A plunge in housing approvals has cast serious doubt on the federal government’s ambitious plan to build 1.2 million homes in five years.
Approvals fell 1 percent in January, down to a seasonally adjusted figure of 12,850, according to figures released last week by the Australian Bureau of Statistics (ABS).
This followed an even sharper decline of 9.5 percent in December, with the housing approvals trendline down to the lowest level since May 2012.
Australia’s new house approvals are falling, casting serious doubt on the federal government’s pledge to build 1.2 million homes in five years
To meet the Albanian government’s target, 20,000 homes must be built every month from July this year to June 2029.
If current trends continue, only about 136,000 homes will be built annually, falling well short of the 240,000 homes needed each year to reach the 1.2 million target.
A recent report on rental affordability by housing sector analyst PropTrack said the government’s plan looked ‘unlikely’ to deliver the promised figures.
“This means we are likely to continue to see an undersupply of homes to buy and an undersupply of homes to rent,” the report said.
Making the situation even more bleak is that approvals do not necessarily indicate how many houses are being built because some projects will be abandoned before completion and this number is also increasing.
“Just because a project is approved for construction does not necessarily mean it will go forward,” the PropTrack report said.
‘During the past two years, around 17 percent of approved projects have not resulted in completion.’
PropTrack said this was a historically high churn rate, driven by labor and material shortages as well as financing costs with interest rates at a 12-year high.
The difficult market conditions have caused a number of construction companies to collapse with almost 1,400 construction companies going bankrupt in the second half of 2023.
This was a 29 per cent increase on the same period in 2022, according to corporate regulator the Australian Securities and Investments Commission.
Another factor clogging the new housing pipeline is red tape, according to Master Builders Australia chief executive Denita Wawn.
The construction sector is struggling under a combination of labor and material shortages plus planning and other financial problems
“We need state and territory governments and local governments to address zoning issues and planning issues,” she told Nine news.
In February, billionaire property developer Harry Triguboff threatened to stop building apartments in his home state of NSW due to frustration with planning authorities.
Sir. Mr Triguboff, who is the founder and chief executive of property giant Meriton Apartments, accused NSW of “arrogant” planning authorities who do not understand the need to make money from bringing new housing that the state urgently needs.
“Our developers are breaking more than anyone else,” he wrote in an opinion piece for The Australian.
‘They can’t all be stupid. So I think the authorities need to consult with the developers, otherwise we will never catch up with the demand.’
Prime Minister Anthony Albanese said his government’s housing plan would bring down rising rents
Economist Leith van Onselen claims record levels of immigration to Australia mean the housing crisis will only worsen.
“Australia’s population increased by an incredible 680,000 people last calendar year,” he told Sky News on Wednesday.
‘That’s the equivalent of about one and a half Canberras.
Combined with the relatively low number of homes being built, according to the ABS figures, this can only mean problems.
“We only added one home for every 4.5 new residents,” Mr van Onselen said.
‘And because of that, data released last week by Domain showed that the national rental vacancy rate collapsed to a record low of just 0.7%.’
The Albanian government has pledged $3.5 billion to meet its housing ambitions, which will be distributed among the states based on how many new houses they build.
It has also established the $10billion Housing Australia Future Fund to finance 20,000 new public housing.
Announcing the housing targets last year, Mr Albanese said they would help push down rising rents.
“This is an initiative that shows how serious we are as state and territory governments across the political spectrum as well as the Commonwealth, understanding that supply is key,” Mr Albanese said.
‘That’s the key to putting downward pressure and helping tenants.’