There are always counter-arguments, but there's some decent evidence emerging that tight mortgage lending standards are beginning to outlive their usefulness.
Today's building approvals figures showed attached dwelling approvals down 39 per cent from a year earlier.
That's not such a shock in itself, but given the number of cancelled projects the downward shift in newly marketed apartments is now more than 50 per cent for Melbourne and Brisbane, and more than 75 per cent for Sydney.
Ker-runch.
Ker-runch.
The speed of the decline in unit approvals is especially noteworthy given the enormity of population growth in the city of Melbourne, which surely means a rental crunch is heading squarely for that city in time.
The apartment story is one thing, but detached house approvals were also down 18 per cent from a year earlier, with a downtrend now entrenched in each of the three most populous capital cities.
Perth, at least, has finally found a base.
But how consumption is going to pick up while people aren't building homes and furnishing them is an interesting question (narrator: it's not).
But how consumption is going to pick up while people aren't building homes and furnishing them is an interesting question (narrator: it's not).
For completeness one should note that there is record building activity in Hobart; but the absolute numbers are tiny and certainly won't move the dial at the national level.
Piecing it all together, and looking through the monthly noise, the trend for total building approvals fell to the lowest level since mid-2013.
A couple of sundry points on composition: high-rise approvals continue to retrace as expected.
Interestingly inner-Brisbane's market has seen vacancy rates tumbled from above 4 per cent to around 2 per cent, and construction still continues to slow.
But it's also of note that for the more 'family-appropriate' style of dwelling approval has been falling since August 2018.
Finally, public sector housing approvals are now tracking at around their lowest ever level, bringing plans to change interest deductibility rules for landlords into sharp focus.
Labor may allocate some of its tax receipts to incentivising build-to-rent schemes.
I recorded a short video on what you need to know about build-to-rent here.
Path of least regret
Overall, another weak result for housing approvals, while even the projects that are getting approved often aren't being completed.
Approvals for non-residential work also declined again, new car sales notched another nasty year-on-year decline in April, and AiG's more timely performance of services gauge remained locked in a nasty contraction (with horrible-looking component sub-indices to boot).
It's hard to see any way in which the Reserve Bank can argue it's realistically achieving its objectives given all of the above and core inflation decelerating even further away from the target.
ANZ has abandoned its previously upbeat view to call explicitly for an interest rate cut on Tuesday.
Macquarie Bank also expects rates to be cut next week.
Of Bloomberg's survey of 26 economists most think that rates will be cut next week, although Commonwealth Bank held firm.
Of Bloomberg's survey of 26 economists most think that rates will be cut next week, although Commonwealth Bank held firm.
