The Albanese government’s promise to construct 1.2 million new homes in five years is becoming more unrealistic by the day.
New home construction in Australia is expected to decline significantly over the next few years, according to the most recent data on housing starts, loans for the construction or purchase of new homes, and new home sales.
This expected decline in construction comes as the population of Australia is expected to grow at a record clip as a result of the Albanese government’s unprecedented immigration program.
This means that net overseas migration will continue to exacerbate Australia’s housing shortage because demand will easily exceed new supply:
The latest Financial Stability Review from the Reserve Bank of Australia (RBA) warned that nearly one-third of home builders across the nation are making losses:
As a result, huge numbers of Australian home builders have gone bust, thereby reducing supply capacity.
New data from the Australian Securities and Investments Commission (ASIC) shows that 783 home-building firms collapsed over the September quarter of 2023 alone.
This compares to 605 builder collapses in the same quarter last year and just 238 construction failures in the September quarter of 2021.
CreditorWatch CEO Patrick Coghlan told news.com.au that insolvencies in the construction industry had risen to levels not seen since before the pandemic.
He stated that builders had been “hammered from multiple fronts”, with supply chain challenges and inflation affecting the cost and availability of materials, labour shortages, and high loan rates reducing demand for construction projects.
The squeeze on profit margins for small and medium-sized residential builders with fixed-rate contracts was also significant, he said.
Coghlan also expects the number of construction sector insolvencies to rise further.
Scott Hutchinson, chairman of Australia’s second-biggest private construction firm, Hutchinson Builders, posted a 93% decline in net profits in the 2022-23 financial year.
Hutchinson recently told The Australian that “we haven’t had a good year since 2017. What’s killing us is the rain and the fact that we can’t get materials and labour. It is not sustainable and that is why so many of us are going broke”.
Finally, liquidator Nicholas Crouch from insolvency firm Crouch Amirbeaggi warned that further interest rate rises from the RBA would heighten pressures in the home building industry and could drive more failures.
“Construction is getting totally hammered by interest rates”, he told news.com.au.
Therein lies a critical problem facing Australia.
The Albanese government has driven up inflation via its record immigration program, most visibly via rental prices:
In turn, the RBA is being forced to respond with higher interest rates, which will further stifle housing supply and lead to further rental inflation.
This is an Albo-fueled housing and inflation crisis via Labor’s extreme immigration policy.
The obvious solution, therefore, is for the Albanese government to reduce the flow of net overseas migration to a level that is below the nation’s ability to supply homes and infrastructure.
