/2019/5/29/WA%202.jpg" target="_blank">Click here</a> to enlarge:</div>
<div class="column"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/5/29/WA%202.jpg" alt=""></div>
<div class="column"> </div>
<div class="column">The price detail shows the latest turn has been broad based across houses, units, price tiers and sub-regions.</div>
<div class="column"> </div>
<div class="column">The shift is notable for the lack of variation across segments.</div>
<div class="column"> </div>
<div class="column">As noted, the monthly pace of declines in Perth has moderated a touch since February, with declines tracking 0.5%mth in Mar-May vs 1.1%mth through Nov-Feb.</div>
<div class="column"> </div>
<div class="column">The detail shows improvements in the North East and South East of the city but some deterioration in inner areas.</div>
<div class="column"> </div>
<div class="column">WA’s mining areas are seeing some lift in prices.</div>
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<a href="https://www.propertyobserver.com.au/images/2019/5/29/WA%203.jpg" target="_blank">Click here</a> to enlarge:</div>
<div class="column"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/5/29/WA%203.jpg" alt=""></div>
<div class="column"> </div>
<div class="column">The Westpac WA Consumer Housing Sentiment index has firmed slightly since Feb but is largely unchanged on a year ago and unlikely to be sufficient to lift the market out of its slump.</div>
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<a href="https://www.propertyobserver.com.au/images/2019/5/29/WA%204.jpg" target="_blank">Click here </a>to enlarge:</div>
<div class="column"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/5/29/WA%204.jpg" alt=""></div>
<div class="column"> </div>
<div class="column">Around supply, Perth’s vacancy rate is now back to ‘normal’ levels but listings of both houses and units remain elevated and will continue to accumulate at the currently very weak pace of sales.</div>
<div class="column"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/5/29/WA%205.jpg" alt=""></div>
<div class="column">Source: Westpac</div>
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<a href="https://www.propertyobserver.com.au/images/2019/5/29/WA%206.jpg" target="_blank">Click here</a> to enlarge:</div>
<div class="column"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/5/29/WA%206.jpg" alt=""></div>
<div class="column"> </div>
<div class="column">The Westpac report comes as Domain report Perth property prices are now nearly back to the levels seen at the end of 2011.
“That 2011 decline was the trough and was before the 2014 peak, so prices rose from their trough in 2011 up to the peak of 2014, and now they are back down to that trough of 2011 more or less,” said Domain senior research analyst Nicola Powell, meaning they are now nearly back to the levels seen at the end of 2011.
“The impact of the once-in-a-generation mining boom played havoc with normal demand patterns; there was a temporary population explosion which led to rising prices and in the end an overbuild of new housing,” LWP Property Group managing director Danny Murphy told Domain.
“When the impacts of the boom ended the major driver of activity in population growth fell away sharply. Other related factors around employment certainty and the expectation of reductions in prices reduced the incentive to purchase.”
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j.ballantyne1990-6AQqhLzZaK

Western Australia sees no real let up to bleak property market

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EXPERT OBSERVER
Earlier this week Westpac moved forward its forecast for RBA cash rate cuts from the original forecast on February 21 of cuts in August and November to June and August.
The June cut remains almost certain; a second in August is our expectation and the November cut should also proceed.
Therefore, Westpac is now forecasting three cuts in 2019 in June; August and November to push the cash rate from 1.5% to 0.75% and to hold at that level through 2020.
Our forecasts for employment; wages growth; economic growth ; inflation and conditions in the housing market  are consistent with the need for  policy to ease  through the full course of 2019, not to go on hold as early as August.
We see the unemployment rate drifting up to 5.4% by year’s end; economic growth at 2.2% for 2019 ; underlying inflation at 1.4%; and the housing market still weak although approaching stability.
That means that the June and August cuts should be supported by a further cut in November.
An option which we considered was a move to some form of Quantitative Easing( QE) should the RBA see the need to ease policy further beyond the 1% level. However, consideration of the RBA’s own research on the deposit structure of major banks( see below) indicates that the RBA could be expected to anticipate that the policy transmission mechanism will still have some effect at a cash rate below 1%.
2019  also seems somewhat early to expect the RBA to embrace QE. Central banks have always favoured interest rate policy over QE until they believed that rate policy flexibility had passed or further lowering rates would be ineffective. Central banks have also mainly favoured QE to ease credit conditions rather than boosting demand.
Looking into 2020 we expect that the case for policy easing could still be apparent but as rates go lower and time passes the option to use QE will become more attractive. Arguably the RBA may see our current forecast of 0.75% as the base or possibly as low as 0.5%. Beyond 0.5% QE seems to be the more effective policy if further easing was required.
Consequently our central forecast for the terminal cash rate in this cycle is 0.75% with risks to the downside, although we would certainly see 0.5% as the floor for the cash rate, with QE a more effective policy tool thereafter.
Optimism that further easing in 2020 may not be necessary would be based on the stabilisation of the housing market; a sustained boost to confidence from a stable Federal government which would be in a position to embrace genuine reform; an improving fiscal position as the terms of trade hold up much better than assumed in the Budget estimates; and a more settled global environment as trade tensions are finally settled.
The revised terminal  cash rate has implications for our AUD and fixed rate forecasts. While back in February we expected the low in the AUD to be USD 0.68 we have now shaved that forecast back to USD 0.66 by end 2019. This forecast is also predicated on  our constructive view on commodity prices and a steady US federal funds rate over 2019.
Markets are currently pricing in a terminal cash rate of around 0.85% by June next year so we have marginally shaved back our bond and swap rate forecasts to reflect a lower and earlier bottom in the cash rate than priced into the market.
The Case for Further Rate Cuts.
Our decision to bring forward the forecasts of rate cuts that we released in  February  was in response to a speech delivered by Governor Lowe on May 21 when he  commented, “A lower cash rate would support employment growth and bring forward the time when inflation is consistent with the target. Given this assessment , at our meeting in two weeks’ time, we will consider the case for lower interest rates.”
However there was a fundamental change in the Governor’s approach . Whereas most of his time as Governor has been marked by an overriding concern with the risks posed to the economy around excessive household debt and frothy housing markets he has now turned his attention to the unemployment rate and labour markets.
Recall that the Bank has three objectives : stability of the currency; full employment; and economic prosperity and welfare of the Australian people. Of course “stability of the currency” relates to its objective to hold the inflation rate within the 2-3% band on average over the cycle.
The focus on household debt and asset markets emphasises “economic prosperity and welfare”.
In his speech the Governor turned to another part of his overall objective – the unemployment rate. He noted “ my judgement of the accumulating evidence is that the Australian economy can support an unemployment rate of below 5% without raising inflation concerns”. A lower unemployment rate is also supportive of the “welfare” objective , a possibility of boosting wages growth and assisting with the achievement of the inflation target.
He also noted that “ monetary policy has a role to play here.”
However the RBA’s current forecasts do not inspire confidence that the unemployment rate will fall much below 5%.  The current forecasts have the unemployment rate holding at 5% out to the end of 2020 . It is important to note that those forecasts are based on  market pricing at the time of the May Board meeting  which the Board ( May Board Minutes) notes as “Cash rate can be expected to be lowered by 25 basis points within the next three months and again by the end of 2019”. The forecast is also based on the AUD holding steady at USD 0.70.
With our forecast that the cash rate will be lowered by 25 basis points on June 4 and August 6 the boost to the economy from rate cuts can be expected to be somewhat stronger than if they are delayed as expected in the RBA’s forecast. Furthermore, the RBA forecast assumes that the AUD holds at USD 0.70 for the duration of the forecast period whereas the current trajectory ( spot already below USD0.69) can be expected to be lower.
Nevertheless it seems unlikely that the RBA would make any significant changes to its forecasts on the basis of those second order changes in the assumptions.
The Governor notes that other policies including fiscal support through infrastructure spending; and structural reform also have a role to play.
These are longer term , necessary initiatives but the point  arises as to whether the RBA should do even more than is currently factored into its forecasts.
There are three key issues here:
<ul>
<li>Westpac forecasts that even allowing for the stimulus from the rate cuts the trend in the unemployment rate is likely to edge up. We have a target of 5.4% by end 2019 , well above the RBA’s forecast of 5%.This would reflect clear below trend growth in the economy – we expect 2.2% for 2019 compared with the RBA’s forecast of 2.6%  supplemented by the weakening trend in the employment outlook – “some labour market indicators have softened a little” – RBA Governor , May 21.</li>
<li>The risk of overstimulating the housing market seems low. There is some evidence that the market may be stabilising but we expect that with affordability still stretched in Sydney and Melbourne and other capital city markets now turning down due to the tight credit environment any risk of an overshooting( as we saw in 2016) in response to lower rates seems low.</li>
<li>Will a lower cash rate fail to ease financial conditions due to its very low level ? The issue here revolves around the RBA’s expectation of the capacity of the banks to pass on lower rates . Of paramount importance is the structure of banks’ funding arrangements. The RBA has produced a graph in the May  Statement on Monetary Policy ( Graph 3.6). Our estimate of the numbers in  the graph is that  : 8% of banks’ deposits are held at 0% interest rate; 25% between 0% and 1%; 15% between 1% and 1.5%; 42% above 1.5% and 10% in offset accounts ( effectively earning the mortgage rate).On these numbers the RBA would assess that around 90% of banks’ deposits could cope with the 0.5% rate cut, already expected. Arguably , on these numbers, around 75% would  cope with a further cut. These numbers are approximate and , no doubt, do not  cover all issues.</li>
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Without doubt the option of QE would be on the radar screen for the RBA but, given the analysis of banks’ deposit structures, it is reasonable that they would look to lower rates in the first instance. At some level of the cash rate , perhaps 0.75% but certainly 0.5% , it is likely that the transmission mechanism from QE would be more effective in easing credit conditions and boosting demand.
The most likely forms of QE would include the RBA purchasing asset backed securities issued by the non- banks or providing attractive funding for the banks secured against their securitised portfolios of mortgages aimed at supporting existing borrowers and possibly tied to new lending targets.
These policies may well be needed to help the RBA move towards its key objectives but are more likely issues for 2020 rather than the immediate challenges which are faced in 2019.
BILL EVANS is the Chief Economist at Westpac
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RBA to halve the cash rate by November: Bill Evans

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EXPERT OBSERVATION 
Westpac has revised the forecast it released on February 21 that the RBA would cut the cash rate in August and November to June and August.
On February 21, Westpac forecast that the Reserve Bank would cut the cash rate by 50 basis points in two tranches – August and November. Since then markets and forecasters have largely moved in that direction.
We have not changed that forecast since that date.
However, we are announcing an adjustment to the forecast to bring forward the first cut to the June Board meeting with the second cut to follow in August.
We then expect the cash rate to remain on hold through 2020.
This change in forecast reflects the lift in the unemployment rate for April from 5.1% to 5.2% and the confirmation from the Governor that the Board would be closely following developments in the labour market with the primary focus on the unemployment rate.
The Governor’s thinking has evolved over the year to accept that, as we have observed in other countries, upside inflation risks are consistent with a lower unemployment rate than had previously been assessed. For Australia the Bank had believed that the key unemployment rate was 5% - he now accepts that he can drive the economy harder with an associated lower unemployment rate without risking any inflation overshoot.
Recall that the current forecast for the unemployment rate is 5% to end 2020, (falling to 4.75% by June 2021), based on market pricing, which in the May Board Minutes is assessed as “the cash rate was expected to be lowered by 25 basis points within the next three months and again by the end of 2019”.
In his speech “the Economic Outlook and Monetary Policy”, released today, he gives the strong guidance that “at our meeting in two weeks’ time, we will consider the case for lower rates".
Recall that other aspects of the Bank’s current forecasts are underwhelming despite the assumption around lower rates – 2.6% growth in 2019; 1.75% trimmed mean inflation in 2019; and 5% unemployment rate by end 2019.
With the June rate cut virtually locked in, the issue is why we expect a follow up move in August.
Firstly, that timing is a little more aggressive than was used in the May SOMP and therefore could reasonably be associated with somewhat more optimistic forecasts.
Secondly, we expect that the June quarter trimmed mean inflation print (released on July 31) will be 0.4% indicating that underlying inflation will print 0.7% for the first half of 2019, making it difficult to persist with a 1.75% forecast for underlying inflation in 2019 – downgrading the underlying inflation forecast to 1.5% in 2019 will make it difficult for the RBA to credibly forecast a return to 2% inflation in 2020.
The Bank may choose to persist with overly optimistic forecasts but will need to ease again to emphasise its inflation targeting credentials.
This second cut would also be consistent with the assumptions that have underpinned the May forecasts .
Key to Westpac’s rate cut forecast on February 21 was the expectation that the unemployment rate was likely to reach 5.4% by end 2019. Our work around the weakness in the cyclical parts of the labour market (around 60% of employment) which is already apparent and recent trends in the business surveys signal that the softening in the labour market can be expected to become more apparent in the next few months.
We also expect that the March quarter GDP report (released June 5) will confirm the Bank’s recent downbeat assessment of the consumer (consumer spending growth in 2019 revised down from 2.5% in February to 2.0% in May) and note that the May Minutes see downside risks to the consumption forecasts.
Note also that the May Minutes point to downside risks for the global economy and confirmed in today’s speech.
Looking further out it is important that the Governor stressed the importance of the exchange rate in the monetary policy transmission mechanism. Accordingly, in order to extract ongoing “dividend” from the rate cut cycle it seems likely that the August RBA decision will not preclude further action.
However, our current assessment is that with the housing market stabilising in 2020 and the RBA uncertain about the impact of sub 1% cash rate on the economy the eventual low point in the cycle will prove to be 1%. This view is consistent with our original call back in February this year.
Our forecast low point of USD0.68 for the AUD which printed in our report on February 21 was predicated on the two cuts – the change in the timing of the cuts does not materially affect that call.
BILL EVANS is Chief Economist for Westpac.
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Westpac tips interest rate cuts in both June and August: Bill Evans

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EXPERT OBSERVER
The Reserve Bank’s May Statement on Monetary Policy (SMP) shows substantial reductions in the growth and inflation forecasts. GDP growth (to one decimal point) is now forecast at 2.6% for 2019 and 2.7% for 2020. That compares with 3.0% and 2.7% in the February Statement on Monetary Policy. The main explanations for the growth reductions for 2019 are consumption (2% down from 2.5%) and dwelling investment (–6.7% down from –4.5%).
As revealed in the Governor’s decision statement following the May Board meeting, the underlying inflation forecasts (trimmed mean) have been reduced from 2.0% for 2019 in the February SMP to 1.75% in May and the 2020 forecast reduced from 2.25% to 2.0%. 
The forecast for the unemployment rate has been slightly increased, with the 5% unemployment rate still expected to hold through 2019 but the fall to 4.75% pushed back from December 2020 to June 2021.
It is very important to note that these forecasts are based on market pricing for the profile for the RBA cash rate and the current spot AUD. In February, markets had one cut priced-in for February 2020, whereas in May, one full cut is priced-in for August 2019 and a second priced-in for May 2020. The AUD trade weighted index is 2% lower than in February.
Consequently, despite a significantly lower cash rate profile, the growth and inflation forecasts have been lowered. These current forecasts are what we should call absolute ‘bare-essentials’ – growth slightly below trend (trend at 2.75%) and inflation only holding at the bottom of the 2–3% target band out to the end of the forecast horizon. It seems clear therefore that the RBA now believes that it needs to cut rates to barely achieve an acceptable outcome.
The timing of market pricing is slightly more cautious than Westpac’s forecasts (announced on February 21) of cash rate cuts in August and November 2019.
The reasonable issue therefore arises as to whether these cuts should not occur immediately. In that regard, we need to point to the lingering theme which the RBA has promoted for most of 2019. That theme relates to the “tension” between the labour market data and economic growth as depicted through the national accounts and partial indicators particularly around retail sales and the housing market.
In the introduction to this SMP, the RBA notes “in contrast to the signal coming from the national accounts, a number of labour market indicators remain positive. Employment growth was strong in the March quarter… the vacancy rate remains high and there are ongoing reports of skilled shortages”. However, the RBA’s own forecasts do not envisage the unemployment rate falling further until 2021, even with the rate cuts embedded in the forecasts.
Consequently, there remains  a suspicion that their labour market forecasts might prove to be pessimistic and, if so, the favourable dynamics that would be associated with a much stronger labour market could be expected to develop. Those dynamics would be associated with faster wages growth, faster employment growth, faster growth in household incomes, faster consumption growth;  a narrowing in the output gap, and therefore a more favourable profile for inflation. Given that the Bank must realise that it is nearing the floor of the cash rate a time to assess this prospect is reasonable.
The issue therefore becomes one of what data around the labour market will be required for the RBA to delay its rate cuts. That theme is fully emphasised in the final sentence in the introduction to the May SMP, “the Board will be paying close attention to developments in the labour market at its upcoming meetings”.
It has been Westpac’s view for some time that the unemployment rate has already bottomed out at 4.9% and we expect that it will gradually drift up through the second half of 2019 to around 5.4%. We expect that trend to become clearly apparent by the June employment report (released in late July), making the first cut an obvious decision for the August meeting. There is always a risk that such a trend could emerge more quickly, but, given the volatility of the monthly employment reports, and the “strong employment growth in the March quarter”, we would be surprised if the RBA was prepared to abandon that hope at an earlier Board meeting.
We are not surprised that the RBA has now adopted our own view of the consumer with its big reduction in forecast consumer spending growth to 2% in 2019 now broadly in line with our own. The RBA is also moving towards our forecast for the contraction for dwelling investment in 2019 of 9%, having now forecast -6.7% from -4.5%, and an overall reduction in the GNE forecast from 2.6% to 1.9% (Westpac’s forecast is 1.6%).
Conclusion:
Today’s SMP emphasises that the RBA thinks it’s highly likely that it will need to follow market pricing with two rate cuts. Westpac concurs with the market’s August timing for the first cut but expects that the second cut will occur in November – well before the timing implied by market pricing of a full cut by May 2020.
The risk remains that the RBA may choose to move earlier than August, although given the strong first quarter for employment growth and the notorious volatility of the monthly employment reports, it seems likely that a prudent central bank would wait until August for its first move - when of course it will be able to fully explain the move and support it with its revised forecasts in the next Statement on Monetary Policy.
BILL EVANS is the Chief Economist for Westpac
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Suspicion RBA labour market forecasts might prove to be pessimistic: Westpac's Bill Evans

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EXPERT OBSERVER
Following the March quarter CPI report, a May RBA rate cut became the majority opinion amongst Australian market economists. Westpac however remained of the view that the first cut would instead come in August after the labour market turned down and as the RBA recognised growth was set to remain well-below trend through 2019.
<a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/38365">Westpac’s view proved correct for May</a>, and the language of the decision statement was also consistent with our August/ November timing for rate cuts. Of greatest importance, the Board inferred in the statement that the labour market would have to strengthen further to stay a rate cut(s). In stark contrast, our analysis of the labour market suggests the cyclical sectors have already turned down sharply and that the headline measures will follow from April (a key release for next week).
On GDP growth, while the RBA only marked their 2019 GDP growth forecast to trend in May, the data-to-hand continues to point to a much weaker outcome. Note, in this week’s <a href="https://www.propertyobserver.com.au/https://westpaciq.westpac.com.au/Article/38378">retail trade data</a> for the March quarter, sale volumes were shown to be up just 0.2% over the nine months to March. Ahead, as the labour market deteriorates, house price declines continue and the savings rate lifts, consumption (and consumer-linked investment in the retail sector) will come under further pressure.  
Across the Tasman, <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/New_Zealand/2019/May_2019/MPS_Review_May_2019.pdf">the RBNZ</a> sought to get ahead of the curve by cutting the cash rate 25bps at their May meeting to 1.50%. The RBNZ had previously been betting on stronger growth in the domestic economy getting inflation back to the 2.0%yr target. However, this has not eventuated and hence, given global risks, the RBNZ decided to act.
Turning to Europe, the recent stabilisation in European data continued this week. The final April services PMI, March retail sales and May Sentix investor confidence all slightly beat consensus expectations, though March German factory orders underwhelmed. ECB President Draghi also remained constructive regarding policy’s effectiveness, reiterating a need to be patient and persistent to bring inflation back to target and that the ECB “don’t accept defeat”.
Over in the UK, the political situation continues to deteriorate. After a swing in local elections away from the conservatives, infighting is growing (again). Equally concerning, a Tory-Labour compromise is looking unlikely in the near-term, portending persistent Brexit uncertainty.
Finally to US and China trade. At the beginning of the week, President Trump surprised global markets by turning up the heat on China. Today the 10% tariff on $200bn of imports is set to be increased to 25% unless a deal can be reached in last-minute negotiations. A 25% tariffs on the remaining $325bn of imports from China to the US has also been mooted, though the timing is unknown.
If they become policy, these threats will not only put at risk China’s 2019 growth target of 6.0% –6.5%, but also the outlook for the US economy. The mutual cost to both nations is reason to believe a resolution will be reached, but not necessarily today. Clearly, there is significant distance between the two parties and the subject matter is highly contentious.
ELLIOT CLARKE is a senior economist at Westpac.
SIMON MURRAY is an economist at Westpac.
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Westpac continues to expect cuts in August and November

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EXPERT OBSERVATION
Westpac correctly forecast that the RBA would remain on hold at the May Board meeting. The Bank was clearly less concerned about the March quarter Inflation report and emphasised the importance of developments in the labour market. Westpac continues to expect rate cuts at the August and November Board meetings.
The Reserve Bank Board decided to leave the cash rate unchanged at 1.50%.
This was Westpac’s forecast, although markets were uncertain, with around a 50% probability priced in for a rate cut and 14/26 market economists forecasting a cut (Bloomberg survey 3 May). There are two main reasons behind this decision. Firstly, the RBA’s response to the recent March quarter inflation report was not as negative as had been expected. In its preview, Westpac pointed out that the RBA had moved from forecasting underlying inflation as the average of the weighted median and the trimmed mean to  forecasting just the trimmed mean.
In the March inflation report, the trimmed mean printed an increase of 0.3% for the quarter, compared to the RBA’s likely forecast of 0.4% - only a 0.1ppt miss. Today, the RBA lowered its trimmed mean forecast for 2019 from 2% to 1.75%, and for 2020 from 2.25% to 2%. That is only a 0.25 ppt reduction in the forecast. As we pointed out in our preview, that reduction compares to a 1 ppt reduction in the forecast from 2.5% to 1.5% in May 2016 (in response to a similarly low inflation report for the March quarter). Governor Stevens cut rates in response to that forecast change at the May 2016 Board meeting.
The second issue of importance was the Board’s noting in the April meeting minutes that “members also discussed the scenario where inflation did not move any higher and unemployment trended up, noting that a decrease in the cash rate would likely be appropriate in these circumstances”.
Today’s Governor’s Statement strongly emphasised the importance of the labour market, “it [the Board] recognised that there was still spare capacity in the economy and a further improvement in the labour market was likely to be needed for inflation to be consistent with the target. Given this assessment, the Board will be paying close attention to developments in the labour market at its upcoming meetings”.
As this comment emphasises, the second condition nominated in the April minutes is yet to be fulfilled. It is also important from a timing perspective to note the term “upcoming meetings”. That suggests to us that a common view held by some economists of a move in June  can be ruled out. This condition around the labour market will need more than one employment report to establish a trend.
We feel that this statement fits well with our view that the next move will be a cut in August. Firstly, we expect that the June quarter inflation report will print trimmed mean growth of around 0.4%. With the first six months of the year contributing 0.7ppts to the annual rate for 2019, it is unlikely it will be possible to persist with the 1.75%( 2019) - 2%( 2020) scenario and a 1.5%( 2019) – 1.75% (2020) scenario will be adopted by the RBA  for its August meeting. Recognition that inflation will hold below the bottom of the 2-3% target band for 2019 and 2020 will signal the need for further policy easing.
We also expect that developments in the labour market over the next three months will disappoint the RBA. It is not entirely clear whether they will be satisfied with a stable 5% unemployment rate which the Governor notes is their forecast for the next year, or they require a sustained lower unemployment rate, as noted in the concluding paragraph stating that a further improvement in the labour market is needed. Either way Westpac expects to see a deterioration in the labour market over the next six months.
We expect that this sequence of weak inflation and softening labour market data will persist throughout 2019, which is consistent with our growth forecast of 2.2% compared to trend of 2.75%. That profile remains consistent with the need for further stimulus at the November meeting following the August cut
Supporting our outlook for the labour market is our research showing that the cyclical sectors of the economy are already in jobs decline although this is being supported by ongoing jobs growth in the non- cyclical sectors.
Westpac forecast that rates would remain steady at today’s meeting. However we anticipate that developments around domestic demand; the labour market; and underlying inflation will establish a clear case for cuts in both August and November. This view has been held since February 21.
BILL EVANS is Chief Economist for Westpac.
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RBA holds rates steady in line with Westpac's forecast: Bill Evans 

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EXPERT OBSERVATION
The March retail report showed a slightly better than expected monthly gain but a materially weaker than expected result for March quarter sales volumes, the latter being the more important takeaway.
Monthly sales posted a 0.3% gain, beating expectations of a 0.2% rise with Feb’s surprisingly firm 0.8% gain marked up to a 0.9%. Annual growth lifted from 3.2%yr to 3.5%yr.
That’s where the good news ends though. The wash up for the quarter as a whole showed all of these gains in nominal sales were due to higher prices with sales volumes declining.
Real retail sales dipped 0.1% in Q1, coming in well below consensus expectations of a 0.3% gain with the quarter on a par with the flat result in Q4. Annual growth has slowed to 1.1%yr but with a cumulative gain of just 0.2% over the last three quarters is in danger of dropping below 1%yr next quarter.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/5/31/New%20Project%2022.jpg" alt="">
The undershoot vs expectations was due to a stronger than expected rise in retail prices which rose, up +0.8%qtr vs +0.7%qtr in Q4. The sub-category detail shows a particularly big rise in food prices (+1.4%qtr vs 1.2% in Q4). Non food retail prices posted a 0.2%qtr gain.
The detail also points to a material slowing in sales across sub-categories associated with ‘big ticket’ discretionary spend, consistent with a wealth effect drag from the housing market correction. In particular, household goods retail volumes declined 0.6% in the quarter to be flat over the year, a marked slowdown on the 5.4%yr growth seen this time last year. Department stores also recorded a contraction, sales volumes down 1.2%qtr, and –0.7%yr. Other non food categories, mostly ‘small ticket’ discretionary, recorded small gains for the quarter and over the year. Cafes and restaurants were the only bright spot, recording a 1%qtr gain in Q1 to be up 1.4%yr.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/5/31/New%20Project%2023.jpg" alt="">
By state, NSW was the only state to post a gain in Q1, up 0.6%qtr, but was coming off a bigger 1.1%qtr fall in Q4, annual sales growth slowing to just 0.9%yr. Results across the other states were: Vic –0.3%qtr, +2.3%yr; Qld –0.1%qtr, +1.5%yr; SA –0.4%qtr, –0.4%yr; WA –0.6%qtr, –0.7%yr and Tas –0.9%qtr, +1.7%yr. The broad based weakness in the quarter suggests that it is not just about spillovers from the correction in housing markets which to date has been largely confined to NSW, Vic and WA.
Looking by channel, online sales look to have posted a 0.7% gain in the March month, annual growth slowing to 'just' 12.7%yr, a subdued gain for this segment.
Overall the March retail report points to downside risks to the wider consumer spending estimates in the March quarter GDP, the headwinds that emerged in the second half of last year clearly carrying into 2019. 
MATTHEW HASSAN is a Senior Economist for Westpac. 
Read full article <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2019/May/er20190507BullRetailQ1.pdf" target="_blank">'Australian retail sales Q1'</a>.
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Retail volume results materially weaker than expected: Westpac's Matthew Hassan 

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Westpac has reported its IO loans has dipped to 31 percent of its home loan portfolio.
It sat at 46 percent in late 2017.
An overview of <a href="/expert-insights/finance/anzs-home-loan-portfolio-shows-big-drop-in-interest-only-borrowers">ANZ's home loan portfolio</a> from their half year results investor pack also showed a big fall in interest-only loan borrowers.
Just 18 percent of their portfolio is IO compared with 26 percent this time last year and 36 percent in 2017.
NAB's IO loans have dropped to <a href="/news/nab-housing-lending-revenue-continues-to-drop-and-shareholders-pay-the-price">26 percent of their loan book</a>.
Some 84 percent of Westpac's entire portfolio has an 80 pecent or lower LVR.
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Westpac announced a reported profit of $3,173 million for 1H19.
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Cash earnings, the Group’s preferred measure of earnings, was $3,296 million, down 22%. 
The Group’s performance in 1H19 was impacted by major remediation and restructuring items: including provisions for estimated customer refunds, payments and associated costs of $617 million (after tax); and costs associated with the reset of Westpac’s wealth strategy announced on 19 March 2019 ($136 million after tax). Excluding these items cash earnings was down 5%.
Westpac Group CEO, Mr Brian Hartzer said it was "a disappointing result reflecting weaker business conditions and the bank dealing decisively with outstanding issues, including remediation and resetting our wealth strategy.”
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Westpac sees IO loans shink to 31 percent of home loan portfolio

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EXPERT OBSERVATION
Dwelling approvals fell 15.5% in February, unwinding a 19.1% jump in February that reflected a big spike in high rise approvals. That was in line with Westpac's forecast but a touch weaker than the consensus view of a 12.5% decline.
Headline moves over the last two months have been driven by 'high rise' units with approvals in the segment more than doubling between January and February and nearly halving again between February and March. Approvals in this segment are still well above Jan's extreme low and about 10% above the average level over the three months to January.
Outside of the high rise segment, the underlying trend looks to be weak. Total approvals ex high rise (covering both detached houses and mid-low rise) looks to be down a further 2% in the month following a 4% fall in February and down around 19% year. Private detached house approvals declined 3.2% month, to be down 18.3% year. Mid-low rise unit approvals look to have risen slightly by around 1% in the March month but are still down by around 20% year.
The state detail also points to a soft underlying tone. The unwinding high rise spike was concentrated in NSW (–27% month, –23% year) and Vic (–27% month, –36% year). Excluding high rise, NSW posted a 10% month gain in the month but was coming off a much weaker January with approvals still down 7.7% on their Dec level. Vic approvals ex high rise declined 1.9% month but is down a milder 3.5% compared to Dec. Approvals declined the other major eastern states, the slide over the last year now looking brutal in Qld (–2.4% month, –35.9% year); much milder in SA (–2% month, –11.5% year). WA bucked the wider trend this month, posting a surprisingly strong 4.8% month gain to be up 20.7% year, very much against the odds.
The total value of renovation approvals fell 8.7% month to be up 3.6% on a rolling three month average basis, a reasonable uptrend still in place. The state detail continues to point to gains coming through more strongly in Qld and WA.
The total value of non res building approvals rose 2.1% month but is still down 0.5% year on a rolling three month basis. Conditions remain mixed across both segments but the state split points to slowing in NSW and Vic partially offset by gains in Qld and WA.
Overall the March dwelling approvals update again points to weakening underlying momentum, highlighting downside risks to the near term outlook for new dwelling construction. So far the weakness mostly just cancels out the lift from the February high rise spike. However clearly there are downside risks to the outlook if the weak momentum continues in coming months, particularly if we also start to see approved high rise projects get put on hold.
MATTHEW HASSAN is a Senior Economist for Westpac.
Download the full report: <a href="https://westpaciq.westpac.com.au/wibiqauthoring/_uploads/file/Australia/2019/May/er20190503BullDwellApprovMar.pdf" target="_blank">Australian dwelling approvals March' (PDF 327kb)</a>.
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Dwelling construction forecast is weak: Westpac's Matthew Hassan 

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Westpac is cutting fixed rates on owner occupier and investor home loans by up to 0.20 percent, effective tomorrow.
Westpac’s decision comes after the nation’s largest bank, CBA, who cuts rates on Tuesday.
It is the second time this year that Westpac has cut some of its fixed home loans, after cutting some of its 2-year fixed rates in February.
<img src="https://www.urban.com.au/images/2019/4/11/Westpac%20Rate%20Cuts.JPG" alt="">
(Source: RateCity.com.au)
RateCity.com.au research shows 40 lenders have cut fixed rates on around 450 products since the beginning of the year. 
ANZ is the only big bank to have not cut its fixed rates this year.
The Commonwealth Bank has cut interest rates on its fixed-rate loans for home owners and investors.
Lenders to cut their fixed rates since the start of the year include Macquarie, St George Bank, Adelaide Bank, AMP, Bankwest and, from this Friday, Bendigo Bank.
<div class="_1665V undefined">
<p data-gtm-vis-recent-on-screen-6236702_632="1554930972862" data-gtm-vis-first-on-screen-6236702_632="1554930972862" data-gtm-vis-total-visible-time-6236702_632="4000" data-gtm-vis-has-fired-6236702_632="1">CBA has also cut 0.1 percentage points off its three-year and four-year fixed-rate loans for owner-occupiers, to take the new rates to 3.79 per cent and 4.09 per cent respectively.
The bank has also sliced 0.1 per cent off its investment loans, with its two-year loan now sitting at 3.89 per cent, its three-year fixed at 3.99 per cent and five years at 4.39 per cent.
The cuts apply to principal and interest loans and are "packaged" rates, where those applying for the loans have other products with the bank, and apply to those taking out a new fixed-rate loan.
</div>
<div class="_1lC_G">As demand for home loans slows, the cuts apply to a range of fixed-rate home loans, with the biggest cut of 0.3 percentage points to its five-year owner-occupied loan to a new rate of 4.09 per cent.</div>
Figures from comparison site Mozo show that a home buyer with a $400,000 loan would save $4260 over the five-year fixed period.
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