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New figures from the Australian Bureau of Statistics reveal that building approvals continued to fall at the start of 2024.
The latest data reveals that in seasonally adjusted terms, total dwelling approvals fell 1 per cent in January 2024 from the previous month to 12,850. Private sector houses took the steepest dive, falling by 9.9 per cent to 7,461. High- and medium-density building appears to be on an upswing, though, with private sector dwellings excluding houses rising 19.5 per cent to 5,238. The value of new residential building also rose 19.4 per cent, climbing to $7.14 billion.
On a state level, dwelling approvals in the three months to January increased only in Western Australia, up by 26.4 per cent compared to the previous year. Tasmania experienced the largest decline, of -29.8 per cent, followed by the Northern Territory (-26 per cent), NSW (-17.6 per cent), South Australia (-13.4 per cent), Victoria (-12.2 per cent), Queensland (-10.0 per cent) and the ACT (-3.9 per cent).
Housing Industry Association (HIA) chief economist Tim Reardon noted that even with some positive gains, the numbers painted a concerning picture for Australia’s building capacity.
“Approvals have been declining since the first increase in the cash rate in mid-2022 and this trend appears to be continuing into the start of 2024,” Reardon said.
And though multidwelling approvals showed a substantial increase, Reardon noted that the growth occurred off the back of a sharp decline.
“Multiunit approvals have increased by 14.5 per cent in January from very low volumes in the previous month. The three-month period to January saw multiunit approvals decline by 15.4 per cent compared to the previous year,” he said.
The construction industry advocate warned that these figures will considerably stymie building activity through the next nine months.
“The low volume of building approvals throughout 2023 will see the volume of homes commencing construction continue to slow this year. The rise in the cash rate is the primary cause of this slowdown in approvals,” Reardon said, noting that markets with higher land costs would bear the brunt of low market activity.
Stressing that the country is currently operating at an approvals level that is far below what’s needed to meet its National Housing Accord building commitments, Urban Taskforce CEO Tom Forrest attributed much of the slowdown to a lack of shovel-ready land, calling on the federal government to step in with assistance in the next federal budget.
“It is the Commonwealth which has opened the doors to a massive wave of post-COVID migration. It is the Commonwealth that called the state premiers together and proposed the National Housing Accord. It is the Commonwealth that has benefitted from the taxation revenue generated by the influx of skilled migrants.
“The federal budget has been boosted by this immigration as well as the strong performance of minerals prices and the mining export sector. It is the Commonwealth that has the fiscal resources to support infrastructure to drive housing supply, so it’s time that the Commonwealth helped out the states with significant funding for infrastructure,” Forrest said.
HIA, meanwhile, is also advocating for federal help to encourage new building.
“It is possible to build 1.2 million new homes over five years but it will require significant policy reforms. These reforms need to include lowering taxes on home building, easing pressures on construction costs, and decreasing land costs,” HIA senior economist Tom Devitt commented at the end of February.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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