The Australian Bureau of Statistics (ABS) on Wednesday released data on dwelling approvals, which fell 8.1% in July to be down 10.6% year-on-year.
The decline was driven by unit & apartments, which fell 15.8% in July, whereas detached house approvals rose by 0.1% over the month.
Over the year, house approvals fell by 15.9% whereas unit & apartment approvals rose by 3.4%.
The next chart plots monthly approvals at the national level in trend terms:
Overall approvals are running at near decade lows.
The next chart shows that approvals have crashed across the major states, but at least have rebounded somewhat in NSW and Victoria:
The next chart shows annual dwelling approvals data, with national approvals also tracking at decade lows:
The collapse in dwelling approvals follows a similar decline in the value of owner-occupier finance commitments to build or buy a new home:
HIA’s new home sales series has also fallen by one-third compared to July 2022:
Therefore, all of the major leading indicators point to reduced levels of home building over coming years.
This aligns with what Treasury Secretary Steven Kennedy said to the Senate Estimates Economics Committee in May when he forecast that new dwelling investment would fall by 2.5% in 2022-23, 3.5% in 2023-24, and 1.5% in 2024-25.
Oxford Economics Australia also forecasted a 21% drop in overall housing investment over the three years to 2024-25.
National Cabinet’s announcement that it would build 1.2 million homes over five years is clearly built on quicksand.
Only once has Australia built more than 220,000 dwellings in a single year (223,000 in 2017). So the idea of building 240,000 homes for five consecutive years in an environment of high material and financing costs and labour shortages is delusional.
The solution to Australia’s housing issue is obvious: limit net overseas migration to a level compatible with the country’s ability to deliver new housing and infrastructure, as well as environmental carrying capacity.
Stop making the problem worse.
