Declining Building Approvals -UDIA calls for Government focus on housing supply and skilled workers

Tuesday 31 May 2022

Today’s Australian Bureau of Statistics’ announcement of a 2.4% fall in Building Approvals is a timely reminder of the challenges facing both new housing supply and the skilled workforce.

“The decrease in building approvals is a sign that the ongoing shortages in materials, development ready land and skilled workers is blowing out construction timeframes and having a dampening effect on forward work programs. Whilst the housing construction industry will likely be busy into next year as it works through the current backlog, concerted focus is needed from Government to keep housing affordability in check,” said Maxwell Shifman, UDIA National President.

Building approvals figures provide an insight into how the construction industry is fairing. It is a bellwether on the immediate health of the economy and an insight into what we need to keep productivity on track.

The number of dwellings approved in Australia in April fell overall by 2.4%, following a 19.2% fall in March in seasonally adjusted terms. Private sector house approvals increased slightly 0.5%, to 10,077 however private sector dwellings, excluding houses, fell 6.1%, to 4,701 a further demonstration of the challenges being felt by multi-dwelling developers across the nation.

The overall fall in building approvals, indicates that although industry is at capacity, there is difficulty finding new housing projects and making them stack up despite ongoing housing demand.

The lack of additional industry capacity, coupled with a shortage of development ready land for new housing construction across the nation, and exacerbated by government building programs across Australia, is adding further pressure on new dwelling delivery, with fewer new projects being added to restock the pipeline.

“There is a perfect storm hitting industry with the lack of land, materials and skilled workers pushing up new housing costs and impacting viability,” added Mr Shifman. “This escalation can be mitigated by fast tracking initiatives that drive skilled migration, skills training, and incentivising states and territories to boost development ready land, and measures to unlock supply lines.“

Without a short-term prospect of construction costs, labour or land supply shortages easing, the new housing pipeline will decline over the year ahead. This will push up housing prices unless Government can act swiftly, particularly as immigration rates continue to return to normal.

“We have a chicken and egg problem – the urgent need to increase skilled migration to meet the needs of thousands of businesses across all industries, together with a need for housing for them to live in. This means fast tracking migrants with the necessary construction skills and initiatives to increase apprenticeships and skills training for Australians… and help build much-needed industry capacity.”

“We can’t sit on our hands and wait, as the costs of doing so will far outweigh the benefits. Without swift action, all Australians will all be negatively impacted by higher cost of living and lower productivity in the near future,” added Mr Shifman.

This year’s Federal budget included $2.8 billion of funding to help young Australian tradies complete their apprenticeships, which is an encouraging and important start. Equally, Government’s plan to enable the National Housing Finance and Investment Corporation to set targets, monitor and report on housing supply, is a critical first step to improving housing affordability into the next housing cycle.

“We encourage Governments to work swiftly on addressing the skilled worker shortage, and to expedite work on new supply boosting measures, to alleviate key shortages now and into the future,” said Maxwell Shifman.

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Media Enquiries:
Deanna Lane | National Media & Communications Manager | 0416 295 898 | media@udia.com.au