In this week’s Treasury of Common Sense on Radio 2GB, I discussed (among other things) the latest abysmal housing construction data and why it means Australia’s rental crisis will worsen.
Below are highlights relating to the housing discussion.
The situation with dwelling approvals looks pretty grim. It’s an absolute national disaster.
The Australian Bureau of Statistics released its dwelling approvals data for the year to December 2023. Only 162,000 homes were approved last calendar year. That is the lowest in about 12 years. So, it’s a really poor figure.
It is also 78,000 less than the Albanese government’s housing target. The federal government committed to building 1.2 million homes over 5 years, so that’s 240,000 homes a year. And yet, the dwelling approvals data was only 162,000.
So, it’s so far below what we need given Australia’s rampant population growth. And what it basically means is that that we’re going to have a worsening housing crisis and a worsening rental crisis because we’re not going to build enough homes to house the population.
It’s not just the dwelling approvals data, it’s also dwelling commencements and dwelling completions, which are tracking around a decade low.
Loans for new homes – both to build them and buy them – was also released by the Australian Bureau of Statistics last week and that’s basically crashed to close to its lowest ever level.
All the forward-looking indicators on housing construction are in the gutter, hovering around decade lows, which is exactly what we don’t need when we’re growing the population at a record rate.
They’re not even close, and it doesn’t look like they’re going to even get close in the future. Especially when you’re in an era of high interest rates, a lot of builders are going bankrupt—another major one went broke last week. We’ve got labour shortages, and materials costs are about 40% higher than they were pre-pandemic.
So basically, all the ingredients are an absolute disaster zone if you want to build homes.
At the same time, we’re running record-high demand through this huge immigration program.
So, it’s basically a recipe for a rental crisis.