This week, the Australian Bureau of Statistics (ABS) released data on dwelling approvals, which showed that the number of approvals fell to 174,050 in the year to July.
That was the weakest result in around a decade:
The outcome has thrust National Cabinet’s announcement that it would build 1.2 million homes over five years (starting 1 July 2024) into the spotlight.
To achieve this target, Australia would need to approval and actually build 240,000 homes a year.
However, as shown below, Australia has only ever built more than 220,000 homes in a year once – in 2017 when we built 223,000 homes:
Maree Kilroy of Oxford Economics Australia expects housing starts to fall below 150,000 in the current year. This would be 90,000 below the 240,000 housing starts required annually in order to achieve National Cabinet’s 1.2 million homes target.
“The National Housing Accord target has been upped by 200,000 to 1.2 million dwellings over the five years ending FY2029”, Kilroy said.
“The current downturn and volume of funding on the table make this a very unrealistic prospect. Planning lags mean that it will take until the back half of the decade for activity to see a meaningful boost”.
ANZ senior economist Adelaide Timbrell concurred warning “two back-to-back falls in approvals suggest a decline in residential construction activity toward the end of this year and into next, despite backlogs in the sector”.
Meanwhile, CreditorWatch chief economist, Anneke Thompson, warned that the decline in construction amid record population growth “is a particularly worrying sign for housing affordability”.
Australia has not built enough homes over the past 20 years. Although the rate of dwelling construction surged last decade, as shown above, this construction boom was insufficient to keep pace with the massive increase in immigration-driven population growth from the mid-2000s:
What makes anybody believe that we will achieve better outcomes over the next 40 years when the population grows by a projected 14.2 million people, according to the latest Intergenerational Report?
That level of population increase is equivalent to the combined populations of Sydney, Melbourne, Brisbane and Adelaide.
Moreover, do Australians want to live in high-rise apartments? Because that will become the norm with a population of 40.5 million, and a Sydney and Melbourne of nine million people each.
If the Albanese Government genuinely wanted to end the nation’s housing shortage, it would run an immigration program that was substantially lower than the overall expansion in the housing stock, not opposite.
