Dwelling approval drop highlights urgent need for interest rate drop or incentive for developers to build
The latest dwelling approvals released by the ABS paint a bleak picture for the future of housing in Australia.
Following two months of growth, total dwelling approvals dropped -6.5 per cent in June, to be back around 12 year lows.
The most glaring statistic was that the declines were driven by New South Wales (-18.8 per cent) and Victoria (-13.5 per cent), the home of two of our largest capital cities and immigration hotspots.
Over the past 12 months, there have been a total of 162,892 dwellings approved, compared to 177,936 in the 12 months prior, representing an -8.5 per cent decrease. It's the lowest number of dwellings approved on a financial year basis since 2011/12.
Dwelling approvals had been trending upwards, marginally, in the two months prior to the latest release.
The result came in below consensus expectations of a milder -2 per cent fall although that mainly reflected a sharp drop in the volatile units component.
Approvals for private sector dwellings excluding houses (townhouses, apartments and terrace houses) fell by -19.7 per cent in June, reaching the second-lowest monthly level recorded since January 2012.
Dwelling Approvals by Building Type
“These building approval numbers are an alarm bell that this housing crisis could rapidly escalate into a political crisis if further action isn’t taken,” said Stuart Ayres, CEO, UDIA NSW.
“Every month of underwhelming data requires another future month of increased approvals for us to have any hope of recovery. We do not want to see these housing targets drift into the realm of impossibility."
The Property Council of Australia said the decline in approvals is another clear sign of the challenges ahead to the national housing targets.
Property Council Group Executive Policy and Advocacy Matthew Kandelaars said the figures continue to paint a challenging picture for reaching our 1.2 million new homes by 2029 target.
“That our dwelling approval numbers have hit the lowest number on a financial year basis in over a decade is a clear sign of the challenges we face in delivering the homes Australians need,” Kandelaars said.
“If we don't accelerate our efforts, we will fall far short of what should be an attainable target. Governments nationwide must use every available measure to help industry deliver the desperately needed supply of new homes.
“We need an invigorated focus on supply-inducing last-mile infrastructure, more construction labour and we need to ensure that first-home buyers are given a better chance of accessing credit for housing.
“To achieve our goal of 1.2 million homes, we need to adopt a proactive mindset and pull every lever available to unlock more supply – including new homes for students, renters and retirees."
