Following on from a number of soft prints since May, this suggests that we will see the inflation gauge sagging towards the bottom of the 2 to 3 percent target range in due course, particularly as a temporarily strong 0.7 percent reading - partly caused by the easing in the exchange rate - will soon drop off the annual reading as soon as December.
Given that inflation is traditionally weak on this gauge in the fourth quarter of the year (only ~0.3 percent is expected in Q4) it seems fairly likely that by the time the Q1 data rolls around the notion of another interest rate cut could feasibly tabled once again.
Adding to the case for a further cut in this long, drawn out easing cycle will be the fact that after a strong run the Building Approvals data now seems to have passed its peak, as we'll now consider in three short parts below.
Part 1 - Building Approvals roll over
While a seasonally adjusted 9134 houses were approved in September (+9 percent year-on-year), which looked decent enough, only 5685 unit approvals were recorded in the month.
This represented a substantial seasonally adjusted 34 percent decline in unit approvals year-on-year and a 22 percent decline from the August figure.
Part 2 - Capital city data shows no Sydney oversupply
Greater Perth is really beginning to ramp up its house approvals now, too, so watch this space.
But we still don't see there being a huge oversupply of units in Sydney for several reasons:
The big picture is that such a level of stock will quickly be absorbed given the rapid rate of increase in the Greater Sydney headcount.
Part 3 - State level - DYOR on regional property
DYOR here, and caveat emptor.
The reason? Population growth - while declining in the mining states, it is soaring in Sydney.
These include, the Central Business District (CBD), the Ultimo/Chippendale/Broadway corridor, North Sydney, Mascot/Green Square/Wolli Creek, and a few others (but not Pyrmont in this cycle).
Indeed, putting the basket case of Darwin to one side, if there is one capital city where sustained strong dwelling price growth appears to have surged well ahead of the market's fundamentals at the macro level (unemployment, building approvals, stock on market, vacancy rates etc.) then in our view that capital city is Melbourne.