This week has been another horror show for Australia’s housing construction sector and the Albanese government’s target to build 1.2 million homes over five years.
On Monday, the Australian Bureau of Statistics (ABS) released data on finance commitments for the purchase or construction of new homes, which remained near record-low levels:
The situation darkened on Wednesday with the release by the ABS of dwelling commencement and completions data for the September quarter of 2023.
Only 174,000 dwellings were completed in Australia in the year to September 2023, which doesn’t account for homes demolished via knockdowns and rebuilds.
More worryingly, the number of dwelling commencements collapsed to only 165,600 in the year to September.
Both are obviously way below the Albanese government’s 240,000 a year housing construction target.
Housing Industry Association (HIA) Senior Economist, Tom Devitt, was quick to sound the alarm:
“This data reveals there were 103,707 detached houses that commenced construction in the twelve months to September 2023, down by 17.0% on the 124,940 commenced in the previous twelve-month period”.
“This points to a slow start to National Cabinet’s ambition to build 1.2 million homes over the next five years starting mid-2024″.
“Since the RBA’s first cash rate increase in May 2022, sales of new homes have tumbled. A number of earlier projects are also being cancelled, with banks withdrawing finance in the face of soaring building costs and shrinking homebuyer borrowing power”.
“This lack of new work entering the construction pipeline is expected to produce a trough in new house commencements in 2024, when Australia will start construction on just 95,400 new houses, the weakest year in over a decade”.
The below chart shows the widening gulf between the various measures of housing construction and the nation’s population growth:
Ramping immigration to record highs when the supply-side of the housing market is hamstrung by high interest rates, elevated material costs, labour shortages, and builder bankruptcies is the height of madness and guarantees that Australia’s rental crisis will roll on.
