HomeBuilder drives structural housing oversupply

Last week, the Australian Bureau of Statistics (ABS) released dwelling construction data for the June quarter, which showed that dwelling commencements hit the highest level on record over the quarter:

The below charts plot annual dwelling approvals, commencements and completions against population growth nationally and across the five major states.

National:

Nationally, population growth collapsed to only 35,700 in the year to March 2021, versus dwelling commencements of 212,000 at the June quarter of 2021 and dwelling approvals of 229,000 as at August 2021:

New South Wales:

In NSW, population growth collapsed to only 11,700 in the year to March 2021, versus dwelling commencements of 60,700 as at the June quarter of 2021 and dwelling approvals of 62,200 as at August 2021:

Victoria:

In Victoria, population growth collapsed -42,800 in the year to March 2021, versus dwelling commencements of 67,200 as at the June quarter of 2021 and dwelling approvals of 69,600 as at August 2021:

Queensland:

In Queensland, population growth fell to 55,300 in the year to March 2021, versus dwelling commencements of 33,100 as at the June quarter of 2021 and dwelling approvals of 43,900 as at August 2021:

Western Australia:

In WA, population growth fell to 15,200 in the year to March 2021, versus dwelling commencements of 23,600 as at the June quarter of 2021 and dwelling approvals of 28,200 as at August 2021:

South Australia:

In SA, population growth fell to 2,700 in the year to March 2021, versus dwelling commencements of 13,800 as at the June quarter of 2021 and dwelling approvals of 15,300 as at August 2021:

In short, Australia’s various major housing markets are facing a structural oversupply of homes in 2022 as the massive pipeline of detached homes currently approved or under construction are completed and hit the market.

At the margin, this supply should put downward pressure on rents and to a lesser extent prices.

Of course, the federal government will endeavour to fill these homes by rebooting the ‘Big Australia’ mass immigration program.

Unconventional Economist
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