Approvals of apartments in capital cities fall further despite a peak in migration

The Australian Bureau of Statistics today released its monthly building approvals data for March 2024 for detached houses and multi-units covering all states and territories.

"The mismatch between rising demand from migration and constraints on the supply of housing is likely to see the acute shortage of housing stock continue to deteriorate," added Mr Reardon.

"Higher density housing development is being constrained by labour, material and finance costs and uncertainties, as well as cumbersome planning rules and punitive taxes, especially on foreign investors.

"This lack of new work entering the construction pipeline is occurring alongside record inflows of overseas migrants and a pre-existing acute shortage of rental accommodation across the country.

"The positive news is that for the past 12 months the volume of detached building approvals has remained relatively stable, al be it at their lowest level for a decade.

"There is growing evidence that the volume of new detached homes commencing construction will reach a trough in 2024, albeit, at its lowest level since 2012.

"The volume of detached approvals nationally rose for the second consecutive month, to be 0.7 per cent higher than it was in the same quarter in 2023.

"Rising interest rates is the key factor slowing building activity, but there is an increased divergence evident in some states. Those able to deliver low cost land are seeing more modest slowing in activity.

"Approvals for new houses in Western Australia contrast with the rest of the country and have been increasing steadily since mid-2023. House approvals in Western Australia are now 33.2 per cent higher than in the same quarter the previous year.

"It is possible to build the Australian Government's target of 1.2 million homes over the next five years, but it will require significant lowering of taxes on home building, easing pressures on construction costs, and decreasing land costs," concluded Mr Reardon.

In seasonally adjusted terms, dwelling approvals in the three months to March increased in Western Australia, up by 38.5 per cent compared to the previous year, and in New South Wales (+7.7 per cent). Other jurisdictions saw declines in approvals, led by Queensland (-17.6 per cent), followed by South Australia (-9.0 per cent) and Victoria (-1.9 per cent). In original terms, dwelling approvals declined in the Northern Territory (-46.2 per cent), the Australian Capital Territory (-14.6 per cent) and Tasmania (-5.4 per cent).

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