Unit approvals trend lower

Data centres surge

The ABS released the May building approvals figures, which showed solid enough figures for detached houses - mainly driven by double-digit growth across Greater Perth - with pretty flat figures for elsewhere. 

Attached dwelling approvals remained tepid in Sydney and Melbourne, with south-east Queensland remaining the one area of relative strength in the country (notably: Brisbane, Redcliffe, Gold Coast, Maroochydore). 

Overall, house approvals are trending higher - essentially thanks to Perth - and unit approvals are now trending lower, with higher mortgage rates and surging building costs now acting as headwinds for the medium-density sector. 

Over the year, there were around 201,000 dwellings approved. 

Over the past two years, about 16,000 dwellings have been approved per month, approximately 20 per cent lower than would be required to meet the government's target of 1.2 million new homes over 5 years. 

I doubt the government will mention the Housing Accord target much from here on out, and it was probably not that much of a serious target anyway.

Going forward, dwelling approvals and dwelling starts are likely to fall away, driven by Sydney and Melbourne, in the aftermath of the Federal Budget changes to property tax legislation. 

It's worth noting that the focus of construction work will likely now pivot away from housing and towards data centres in Sydney and Melbourne. 

The value of building approvals for data centres has surged, as we've previously seen reflected in the private new CapEx figures.

Reported the ABS this morning:

"Approved non-residential building rose 41 per cent (to $10.83 billion), following a 22.9 per cent April rise. This was a record high for non-residential building and was driven by a rise in large data centre approvals located in New South Wales and Victoria.

The value of total residential building value dropped 5.7 per cent (to $10.24 billion)."

James Foster ran through the building approvals figures in more detail here.

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Cotality also released its latest monthly home values index this morning. 

Detached house prices over the year to date are down significantly in two cities, namely Sydney (-4.2 per cent) and Melbourne (-4.4 per cent), with small declines for unit prices also recorded. 

It's typically a quiet time of year for the rental market, but in June we saw the first potential signs of an increase in rental price growth, with rents rising by a seasonally adjusted 0.5 per cent over the month, to be 5.9 per cent higher over the year.

Source: Cotality

Rents have increased by around 42 per cent over the past five years, Cotality reported. 

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The WTI crude oil price fell below $68.50 today for the first time in 4 months. 

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New home sales evaporate into thin air...

Credit aggregates slow

Business credit growth remained solid in the most recent Financial Aggregates data, up by almost 10 per cent over the year to May 2026, with investment in new data centres seeming likely to be a tailwind over the next year or two.

Housing credit growth slowed from 0.65 per cent to 0.54 per cent in the month of May, and this growth largely relating to mortgage approvals initiated well before the Federal Budget.

Over the year, housing credit growth was still solid at 7½ per cent, but these strong figures are already rolling over significantly on the monthly data.

Housing credit growth for investors was running at double-digit levels over the year - arguably underscoring why there was a need for a tax policy change - with the housing market having become flooded with borderless buyer's agents buying up investment properties all over the country. 

Yes, this was partly a response to a shortage of housing and rising rents, but it was also potentially becoming a systemic risk for the housing market and the economy. 

In real time, the housing credit impulse is undergoing a hard U-turn, and asking prices have already fallen significantly for houses in Sydney, Melbourne, and now Brisbane over the past three months.

Below is the asking prices chart for houses Sydney, from SQM Research, which shows asking prices for detached houses down by -4.3 per cent over the past 3 months (Melbourne and Brisbane are reflecting a very similar pattern):

Source: SQM Research

Business confidence collapses

In other news, small business confidence has been annihilated.

In fact, business confidence for SMEs has now fallen lower on the NAB survey measures than it cratered during the pandemic (which is pretty remarkable given everything that was happening at that time):

Source: NAB

What next?

What comes next looks set to be a painful adjustment for the housing market, and the Aussie economy.

Here are three related things which will likely happen, in my best guess. 

Firstly, it seems that very few investors are prepared to take the risk of buying a new build property at the moment, given crippled market confidence and increasingly scary media headlines.

As such new housing supply will eventually tighten. 

This will take a while to work its way through, however, given that there's a significant pipeline of new dwellings already under construction.

Secondly, as stamp duty take is already being eviscerated, it's almost certain that at the state level there will be creative incentives put in place to encourage more buyer activity, whether it's in the form of first homeowner grants, loans, deposit schemes, duty relief, or other concessions and initiatives. 

And thirdly, the interest rate cycle may also now be getting close to its peak, according to central bank rhetoric, market futures pricing, and bond yields. 

The Reserve Bank of Australia's Board Minutes, released today, appeared to bring to mind the significant slowing in consumption growth which was brought about by the Banking Royal Commission through 2018, and there's evidently some concern that the Aussie economy may be tipping into a slowdown or even a recession.

An August interest rate hike is now priced at lower than a 20 per cent chance, and Australia's 3-year bond yield is trading at around 4.37 per cent.

---

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Podcast: Is peak fear here for property? Negative gearing, SMSF risk and the 6-year rule

Property Podcast

We recorded this episode just before the government announced the ban on SMSF lending for property.

Here are the key points discussed:

In this episode of the Australian Property Podcast, Pete Wargent and Chris Bates ask whether Australia’s housing market has moved from nerves to peak fear.

They unpack weaker auction results in Sydney and Melbourne, falling prices, softer new-home sales and why investor sentiment keeps deteriorating even as hopes build for lower rates later in 2026. A key focus is policy risk: how proposed negative gearing and capital gains tax changes could hit established-property demand, why self-managed super fund lending may become the next political battleground, and whether investors end up being pushed towards new builds or Melbourne apartments instead.

They also test a few narratives gaining traction right now, including whether peak fear may open a window for first-home buyers, why headlines about Melbourne apartments and boutique developments need more scrutiny, and what a genuine market reset would look like across owner-occupier suburbs, investor pockets and regional areas rather than just in headlines.

Pete and Chris then move from headlines to practical strategy, explaining what buyers should watch around confidence, supply, serviceability and sensational market narratives.

In the listener Q&A, they tackle whether to keep a townhouse when upgrading to a forever home, how the six-year CGT rule works in practice, and whether AI could become deflationary for households carrying big debt.

Tune in here (or click on the image below):

You can also watch the YouTube version here:

---

1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

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    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 18k followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

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Job vacancies march lower

Job vacancies ease

Job vacancies fell by -2.1 per cent over the 3 months to May 2026, to a seasonally adjusted total of 329,500, according to the ABS. 

This was in large driven by a sharp drop in public sector vacancies, following an earlier boom in Canberra-driven hiring. 

At the state level, most states and territories are continuing to see total job vacancies trend lower from their post-pandemic highs.

The number of unemployed persons per job vacancy rose to just above 2, to be at the highest level since February 2021 (albeit still at a historically low level). 

With the solid expansion in the labour force, it looks as though the unemployment rate will continue working its way higher from here, especially after a Federal Budget that will 'challenge' confidence.

The ABS commented:

"The Financial and insurance services industry had the largest quarterly percentage drop, with a fall of 21.4 per cent. This was followed by Accommodation and food services, which was down by 16.1 per cent. "

Overall, it looks like the labour market was gradually softening in the lead-up to the Federal Budget.

---

1. Download our property buying guide

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You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 18k followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

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Employment flat over 3 months

Employment flattens through Easter volatility

At first blush it looked like a solid set of numbers for May employment change, with a +40,300 increase in employed persons, albeit mostly part-time roles.

But then when we got into the detail of the release, April's figures were revised down to -40,700, meaning that employment was broadly flat over the past couple of months.

Essentially, there was some seasonal volatility as fewer people took leave than normal over the Easter period. 

The 3-month average employment gain was only +6,300.

The participation rate is also well down from the 2024 highs.

The seasonally adjusted unemployment rate fell back to 4.4 per cent, though it looks as though the trend is still probably higher from here. 

There was little change in underemployment measures, though policymakers will be keeping a close eye on the youth unemployment, rate which is above 10 per cent (and particularly in Victoria where the youth unemployment rate is a concerning 13.2 per cent). 

Finally, population growth among the aged 15+ civilian population was revised lower following recent data updates, but remains elevated at 1.76 per cent over the year.

Overall, markets weren't much changed, and indeed the 3-year bond yield was lower over the day at 4.37 per cent, as oil prices completed a round trip all the way back down to where they were when the Iranian conflict began.

A rate hike for August is now priced as less than a 1 in 4 chance. 

James Foster ran through the figures in more detail here. 

---

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You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 18k followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Inflation falls to 4pc, but...(housing CPI reaccelerating)

Headline inflation declines

Headline inflation fell from 4.2 per cent to 4 per cent in May, which was considerably lower than the median market forecast (4.3 per cent), largely thanks to lower fuel prices. 

The fuel excise cut will be in part extended out beyond 30 June and through July, which will help to smooth the transition back to 'normality'.

Source: ABS

That was the good news.

On the other hand, new dwelling price growth is accelerating again, rising by a strong 0.88 per cent in May for the fastest increase since 2022.

Rising building costs - together with crippled confidence in the housing sector - will likely soon become a headwind for new housing supply. 

Rents are also reaccelerating, rising by 0.42 per cent in May, for the fastest increase in over a year.

As such, as the housing component group of consumer price inflation has picked up to 6½ per cent over the year to May 2026.

Source: ABS

Trimmed mean inflation thus rose from 3.4 per cent to 3.6 per cent for the 12 months to May 2026.

Source: ABS

An interest rate hike remains as about a 1 in 3 chance by for the August Reserve Bank meeting. 

Australia's 3-year bond yield wasn't all that much changed on today's release, trading at just under 4.4 per cent, albeit it's a long way below recent highs. 

James Foster ran through the inflation figures in more detail here.

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In other news, new online job advertisements fell by -7,000 or -3.3 per cent in May as the economy looks to slow further from here, given low business confidence and near-record low employment confidence. 

Source: Jobs & Skills Australia

Over the year declines were mainly driven by Victoria (-5.3 per cent), with Queensland suddenly now entering the chat (-5.3 per cent over the year) following a sharply monthly decline in Queensland vacancies in May (-2,700). 

Source: Jobs & Skills Australia

SMSF changes

In a couple of recent podcasts, Batesy and I discussed the possibility of a ban on self-managed super fund borrowing for residential property, whereby I had noted a possible carve-out for new dwellings (on the assumption that the government presumably wants to encourage new dwelling supply).

Reportedly the government has agreed to a deal with the Greens for a prospective ban on new borrowing for all residential property in SMSFs, which is a surprise (to me anyway) given that up to a third of new apartment pre-sales in many developments may be accounted for by superannuation fund purchases.

For what it's worth, I obviously agree that property spruiking for new apartments in the SMSF sector has been a long-running regulatory challenge.

But the outright ban does seem likely to kill off a decent chunk of new developments as apartment pre-sales dry up.  

Apart from the clear risk to new apartment supply, there's also a good chance that the electorate sees this as yet another broken pledge, with the Federal government's share of the primary vote falling as low as 27 per cent in recent polling.  

 

The latest trend across all opinion polls has seen both of the traditional major parties take a hit. 

---

1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 18k followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Podcast: What the rate pause and Budget shock mean for Australia’s property market

2-Sense podcast

A rundown of what we covered in the podcast this week:

In this episode of the Australian Property Podcast, Pete Wargent and Chris Bates unpack a housing market that is trying to stabilise after the Budget shock, without much conviction that the hard part is over.

They start with the Reserve Bank holding the cash rate at 4.35%. Bond yields are off their peak, some fixed rates are edging lower, and buyers are asking whether confidence can rebuild. Pete and Chris explain why that does not guarantee a strong recovery while policy uncertainty, softer investor demand and weak sentiment still weigh on Sydney and Melbourne.

The episode then turns to what is changing on the ground. Investors are pulling back, upgraders are cautious, first-home buyers are getting a little more breathing room, and rents remain under pressure because vacancies are still tight. They also unpack stamp duty changes, buyer incentives and why mortgage stress is still more of a pressure story than a distressed-sales story.

Finally, they look ahead to late 2026 and 2027. If rates fall meaningfully, the market could find a new leg higher. If cuts stay modest, Australia may be heading into a slower, more balanced phase instead. It is a useful episode for buyers, investors and homeowners trying to work out what matters now and what noise to ignore.

Tune in here (or click on the image below):

You can also watch the YouTube version here:

---

1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 18k followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.