Last week, the Australian Bureau of Statistics (ABS) released dwelling approvals data revealing that the number of dwellings approved for construction in the year to October collapsed to just 164,200, which is about 76,000 less than the Albanese government’s target of building 240,000 new homes a year:
On Monday, the ABS also released data showing that lending for the purchase and construction of a new home remained at historical lows in October:
HIA Chief Economist, Tim Reardon, claims the RBA’s aggressive interest rate hikes have killed-off demand for new homes as well as new home construction.
“In the face of an acute shortage of housing stock, the rise in the cash rate has seen the volume of work entering the pipeline contracting for more than two years”, Reardon said via media release.
“Lending for the construction and purchase of a new home [was] 22.4% lower than at the same time the previous year and at their lowest level since the GFC”.
“This low volume of lending has been sustained since the start of 2023 and will see new home construction continue to slow through 2024, despite the need to increase the supply of new homes”.
Australia added 170,000 net homes to Australia’s dwelling stock in 2022-23, according to the ABS, which was well below what was needed given the 626,000 increase in Australia’s population over the same period:
As shown by the forward-looking indicators above, dwelling construction rates will likely fall in 2024 at the same time as population growth remains turbo-charged via unprecedented net overseas migration.
The Albanese government in August committed to building 1.2 million homes over five years, or 240,000 homes a year, to ease the nation’s worsening housing shortage.
This target has never been achieved before. The highest single year of dwelling completions was 223,000 in 2017, which occurred with low interest rates, lower materials prices, and relatively abundant labour availability.
Current approval rates are already 76,000 below the required run rate and, if anything, are likely to head lower.
The Albanese government’s 1.2 million homes target is destined to fail at the same time as the government is importing record numbers of people into the country who need housing.
Increasing housing shortages, higher rents, overcrowding, and homelessness will be the inevitable results.
