The Albanese government’s target of building 1.2 million homes over five years continues to slip further out of reach.
On Monday, the Australian Bureau of Statistics (ABS) released dwelling approvals data for January, which fell another 1.0% (expected +4.0%) over the month. This follows the 10.1% fall in December.
The next chart plots monthly dwelling approvals on a trend basis and shows that approvals have crashed and are tracking at their lowest level since May 2012:
On an annual basis, dwelling approvals have fallen to their lowest level since March 2013 and are also now tracking below the historical average:
Only 163,000 homes were approved for construction in the year to January 2024, which is 77,000 below the Albanese government’s 240,000 annual housing construction target.
As shown in the next chart from Justin Fabo at Antipodean Macro, the decline in dwelling approvals “has been foreshadowed by the renewed weakness in new house sales”:
There has also been a marked decline in Google searches for “display home and land package”:
Finally, loans for the construction or purchase of new homes have fallen to a historical low, which is further evidence of the collapse in buyer demand:
Based on the data above, Australia’s dwelling construction will remain well below the Albanese government’s housing target over the foreseeable future.
It also means that the gaping shortfall in supply relative to population growth will remain.
This is an unmitigated disaster for Australia’s growing army of tenants, who face a prolonged period of historically low vacancy rates, strong rental inflation, and rising share housing and homelessness.
So long as the Albanese government continues to stuff the nation with migrants amid the crash in construction, Australia’s rental crisis will worsen.
