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Commentators are now worried that the federal government’s ambitious housing target is in trouble.
The latest monthly data from the Australian Bureau of Statistics (ABS) showed a concerning 9.5 per cent drop in new dwelling approvals in December, with just 13,085 homes being approved across Australia.
Higher-density approvals took an even harder hit, with multiunit buildings seeing a 22.4 per cent decline in approvals in December 2023.
For many stakeholders, the news is deeply unwelcome.
Col Dutton, president of the Urban Development Institute of Australia (UDIA), stated that this is “the worst time to see building approvals declining”.
“Today’s ABS data on declining building approvals is a blow for Australia’s ambitions to ease the housing crisis and build the National Accord target of 1.2 million homes within five years,” Mr Dutton said.
Despite the federal government’s ambitious building target, the UDIA stated that current monthly approvals are 34 per cent lower than the long-term average, and that the total volume of approvals for 2023 was “the lowest in a decade”.
Tom Forrest, CEO of Urban Taskforce Australia, also expressed deep concern about what the ABS approvals data means for the future of Australian housing.
Mr Forrest stressed that the latest ABS data set “a benchmark low for the third consecutive month, once again the worst performance in the last decade – by a long way”.
He stated that the month-by-month approval figures paint “a dismal picture for New South Wales planning system approvals” and that the data indicates that “the Albanese government’s National Housing Accord is in trouble, even before it initially starts”.
As well as low rates of building approvals, the ABS revealed that lending indicators are also dwindling.
During the month of December 2023, Australia saw a 5.6 per cent reduction in the total value of housing loans to owner-occupiers, and a 1.3 per cent reduction in lending to property investors.
Housing Industry Association (HIA) senior economist Tom Devitt emphasised the severity of these figures, stating: “The ABS has been collecting data on lending for new homes since 2002, and today’s data shows the lowest number of these loans being issued on record.”
“The steepest RBA rate hiking cycle in a generation has compounded the elevated costs of home building, seeing potential home buyers squeezed out of the market and fewer new homes commencing construction,” said Mr Devitt.
When compounded with the rental crisis that is affecting the 31 per cent of Australians who rent, Mr Devitt expressed concern that the decline in lending and approvals was threatening to “worsen Australia’s housing crisis”.
The cost of building materials also remains elevated, with Master Builders Australia CEO Denita Wawn noting that building materials remain “over one-third more expensive than before the pandemic”.
“This is the last thing we need at a time when the gulf between supply and demand is so huge,” said Ms Wawn. “Urgent action is required across the board to increase the flow of new homes onto our rental market.”
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