Australian building approvals hit 11-year low in blow to hopes of solution to rental, housing crisis
There is actually no rental housing shortage in Australia. Huge numbers of dwellings have been taken out of long-term rental and advertised as holiday lettings, via AirBnb and the like. If all the holiday lettings were transferred into long term availability, the rental shortage would vanish. Governments are aware of that but cannot do much about it.
They need to ask WHY owners are putting their houses into a high-maintenance and intensive management situation. Why are owners making more work for themselves? There is only one main reason for that. Holiday lets escape the onerous regulations on long-term letting. It follows that replacing all the long term regulations with the same low level of control that prevails for holiday lets would rapidly see lots of dwellings back in the long-term market.
But governments love their extensive "pro-tenant" regulations so no change is likely. The rental shortage is goverment-created, not a deficiency in housing supply
Australia’s building approvals have hit an 11-year low, in a fresh new blow to hopes of a quick solution to our housing crisis.
According to data released by the Australian Bureau of Statistics: “the total number of dwellings approved fell 8.1 per cent in April, in seasonally adjusted terms, following a 1.0 per cent decrease in March”.
That April figure is the lowest monthly figure in over a decade.
“Total dwellings approved fell to the lowest level since April 2012,” Daniel Rossi, ABS head of construction statistics said. “The overall decline was driven by a fall in approvals for private sector dwellings excluding houses, which fell 16.5 per cent, to the lowest level since January 2012
Rising interest rates and inflation are affecting the number of new home builds. Picture: Brendan Radke
“Private sector house approvals also continued to decline, falling 3.8 per cent in April, following a 3.7 per cent decrease in March.”
The slowing rate of construction is likely to exacerbate Australia’s housing and rental crisis, at least in the short to medium term.
Master Builders Australia said the slowing rate of construction would “impact Australia’s ability to meet its housing target”.
The Albanese Government has pledged to build one million homes over five years from 2024.
“The reverses in new home building approvals come in the aftermath of twelve months of rising interest rates and inflation at its highest in over 30 years,” Master Builders Australia Acting CEO Shaun Schmitke said.
“The biggest drops were in higher density home building approvals and home renovations falling 16.9 per cent and 26.6 per cent respectively.
“Although demand for medium and high-density housing is surging, the pipeline of new stock is rapidly diminishing.
“The fall in new builds will exacerbate pressures in the rental market at the worst possible time with media reports today showing the portion of income needed to pay rent lifting to the highest level since June 2014
“To ensure we continue to supply enough homes to house all Australians, governments need to look at what impact their regulations and policies have on the cost of building homes and on the cost of building social infrastructure.”
Record high immigration is also set to put further strain on Australia’s housing market.
According to the PropTrack New Homes Report – May 2023: “While the government has committed to increasing housing stock, construction industry headwinds and fast population growth may hamper plans to provide a prompt solution to the housing crisis”.