New housing approval data predicts there’s no end in sight for the ongoing Australian housing crisis.
Total dwelling approvals in September fell 4.6 per cent to 13,144, according to the latest figures from the Australian Bureau of Statistics (ABS).
Over the 2022-23 financial year, Australia added just 169,500 dwellings to the nation’s housing stock, well below what was required to house the record 626,000 growth in Australia’s population.
This approval rate is around 75,000 fewer than the 240,000 new homes required to meet the Albanese government’s target of building 1.2 million homes over five years.
Housing Industry Association Senior Economist Tom Devitt said the volume of new house approvals remains at its “lowest level in a decade” and warned homeowners would continue to feel the effects of RBA rate hikes.
“The number of new houses approved in September fell by 4.0 per cent for the month. This leaves approvals of new houses in the last three months 13.9 per cent lower than the same quarter last year,” said Mr Devitt in a statement provided to Build-it.
“Building approvals continue to be weighed down by the fastest increase in interest rates in a generation.
“Further declines are expected as the full impact of this year’s rate hikes flow through to households.
Mr Devitt said that the low approval figures would result in a decade-low volume of new housing in 2024 that will severely hurt Aussies going into the future.
“There are very long lags in this cycle due to the record high volume of building work that was in the pipeline when the RBA first raised rates in May 2022,” he said.
“The volume of houses under construction only started declining in the June quarter of 2023, and remains elevated, a year after the first increase in the cash rate.”
“This large volume of building work has obscured the impact of these rate rises on the broader economy, especially unemployment, as the building industry employs over one million Australians.
“This slow down in the volume of approvals will make it increasingly difficult to reach the Australian government’s target of building 1.2 million new homes in five years.”
No end in sight for struggling renters
The bleak figures come after a report last week that showed Australia’s rental supply fell to a record low in September.
Analysing over 10 million Aussies that visited Realestate.com this year, PropTrack’s latest Rental Report found the total number of new rental listings was at a record low after falling 7.1 per cent year-on-year.
The total number of properties listed for rent has fallen 22.8 per cent below the September average for the past five years.
The report also found that the national vacancy rate was also sitting at a record low of 1.1 per cent, down from 1.3 per cent a year earlier.
While the supply of houses continues to dwindle, competition for rentals remains strong. According to the report, the number of enquiries per listing rose from 24.5 a year ago to 24.8, with capital cities sitting at a combined 28.1.
Rental properties were also being snapped up quickly, with properties only being advertised on the website for an average of 20 days.
PropTrack Director of Economic Research and report author Cameron Kusher said the rental market remains extremely challenged.
“Renters are facing significant competition for the limited stock available for rent,” he said.
“These conditions have pushed the cost of renting much higher over the past year.
“For first-home buyers, higher rents make it harder to save for a deposit, while borrowing capacities have reduced and prices continue to rise, making it difficult to enter into homeownership.”
“These conditions highlight why it is so important to build more housing, particularly in the major capital cities.
“With dwelling approvals and commencements at decade lows and this trend unlikely to change in the near-term, immediate solutions should focus on encouraging investment and better utilisation of existing housing.”
