Australia is about to stop building. The trouble seen in Perth could spread to the rest of the country.
As we all know, Australia has been building a record number of apartments. Australian cities' skies are crowded with cranes.
The big property developers who fund all this building have been making fat stacks of cash for a long time now. But the end of the good times seems to be coming. There is a lot of talk about an apartment crash.
That is making the pipeline of new projects dry up. This next graph shows the number of builders getting approvals to build new dwellings has plunged.
Australia is about to stop building. And it could be a bit like the end of the mining boom. A bunch of men in hard hats suddenly find their jobs drying up.
IF THE NAIL-GUNS FALL SILENT
A crash in construction jobs would be very bad. Construction employs five times as many people in Australia as mining.
Just a 5 per cent dip in construction employment would be as bad as a 25 per cent fall in mining employment. (And we have had a 25 per cent fall in mining employment since 2012).
To see how devastating the loss of all those mining jobs was, look west.
Unemployment in Western Australia is now the worst in our nation.
Perth house prices have been falling steadily for nearly two years.
And of course, falling house prices make people spend less, and that means more jobs in other industries are lost, and the effect snowballs.
If the end of the apartment boom unleashes an effect like this on the rest of Australia it would be seriously bad news.
Should we panic? There are still reasons not to:
1. A fall in construction activity would be less geographically concentrated than a crash in mining. That means the snowball effect on jobs in other industries wouldn't be so strong.
2. There are more other industries in the non-mining states. That means more other options for people who might lose a job as a tradesman.
On the other hand, if you do feel like panicking, remember that the fall in mining investment is actually still going strong. Getting both mining and construction investment falling in synch would be very bad news for the economy in 2017.
THE HERO WE NEED
The answer to this mess is pretty simple. Infrastructure. What we need, and most experts agree, is to point a fire-hose of money at the bridge and tunnel industry until it wakes up and gets cracking. Same with schools and hospitals, high speed internet cables and rail-links, etc.
That will ensure there are new jobs for anyone who lost theirs building mines or apartments. And, even better, it will make Australia a more functional and wealthy place to live in the future.
But government is slow - even with the best of intentions. So, ScoMo, if you're reading this, forget about the red ink in next year's Budget for a moment.
A construction crash across Australia is a real risk you need to be prepared for. It is time to get some big infrastructure projects "shovel-ready".