Data released this week by the Australian Bureau of Statistics (ABS) showed that capital city unit and apartment approvals have fallen to October 2012 levels:
56,000 unit and apartments were approved across the capital cities in the year to August 2023, which was literally half the 111.700 approvals approved in the year to September 2016.
The next chart plots high-rise apartment approvals across the major states and nationally:
Nationally, 36,900 high-rise apartments were approved in the year to August 2023, less than half the 78,100 high-rise apartments approved in the year to October 2015.
The collapse in high-rise approvals has arrived at the worst possible time given the nation’s population is growing at a record pace amid the largest immigration boom in history:
Source: Cameron Kusher (PropTrack)
According to the June quarter national accounts, Australia’s population soared by 626,000 over the 2022-23, driven by net overseas migration of around half a million people.
Since new migrant arrivals tend to rent apartments, Domain data shows that unit rents are rising seven times faster than wages:
In the year to June, unit asking rents across the combined capital cities surged by 26.1%, easily exceeding the 3.6% growth in the ABS wage price index.
The above charts suggest the rental situation will worsen.
Developers have largely abandoned the nation’s apartment market, as evidenced by the collapse in approval rates.
The Albanese government has made the supply situation even worse by running the largest immigration program in Australia’s history.
Ongoing strong rental demand from high levels of immigration will, therefore, run headlong into falling rates of supply, which will cause the rental market to tighten even further and rents to rise.
It is a housing disaster in the making.
