Concerningly low housing approvals forecast significant contraction in new housing supply, says UDIA
Today’s ABS data on building approvals and CPI figures paints an increasingly grim picture for new housing over coming period. UDIA National predicts dwelling completions will be around 30% lower than the long run average 18 months from now if housing supply and productivity is not ramped up immediately.
“UDIA National has been warning of a major contraction in new housing construction and productivity for some time, and that prediction is coming true just at the time when we need to be increasing new housing supply and re-stocking our pipeline,” said Max Shifman, UDIA National President.
Total Building Approvals for July across Australia – shown in the graph below – are 23% lower than the long run average, which makes it the seventh consecutive month that total approvals volumes have remained lower than the long run monthly average – at a time when figures need to be on the higher end.
UDIA National notes that completions typically run at around 90% of approvals across all dwelling types and with an almost 18-month lag converting approvals to housing completion, predicts that new housing completions in 18 months’ time will fall to 33% or more below the long run average, unless significant changes are implemented to boost housing supply.
The numbers are worse for attached dwellings specifically, where approvals are now 34% lower than the long run average. This means future completions for apartments will be closer to 44% below the long run average, and frighteningly, well below the levels needed to deliver the 1.2m Housing Target agreed by National Cabinet.
“The ever-worsening reduction in new housing supply is leading to skyrocketing house prices and rentals, and we predict this becoming much worse over the next 18 months. While strong demand may be returning to the market, there has been no commensurate improvement in development-ready land supply,” he said.
Given the data, it’s clear we cannot afford to wait until mid-2024 for the proposed National Cabinet planning reforms to be introduced.
The success of every single Government housing initiative depends on solving this basic problem first – finding more development ready land. With the recent cost increases, it’s also essential that the types of housing unlocked must match the needs of the different demographics and their capacity to purchase.
UDIA National urges political leadership across the nation to lock in housing targets, streamline planning systems and deliver enabling infrastructure, and most critically, facilitate the types of housing that Australians need and can afford.
Deanna Lane | National Media & Communications Manager | 0416 295 898 | firstname.lastname@example.org