New building approvals data released by the Australian Bureau of Statistics have once again painted a concerning picture of the nation’s housing crisis. Source: Timberbiz
The Australian Bureau of Statistics released its monthly building approvals data for March 2024 for detached houses and multi-units covering all states and territories which show the number of multi-units approved for construction in the first three months of 2024 fell further to be the lowest volume since April 2012.
Master Builders Australia Chief Economist Shane Garrett said March was the worst month for new detached house approvals since July 2012 – almost 12 years ago,” he said.
“There was a small gain (+1.9%) in approvals for higher-density homes during the month, but we need to see more growth in this sector of the market.”
The results meant that just 161,500 new homes have been approved over the past year.
Master Builders Australia CEO Denita Wawn said the figures stood in sharp contrast to the yearly target of 240,000 new homes under the National Housing Accord.
“The Accord takes effect in less than two months’ time, and if we are going to have any chance of meeting this target, we need to lift new home building by 50% from current levels over the next five years,” she said.
“Despite the will of governments to get home-building activity moving, there are still too many obstacles in our way.
“Chronic tradie shortages, planning and licensing delays, draconian industrial relations changes, material cost inflation, inefficient regulation, unfeasible lending practices and risk allocation are making projects unsustainable.
“We have to make it easier to build new homes by bringing down the cost of construction. This must be a priority in the upcoming Federal Budget.”
HIA Chief Economist Tim Reardon said the mismatch between rising demand from migration and constraints on the supply of housing was likely to see the acute shortage of housing stock continue to deteriorate.
“Higher density housing development is being constrained by labour, material and finance costs and uncertainties, as well as cumbersome planning rules and punitive taxes, especially on foreign investors,” he said.
“This lack of new work entering the construction pipeline is occurring alongside record inflows of overseas migrants and a pre-existing acute shortage of rental accommodation across the country.
“The positive news is that for the past 12 months the volume of detached building approvals has remained relatively stable, albeit at their lowest level for a decade.
“There is growing evidence that the volume of new detached homes commencing construction will reach a trough in 2024, albeit, at its lowest level since 2012,” Mr Reardon said.
The volume of detached approvals nationally rose for the second consecutive month, to be 0.7% higher than it was in the same quarter in 2023.
“Rising interest rates is the key factor slowing building activity, but there is an increased divergence evident in some states. Those able to deliver low-cost land are seeing more modest slowing in activity,” Mr Reardon said.
“Approvals for new houses in Western Australia contrast with the rest of the country and have been increasing steadily since mid-2023. House approvals in Western Australia are now 33.2% higher than in the same quarter the previous year.
“It is possible to build the Australian Government’s target of 1.2 million homes over the next five years, but it will require significant lowering of taxes on home building, easing pressures on construction costs, and decreasing land costs,” he said.
In seasonally adjusted terms, dwelling approvals in the three months to March increased in Western Australia, up by 38.5% compared with the previous year, and in New South Wales (+7.7%). Other jurisdictions saw declines in approvals, led by Queensland (-17.6%), followed by South Australia (-9.0%) and Victoria (-1.9%). In original terms, dwelling approvals declined in the Northern Territory (-46.2%), the Australian Capital Territory (-14.6%) and Tasmania (-5.4%).
