RBA: Housing shortage to intensify


Builders are not happy and are telling the RBA so. Via liaison:

Home building is expected to slow as builders work through their backlog of projects.

Sales of house and land packages have been fairly stable in recent months, at low levels. There is considerable variation across the country, reflecting factors such as population flows and relative affordability. Demand for off-the-plan apartments is low.

Contacts are cautiously optimistic about the outlook, and generally expect demand for new homes will pick up as buyer perceptions of interest rate stability and affordability improve.

Most detached home builders expect their workload to decline in coming months as they work through their backlog of projects, due to the lower sales in 2023 and in 2024 so far.

New apartment construction has already declined. Many high-rise residential developments are stalled or not going ahead due to the high costs of construction relative to apartment sale prices and capacity constraints in the construction industry.

While the pace of construction cost growth is easing as material costs improve and supply chains normalise, the cost and availability of labour remains a challenge, particularly for high-density projects that compete with the large volume of infrastructure projects for similar skills.

Here is the problem with Albo’s useless housing construction program. The alleged target of 1.2 million homes over five years is reliant upon private builders to deliver more than 90% of the volume.

Yet builders are seeing mediocre orders and rising costs owing to Albo’s energy shock, meaning they can’t incentivise buyers with price.

The current rate of building approvals, which is above completions, is 750,000 homes over the five years:

Dwelling approvals

Eventual interest rate cuts will help but Albo’s centrally planned 1.2 million homes are already a running joke, with nobody doing anything to change it.

What kind of government renders its own population homeless?

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.