The Housing Industry Association’s Chief Economist, Tim Reardon, has announced a concerning trend in the construction sector, revealing that the number of multi-units approved for construction in the first three months of 2024 has fallen to the lowest volume since April 2012.
The Australian Bureau of Statistics released its monthly building approvals data for March 2024, covering detached houses and multi-units across all states and territories.
Reardon highlighted a significant mismatch between rising demand from migration and constraints on housing supply, which is likely to worsen the acute shortage of housing stock.
He attributed the constraints on higher-density housing development to various factors, including labour, material, and finance costs, uncertainties, cumbersome planning rules, and punitive taxes, especially on foreign investors.
While the volume of detached building approvals has remained relatively stable over the past 12 months, it is at its lowest level for a decade.
However, 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.
Rising interest rates are a key factor slowing building activity, with some states experiencing more modest slowing due to the ability to deliver low-cost land.
Approvals for new houses in Western Australia have been increasing steadily since mid-2023 and are now 33.2 per cent higher than in the same quarter the previous year.
Reardon concluded that meeting the Australian government’s target of building 1.2 million homes over the next five years would require significant reductions in taxes on home building, easing pressures on construction costs, and decreasing land costs.
In seasonally adjusted terms, dwelling approvals in the three months to March increased in Western Australia and New South Wales but declined in Queensland, South Australia, and Victoria.
In original terms, approvals declined in the Northern Territory, the Australian Capital Territory, and Tasmania.