UDIA National warns that the continuing collapse in new housing supply will only lead to rocketing house prices in future following the release of ABS data showing the lowest Building Approvals figures in a decade.
“Interest rates and rising costs have had an overwhelming impact on these dismal housing figures and the announcement today by the Reserve Bank to keep the finger on the pause button as interest rates bite hard into Australian’s finances, is a sensible decision, particularly as owner occupier lending is down 20%, and investor lending is down 15% since last June,” said Max Shifman, UDIA National President.
Today’s building approval figures show the largest quarterly drop in over a decade, down 18% for all dwellings and the price of housing builds increasing by 12.5% in the last year.
The greatest fall has been in apartments and attached dwellings which have dropped 21.4% since last year but detached housing, which has done the heavy lifting on new housing supply for the past five years, has fallen an equally startling 18%.
Notably, today’s ABS data also shows that the average price of a new dwelling to be constructed has risen 50% since pre-Covid.
UDIA notes that there is a minimum of an 18-month lag between approval and delivery of a new dwelling, which means the full impact of this ongoing drop will only be felt when the housing would otherwise have hit the market. This can only mean prices, rentals and housing constraints are set to get worse because there simply isn’t enough supply coming through.
“This data is the canary in the coalmine for Australian housing. We continue going backwards each year, with a shortfall of at least 21,000 market houses and 45,000 affordable/social houses expected this year. The industry will deliver 20% less housing than we did last year,” said Max Shifman.
The writing is on the wall for Australia and if we don’t move now to boost housing supply of all kinds, using tools like the HAFF and the Housing Accord, we are going to relegate out children to decades of chronic housing unaffordability.
The only action that will move the dial on housing pressure is building more – anything else simply will not give Australians access to affordable rental and home ownership.
“Now is the time for our political leaders to get on with the job of address the housing shortfall through whatever means necessary. This includes passing the HAFF so we start driving affordable supply into the market, and for State and Local governments to help with the hard work of fixing their planning systems and make it possible for the industry to get delivering again,” said Mr Shifman.
HAFF is not the only way to boost housing supply in the market, but it is concerning for Australians that our government cannot reach a consensus on how to unlock housing which is as essential as food and water to the wellbeing of everyone. Every month the HAFF is delayed, Australia falls behind by another 500 dwellings.
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Media Enquiries:
Deanna Lane | National Media & Communications Manager | 0416 295 898 | media@udia.com.au