Housing affordability set to plummet after record-low building approvals

Jarrod Brown
By Jarrod Brown
5 Min Read

This month’s dwelling approvals continue the industry’s downward spiral, worsening the nation’s already bleak housing affordability crisis. 

Courtesy of the Australian Bureau of Statistics (ABS), the latest statistics for February show that higher density approvals have hit their lowest monthly figure in almost 12 years.

While approvals for private homes might have risen by 10.7 per cent, approvals for private sector dwellings fell by a whopping 24.9 per cent, driven by a fall in the number of approved large apartment and high-density projects. 

Overall, total new home building approvals slipped by 1.9 per cent down to 12,520, which marks the third consecutive decline since December’s 9.5 per cent drop. 

The news of declining high-density builds comes only weeks after research by Domain found cities with denser urban housing sectors were far more affordable than they otherwise would’ve been. 

According to Domain’s Chief of Research and Economics, Dr Nicola Powell, the country’s investment in high-density living over the two decades is what has held prices (somewhat) at bay, claiming that places like Perth and Adelaide would be up to 44 per cent more expensive than they are today without it. 

“While it might seem surprising, this (high-density) shift is essential for preserving and improving housing affordability for the broader population,” said Powell. 

“Without the shift towards greater density and smaller land sizes over the past two decades, house prices would be vastly higher than they are today.”

In 2024, the average price for a home in Perth sits at $620,000, 23 per cent lower than Australia’s $759.437 median property price.

It doesn’t look good for the Housing Accord

With three months to go until the Housing Accord clock starts ticking, the latest approval numbers don’t bode well for Albo’s answer to the housing crisis. 

Over the year to February, just 163,100 new homes received approval across Australia – the lowest in 11 years.

For the Housing Accord to hit its target of 1.2 million home builds by 2029, that number will need to jump an unprecedented 48 per cent to create 240,000 new homes annually within the coming months. 

With the construction industry staring down rising building costs across the country, Master Builders CEO Denita Wawn says a spike in productivity isn’t likely to happen any time soon. 

“When it comes to signing new contracts, the pen is not making it to paper as the investment does not stack up,” said Ms Wawn. 

“Resolving supply constraints should be the focus of all political parties in fixing our housing crisis. Until they are addressed, Australians will continue to struggle with housing affordability.

“We must ensure that sufficient support is provided to encourage investment in housing development this includes steering clear of changes that would dampen the investment environment.” 

According to the building group, soaring labour shortages and rising costs are responsible for putting the “biggest handbrake” on delivering homes. 

Recently, BuildSkills Australia said the industry would need 90,000 workers in the next 90 days to fufill the Accords targets, with Master Builders also estimating the industry would need around half a million tradies over the next three years.

Ms Wawn said the Federal Government needs to do more to attract workers and dismantle roadblocks standing in the way of developers. 

“The Federal Budget provides an opportunity to attract more people into the industry through industry-led apprenticeships, better targeted skilled migration and reskilling migrants already in the country,” she said.

“But it’s not the only challenge. More work needs to continue at a state/territory government level to speed up their commitments for planning reform, address high developer charges, and ensure there is enough critical infrastructure to support new communities or higher density.”

Share This Article
Jarrod Brown combines his background in journalism, copywriting and digital marketing with a lifelong passion for storytelling. He has a strong passion for new and emerging consumer technology within the building sector. He lives on the Sunshine Coast - usually found glued to the deck of a surfboard.