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Despite a steady rise in housing approvals over September, lagging apartment approvals pose a significant threat to Australia’s housing target progress.
The Australian Bureau of Statistics (ABS) has revealed that the total number of dwellings approved rose 4.4 per cent over the month of September to 14,842, after a 3.9 per cent fall in August of this year.
Multi-unit approvals were observed to have increased by 8.5 per cent over the month to 4,950, with the 14,890 total approvals over the September quarter lifting 10.7 per cent from the previous quarter, and registering 1.2 per cent higher than the same time last year.
However, the 56,186 apartments and townhouses approved over the last 12 months are significantly lower than the 102,323 units approved over the same period in 2017–18, causing a number of industry pundits to warn that Australia’s capacity for high-density building is far from where it needs to be.
Weighing in on these figures, economist at the Housing Industry Association (HIA), Maurice Tapang, raised concerns around the volume of multi-unit approvals, stating that they “have been bumpy and trending at decade-low levels amid challenges with capacity, labour availability and materials costs”.
The Property Council of Australia’s (PCA) executive of policy and advocacy, Matthew Kandelaars, said that apartment approvals were well below where the organisation would like to see them.
“We only approved about half of the apartments over the last 12 months than in the same period in 2017–18. High construction costs, sluggish planning processes and taxes that hinder apartment projects are now limiting supply,” said Kandelaars.
Over the month of September, detached house approvals across the country increased by 6.1 per cent to 9,980, which Tapang noted was “the highest monthly number of detached house approvals in two years”.
Unpacking the conditions which drove this result, Tapang highlighted that “unchanged cash rate settings, supported by strong population growth, low unemployment levels and acute housing shortages have helped lift consumer sentiment”.
“The result seen in house approvals data continues to confirm that the market is past its trough, and more buyers are building a new home, especially in those markets outside of Sydney,” he said.
Within the capital city markets, Tapang stated that “detached house approvals in Melbourne are double that of approvals in Sydney, despite these two capital cities having comparatively similar population numbers and inflows”.
The economist also said that detached house approvals in some areas of regional NSW have been improving due to buyers in the state searching for more affordable opportunities outside of the more expensive capital city market.
Across the capital cities, Tapang noted that the “cost of home building materials are growing at a more normal pace, while build timers for houses are back to pre-pandemic levels”, but stressed that the price of shovel-ready land “remains prohibitively high, especially in Sydney”.
Looking toward the future, the economist emphasised that “the volume of apartment construction needs to double current approvals numbers in order to achieve the Australian government’s target of 1.2 million homes over five years”.
Kandelaars also highlighted the need for action around housing supply, and stated that “we need to see genuine movement to address our housing crisis and boost apartment construction”.
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