The latest housing construction data from the Australian Bureau of Statistics (ABS) is a disaster.
Only 37,200 homes commenced in the December quarter in trend terms, the worst quarterly result since June 2012.
This gives an annual run rate of 148,800, around 91,000 below the Albanese government’s construction target of 240,000 homes annually.
Dwelling approvals data for February was equally weak. Only 12,400 homes were approved for construction in trend terms, the lowest monthly reading since April 2012.
That also gives an annual run rate of only 149,000 homes, 91,000 below the Albanese government’s construction target of 240,000 homes annually.
On Tuesday, the Housing Industry Association (HIA) released new home sales data for March, which recorded flat sales over Q1:
HIA Senior Economist Tom Devitt was glum in his assessment of the data.
“The prospect of a pick-up in home building activity in 2024 is not likely given the low volume of new homes sales in the first three months of 2024”, Devitt said.
“Concerningly, sales in the first three months of this year remain 41.3% below the same quarter in 2021, 18.2% below the same quarter in 2020, and 18.9% below the same quarter in 2019″.
Devitt also noted that home sales have fallen particularly hard in NSW and Victoria, which are receiving the lion’s share of overseas migrants:
“Sales in New South Wales and Victoria in the first three months of 2024 remain down significantly compared to recent years, including sales falling by 48.7% and 32.7% respectively, compared to the same quarter in 2019″, Devitt said.
“The higher land costs in New South Wales and Victoria is the principal reason why sales in these markets are more significantly affected by the rise in the cash rate”.
Labor’s 1.2 million housing target is unlikely to be achieved given high interest rates, elevated material costs, and labour shortages. Home builders are also competing with state government infrastructure projects for workers.
The dire outlook is reason enough for the HIA to be concerned. So should Australian tenants, who are facing more shortages and soaring rents.
If the Albanese government doesn’t cut net overseas migration hard, the rental crisis will become entrenched.
