There is currently a shortage of properties both for sale and for rent, and this is one of the reasons house prices of kept rising and rents have skyrocketed over the last few years.
Sure the government has talked about building 1.2 million homes over the next five years, but remember they're not going to build them.
Private developers and builders are going to take a financial risk and development risk, and currently many new projects are not financially viable.
The ABS released its building activity data for the September Quarter 2023 which provides estimates of the value of building work and number of dwellings commenced, completed and under construction across Australia and its states and territories.
The data reveals there were 103,707 detached houses that commenced construction in the twelve months to September 2023, down by 17.0 per cent on the 124,940 commenced in the previous twelve-month period.
Australia commenced construction of just 23,058 new houses in the September Quarter 2023, the weakest quarter in over a decade and down by 21.6 per cent on the same quarter last year.
HIA Senior Economist, Tom Devitt explains:
“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.
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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.
There was also a decline in the number of multi-unit projects commencing construction, down by 9.6 per cent in the September Quarter 2023 to just 13,916, one of the weakest quarters in over a decade.
Multi-unit commencements are mounting a recovery on the back of population growth and land constraints, with Australia expected to commence 84,400 new multi-units in 2024.
This would still put total detached and multi-unit commencements at less than 180,000 in 2024, far below the 240,000 per annum required to meet National Cabinet’s target.
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.
Meeting National Cabinet’s target will be largely dependent on the delivery of adequate private housing across the housing continuum. This will also have the biggest impact on the cost of housing and rental availability.
Holding all levels of government to account for improving planning regimes, reducing red tape, and supporting the development of appropriate infrastructure and a skilled construction workforce, must be a priority this year,” concluded Mr Devitt.
The number of dwellings approved but not yet commenced is also rising again, up to 34,500, driven by a lift in New South Wales.
New dwelling construction has typically swung with the pipeline of dwellings under construction, but that hasn’t been the case since COVID hit because of capacity constraints and supply disruptions.