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Today in property: dark side of rate cut, zombie apartments, construction levels still dropping

It seems people saving for a deposit just can't catch a break.

University of NSW Business School professor of economics, Richard Holden has crunched the numbers post-official interest rate cut, and the news isn't great for savers. More than 80 per cent of Australian savings accounts are about to enter negative interest territory, which will put households under pressure - and banks as well.

According to Mr Holden, if savings deposits go down, banks will need to get funding from other sources - and if there's a credit crunch overseas, those sources could dry up as well. Duncan Hughes' piece in the AFR goes into the pros and cons of this situation, and is worth getting your hands on.

Finder released a report over the weekend showing how the $526 billion held in Australian savings accounts could take a $1.3 billion hit, if banks pass the full .25 per cent rate cut on. We know some banks have already done that, including ANZ.

Su-Lin Tan is proving true to form today in her glass-half-empty assessment of the housing market; her piece in today's AFR quotes a variety of agents saying the post-election fizz among property buyers is starting to go flat. A more solid assessment can be found in CoreLogic's housing market snapshot of house listings taken at the end of May; it shows the lowest number of listings in 12 years, with homeowners holding off on selling as they wait for a recovery.

According to CoreLogic, the flip-side of that situation is that housing affordability hasn't been this good in Sydney since early 2015 or Melbourne since late 2016.

That situation isn't likely to last long in the apartment sector, if The Australian's Robert Gottliebsen is any gauge. He's criticising the NSW government today for its plans to shake up the planning system for large-scale residential development across Sydney, which he says could stall major projects for years, and lead to an acute supply issue.

Not that that's the issue right now. The specter of zombie apartments was raised again by ABC News this morning, quoting My Housing Market chief economist Andrew Wilson saying Sydney has an oversupply of new apartments. Which is okay for foreign investors described by SQM Research's Louise Christopher, who are happy to buy and keep empty apartments for the capital gains alone - but they alone don't a robust property market make.

Consider also, two reports released last Friday: the Performance of Construction Index for May showing home building contracted for the 10th straight month and apartment building dropped for the 14th straight month; and ABS figures for April showing residential property investment fell for the ninth consecutive month. AMP Capital's Shane Oliver isn't stretching when he says any about-turn in property market sentiment could take another year before housing construction sees a corresponding recovery.

This is a worry when you consider jobs are one of the only factors keeping the Australian economy afloat at the moment. The construction sector is one of Australia's biggest employers; an ongoing decline in construction employment leaves us particularly vulnerable.

No wonder federal and state governments are under pressure to step up spending on infrastructure projects in the short term.

Speaking of: NSW Treasury figures released yesterday showed that in two years, the state government has foregone $850 million in revenue to assist first home buyers into the market. These figures showed first-time buyers accounted for more than a quarter of total home purchasers in NSW in April, double the proportion two years ago.

It's also interesting to note Morgan Stanley figures showing that more of those home buyers are sourcing funding outside the big four banks - a situation that will no doubt continue to hit ANZ harder than most.

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