Australia and New Zealand

Research evidence excerpt

Australia and New Zealand

recast of 4.8%oya, particularly given the recent mod-

of suitable investment opportunities play an important role.eration in global energy prices (Figure 1).

The RBA has also noted that structural trends have provided

support to business credit in recent years, including stronger Figure 1: Australian inflation forecasts

% competition among lenders and the growth of specialized

6.0 Headline JPM Trimmed mean JPM non-bank and private credit providers. These dynamics are

5.5 Headline RBA Trimmed mean RBA likely to support business credit even as financial conditions

5.0

4.5 tighten.

4.0

3.5

3.0 In contrast, residential building approvals declined 1.1%m/m

2.5 in May, the third consecutive monthly decline. The approval

2.0 mix was more encouraging than the headline number sug-

1.5

1.0 gests, with detached dwelling approvals up 2.8%m/m and

2024 2025 2026 2027 2028 13%oya. The volatile high density segment dragged the head-

Source: ABS, RBA, J.P. Morgan

line lower, falling 10.4%m/m. This is a favorable mix given

detached approvals account for a larger proportion of total

Budget commentary in the minutes was minimal, largely con-

approvals (around 60%) and provide a better signal of under-

fined to the housing market, where demand has cooled on the

lying trends. New dwelling construction is exempt from the

combination of tighter financial conditions and proposed tax

government’s negative gearing changes so are somewhat

changes. We expect housing activity to remain soft in 2H26,

insulated, but with housing sentiment depressed and price

weighing on consumption in sectors most closely tethered to

declines likely we think approval volumes will remain soft

dwelling turnover, though the impact on rents should be limit-

for a while yet.