Cracks are appearing in Australia's residential construction boom, with fears it will peak in the next 12 months.

While many have touted the property sector as the nation’s next big hope for the economy as mining investment fades, Nomura strategist Andrew Ticehurst says it may soon run out of steam.

“Maybe we’ve fired that bullet, he said.

“It looks like we’ve got a bit less support for the economy over the year ahead coming from housing.”

Mr Ticehurst said leading indicators like home loans and building approvals appear to be losing momentum.

While the number of people borrowing money to buy existing homes is rising, there’s been some moderation in the number of people getting loans to build a house, he said.

“So when you look at turnover in the established housing market, that’s great for real estate agents and conveyancers and solicitors and accountants,” he said.

“But it does relatively less for GDP, and it certainly doesn’t employ builders.”

The number of new home loans fell to an almost two-year low in May, as the corporate watchdog cracks down on risky mortgage lending.

Home loan approvals fell 6.1 per cent, disappointing economists’ expectations of a 1.5 per cent fall.

Late last year, the Australian Prudential Regulation Authority announced there would be greater scrutiny of lending practices after a surge in investors entering the housing market drove a second year of double digit home price growth.

And Mr Ticehurst said building approvals data, which lags behind the housing finance data by a month or two, also looks like it’s topping out a little.

Building approvals in June suffered their largest setback since September 2014 as the huge surge in high density dwellings eases.

Approvals for the construction of new homes fell 8.2 per cent, way worse than market expectations of a 0.9 per cent fall.

But Mr Ticehurst acknowledged that those figures can be volatile, with numbers bouncing around as apartment blocks are approved each month.

Another factor putting the brakes on the economy was slowing population growth due to weaker net immigration, Mr Ticehurst added.

As of about December last year, Australia’s population was approximately 23.6 million people but the annual rate of growth had slowed from about 1.75 per cent to about 1.4 per cent, he said.

And in 2014 we had fewer arrivals and more departures compared to 2013.

“The rate of growth that the economy is actually likely to be able to achieve is also going to be a bit slower,” Mr Ticehurst said.

By Lucy Hughes Jones