Panic as housing construction craters and home builders fail


Last week was an unmitigated disaster for Australia’s housing market, with dwelling approvals and loans for purchasing or constructing a new home cratering.

Annual dwelling approvals collapsed to only 162,200, which was the lowest result since March 2013 and below the historical average:

Dwelling approvals Australia

Loans for purchasing or constructing a new home also remained near record low levels in December:

Loans for new homes

Chart by HIA

The Housing Industry Association (HIA) sounded the alarm, warning that the Albanese government’s target to build 1.2 million homes over five year (240,000 homes a year) is under threat.

“The steepest RBA rate hiking cycle in a generation has compounded the elevated costs of home building, seeing potential home buyers squeezed out of the market and fewer new homes commencing construction”, HIA Senior Economist Tom Devitt said.


“This lack of new work means the pipeline of new housing supply approaching completion is now shrinking rapidly”.

“At this rate, Australia will not commence enough housing to meet National Cabinet’s target, falling well short of the 1.2 million new homes they want to see built in the next five years”…

“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”.

“As fewer new projects begin construction, the pipeline of work that Australia’s home builders have under construction is expected to shrink rapidly this year”.

“At a time of record population growth and acute shortages of rental accommodation, a dwindling supply of new homes threatens to worsen Australia’s housing crisis”, Devitt said.

The housing situation darkened further over the weekend with one of Australia’s largest construction companies, St Hilliers, ceasing work at 21 active construction sites and plunging into administration:


“St Hilliers – a 34-year-old apartment, commercial and infrastructure building company – has told sub-contractors not to come into work at 21 work sites, with seven entities within the group now in administration”.

“WLP Restructuring partners Glenn Livingstone and Alan Walker were appointed on Sunday as voluntary administrators of St Hilliers Contracting, the company’s construction division”.

“So far, 22 staff have been retrenched with 80 still employed in uncertain circumstances at the company established in 1989”.

“Its key projects are in Sydney, Brisbane, Townsville and Perth”.

The collapse in dwelling construction has obviously occurred alongside the record boom in Australia’s population via net overseas migration:

Historical NOM

As a result, Australia’s housing shortage is certain to worsen, driving up both prices and rents.

Dwelling completions vs population

It is an inequality disaster in the making, brought about by the federal government’s lunatic mass immigration policy.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.