Home building permits in Australia fell 5.2 per cent in May from April after posting gains in two consecutive months, according to the Australian Bureau of Statistics. Approvals to build or renovate houses likewise declined 9.1 per cent from a year earlier.

Housing construction remains to be one of the biggest contributors to the country’s economic growth, with a surge in apartment construction leading to a big supply jump in the property market. This might go on for a longer period of time as the Reserve Bank of Australia hints at a possible decline in the official interest rates this year.

The amount of apartment construction is also sounding the alarm on the sustainability of housing prices. However, the RBA would welcome some cooling of house prices if it was orderly. In its latest board meeting, the RBA decided to leave the official cash rate unchanged at 1.75 per cent, although some economists predict that a cut in August is in the cards.

“England’s decision to leave the European Union, combined with ongoing uncertainty around Australia’s next government provided the board with the incentive they needed to leave the cash rate untouched at 1.75 per cent,” said Mortgage Choice CEO John Flavell. “Depending on what the end result of the federal election is and what impact it has on consumer confidence, as well as other key economic metrics, we may see the Reserve Bank of Australia cut the cash rate at least once more this calendar year.”