A plunge in home approvals has cast severe doubt over the federal government’s ambitious plan to build 1.2million homes in five years.
Approvals fell 1 per cent in January, down to a seasonally adjusted figure of 12,850, according to figures released last week by the n Bureau of Statistics (ABS).
This followed an even sharper 9.5 per cent drop in December with the housing approvals trend line down to its lowest level since May 2012.
‘s new house approvals are slumping casting severe doubt over the federal government’s promise to build 1.2milion homes in five years
To meet the Albanese government’s targets, 20,000 homes will need to be built every month from July this year until June 2029.
If current trends continue only about 136,000 homes will be built annually, which falls significantly below the 240,000 homes needed each year to meet the 1.2million target.
A recent report on rental affordability by housing sector analyst PropTrack said the government’s plan was looking ‘unlikely’ to deliver the numbers promised.
‘This means we’re 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 gloomier is that approvals do not necessarily indicate how many houses are built because some projects will be abandoned before completion and this figure, too, is on the rise.
‘Just because a project is approved to be built doesn’t necessarily mean it goes ahead,’ the PropTrack report said.
‘Throughout the past two years, about 17 per cent of approved projects have not resulted in completions.’
PropTrack said this was an historically large drop-off rate and it was being driven by labour and material shortages as well as financing costs with interest rates at a 12-year high.
The difficult market conditions have seen a swathe of building companies collapse with almost 1,400 construction businesses going out of business in the second half of 2023.
This was a 29 per cent increase on the same period in 2022, according to corporate regulator the n Securities and Investments Commission.
Another factor clogging up the pipeline for new housing is red tape, according to Master Builders CEO Denita Wawn.
The construction sector is struggling under a combination of labour and material shortages plus planning and other financial issues
‘We need state and territory governments and local governments to resolve zoning issues and planning issues,’ she told Nine news.
In February billionaire property developer Harry Triguboff threatened to quit building apartments in his home state of NSW because of frustration with planning authorities.
Mr Triguboff, who is founder and managing director of property giant Meriton Apartments, blamed ‘arrogant’ planning authorities in NSW who don’t understand the need to make a profit for stalling new housing the state urgently needed.
‘Our developers are going broke more than anyone else,’ he wrote in an opinion piece for The n.
‘They can’t all be dumb. So I believe authorities must consult with developers, otherwise, we will never catch up with demand.’
Prime Minister Anthony Albanese said his government’s housing plan would drive down soaring rents
Economist Leith van Onselen argues that record immigration levels into mean the housing crisis is only set to worsen.
”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.
When combined with the comparatively low number of homes being built, according to the ABS figures, this could only spell trouble.
‘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 an all-time low of just 0.7%.’
The Albanese government has pledged $3.5billion to achieve their housing ambitions, which will be shared out among the states according to how many new houses they build.
It has also established the $10billion Housing Future Fund to finance 20,000 new social housing dwellings.
Announcing the housing targets last year, Mr Albanese said they would help drive down soaring 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 the key,’ Albanese said.
‘That’s the key to putting downward pressure and assisting renters.’