Job vacancies fall further; unemployment to rise

Job vacancies fall

Job vacancies fell another -3,000 over the 3 months to August, for a decline of -0.9 per cent, following a -2.2 per cent decline over the preceding quarter.

While the 3 most populous states appear to have stabilised, job vacancies fell in all most of the other states and territories. 

The number of unemployed persons per job vacancy has increased from the pandemic emergency lows of around 1(!) to 2.2.

This is the highest ratio since February 2021, and suggests that monetary policy has been mildly restrictive.

With the size of the labour force continuing to swell quite rapidly, it looks as though the unemployment rate may rise gradually towards 5 per cent, and then above.

Overall, it does look as though the unemployment rate will keep rising from here, with Western Australia and the Northern Territory seeing fewer roles created, and Canberra seeing some cutbacks in hiring too.

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Top end leads housing declines

Prices falls for a 6th month

Cotality reported that housing prices declined -1.1 per cent nationally in September 2026, to be -5.2 per cent below the peak following six monthly declines. 

Source: Cotality

The declines have been driven by Sydney (-8.6 per cent) and Melbourne (-7½ per cent), and more broadly by houses in the most expensive price quartile in the market.

Indeed, given the 5 per cent deposit scheme - and the bottom end of the market being supported by soaring rents and construction costs - there has been no improvement at all in affordability for first homebuyers in the higher mortgage rate environment.

Dr Alex Joiner of IFM Investors charted the data below to demonstrate how price declines have been driven primarily by houses in the most expensive 25 per cent of the market.

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Building approvals fall -6pc (more to come)

Building approvals to tank

Attached dwelling approvals dropped significantly by a seasonally adjusted -21.2 per cent in August, to 5,670.

South-east Queensland has been pumping the numbers for attached building approvals over the past couple of years, but reportedly pre-sales have fallen away sharply since the May Federal Budget.

House approvals have also been solid in Perth and Brisbane of late, taking total house approvals up to a 5-year high of around 10,890 for the private sector in the month of August.

Again, however, since the Federal Budget enquiry for new homes has tanked, and this will likely flow through to approvals data over the next year or two.

Overall, there were around 16,950 dwellings approved in August, seasonally adjusted, for a decline of -6.1 per cent. 

Approvals had been picking up, but now higher interest rates and build costs are bringing the cycle to an end. 

Over the year, around 207,000 dwellings were approved.

Nobody really talks about the 1.2 million new homes target any more - clearly we won't get anywhere close to that - especially given the recent surge in developer insolvencies.

Indeed, not all dwellings approved will actually be built.

Finally, the monthly figure for non-residential building work approved is extremely noisy and lumpy as data centres are approved, and it fell by -45 per cent in August...the trend has been higher, though, as more data centres are to be built in Sydney, Melbourne, and it appears Queensland. 

Overall, building approvals figures have been solid until now, but are softening in real time, and are widely expected to drop away over the next 12 months.

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Inflation softer than feared

Inflation softer

Analysts had expected a bit of a shocker for the inflation figures today, and auto fuel prices did surge by almost 15 per cent in the month of August (following a 7½ per cent leap in July), taking headline inflation up to 4 per cent.

However, the underlying data was materially softer than feared, seeing the Aussie dollar drop from around 70 US cents to below 69.6 cents after the release, before stabilising. 

The 3-year government bond yield also declined to 4.9 per cent, having been as high as 5.1 per cent over this past week.

The trimmed mean inflation figure - which strips out some of the noise - was only 0.2 per cent in August 2026, which was softer than market expectations (though to be fair Westpac Economics pretty much nailed it). 

To two decimal places, trimmed mean inflation was 0.24 per cent in August.

Source: ABS

Markets moved quickly to price out a rate hike from November, now trading at around only a 1 in 4 possibility. 

Housing was still the main contributor to inflation over the year, with consumer prices rising 5.7 per cent (driven by new dwelling prices, up 5.4 per cent). 

New dwelling costs have now increased by 48 per cent since April 2021.

Overall, the Treasurer and the central bank would have to be pretty pleased with these numbers, having taken plenty of criticism of late.

A lot now seemingly rides on the uncertain outlook for oil prices, following two face-ripping months for the cost of fuel. 

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    3. Subscribe for my free daily blog

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RBA hikes to 15-year high

Rate hikes

The Reserve Bank of Australia hiked interest rates for a 16th time under the present government.

This takes interest rates to a 15-year high of 4.60 per cent, and mortgage affordability to its worst level since the 1980s.

One good piece of news for the government, is that the central bank did at least consider holding rates today, and to that extent the presser was regarded as somewhat dovish.

Inflation figures for the month of August are out tomorrow morning, although Michele Bullock did note that not too much weight will be ascribed to one month of (historic) data, which is probably fair given that interest rates have been lifted four times this year already.

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

    3. Subscribe for my free daily blog

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Unemployment rate highest since 2021

Unemployment rises

Employment increased by an estimated +39,000 persons in August, seasonally adjusted, after the previous month's surprise decline, with part-time employment (+46,000) accounting for all of the monthly gain.

Looking through a bit of the monthly noise, the 3-month average employment gain was a solid +34,000.

It's worth noting that a lot of people have been taking second jobs (i.e. jobs growth has been higher than the growth in employed persons).

The estimated growth in the adult population was steady over the year to August at a still-elevated +388,000 or +1.7 per cent.

The participation rate also increased in the month of August by 0.2 percentage points to 67.1 per cent.

As such the seasonally adjusted unemployment rate rose from 4.48 per cent to 4.65 per cent (reported as 4.6 per cent), which was the highest unemployment rate since November 2021.

Measures of underutilisation weren't much changed.

The wrap

The unemployment rate was higher than expected in August, and indeed was just a tiny fraction away from rounding up to 4.7 per cent.

This was also above the Reserve Bank's forecast trajectory for the unemployment rate, though the central bank is still expected to hike interest rates by 25 basis points towards the end of this month.

In other news, the AFR reported that the rescue deal for the developer Bathla has fallen through, with work set to be paused across many Sydney construction sites.

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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

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

Intergenerational report projects 39.3 million population

Population projections

The seventh Intergenerational Report (IGR) was released this week, which threw out its usual projections for the next 40 years.

Shane Oliver of AMP charted in colour-coded fashion the population projections of the various IGRs since 2002, which shows how population growth accelerated through the mining boom years. 

It's interesting to note that today's estimated resident population of 28.1 million is already considerably higher than anything conceived in the 2002 IGR all the way out until 2042.

Source: Shane Oliver, AMP, Intergenerational Report data

The latest projections see the population rising to 39.3 million by 2066, even as the fertility rate declines.

Reported the IGR:

"Over the next 40 years, population growth is projected to be increasingly concentrated in Australia’s major capital cities, driven by patterns of net overseas migration. 

This trend is broadly similar to what was observed in the 2023 IGR, but the gap between capital cities and regional areas has widened. Capital cities are projected to grow over twice as fast as the rest of Australia".

The report noted that some regional areas will grow materially, while others won't - it's not expected to be a uniform trend.

Most young new migrants are expected to head for the capital cities, slowing the ageing of the population in the larger conurbations.

Life expectancy is expected to continue increasing to 86.1 years for males and 89.5 years for females. 

The ageing of the population nationally means that the number of Aussies aged over 65 will approximately double, and the number aged over 85 will roughly triple.

Australia's open economic model is founded upon the principles of the 3Ps: population, participation, and productivity.

Generally speaking, new migrants are young and increase the participation rate and the tax take - although migrants do grow older themselves, of course - and indeed forecasts have been upgraded, with participation expected to increase until 2040, particularly for females, and for older workers in the 'knowledge economy'.

However, it's clearly been the case that Australia has relied upon population far more so than lacklustre productivity over the past decade.

Looking ahead, productivity gains are expected to be realised from the boom in AI over the next 40 years. 

This was probably the most contentious part of the report: how will AI impact the economy, and when and how will productivity gains materialise?

The report also mentions delivering 'cheaper energy', but...well, let's not go down that rabbit hole today!

In real terms, the economy is expected to be about twice the size of today 40 years from now, while real per capita income is expected to increase by about 55 per cent.

The report says that more Australians need to be encouraged into home ownership, to assist with productivity, intergenerational equity, and prosperous retirement. 

Unlike many developed nations, the Aussies don't have a major government debt problem - the fiscal position has improved notably since the 2023 report, with gross debt expected to glide lower to around 22 per cent of GDP by the 2050s.

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3 ways to find out more:

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 20,000 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 book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

ALP Newspoll approaches record low

Polling crashes to earth

The landscape-shifting Federal Budget only dropped in May, and although it will likely to take a couple of years for the impacts to be felt more fully, the early signs of household wealth starting to fall are now just beginning to flow through to polling.

Source: The Australian

Real per capita household income has already been steadily falling in Australia since 2022, and this week's Newspoll saw the ALP Primary voting intention fall to the lowest level in the almost 15 years since April 2012, at 27 per cent.

Newspoll has generally been one of thee stronger pollsters for Labor, but this puts them at about parity on a 2PP basis, with the primary now now approaching the all-time low poll of 26 per cent for Julia Gillard recorded in 2011. 

The Australian newspaper reported that the primary vote for the government has fallen from 37 per cent to 27 per cent over the past 12 months, mainly due to immigration concerns following the terror attack in Bondi and the fallout from the unpopular Federal Budget.

Unfortunately for the government, with productivity in the gutter and inflation still floating well above the central bank's target, it appears likely that there will be several further blows to sentiment over the year ahead. 

Source: ASX

All four of the major banks are now calling for a September interest rate hike to a cash rate target of 4.60 per ent.

Even ahead of that consumers will face something of a rude shock as fuel prices continue their charge higher towards $3/litre.

It seems a near-certainty that the next Federal election be the positioned as a referendum on tax and immigration, with the opposition parties likely to propose reversing the tax reforms for trusts, capital gains tax, and negative presented in the 2026 Federal Budget.

In the housing market, it is being fairly widely discussed that a significant proportion of property development companies are teetering on the brink of insolvency, with further interest rate hikes looking likely to push insolvency notices into record high territory.