Key takeaways
Australia's population reached 27.1 million by March 2024, growing by 2.3% over the previous year, driven mainly by net overseas migration (83%).
The influx of people has worsened the housing crisis, with building approvals not keeping up with demand. Building approvals for apartments are down nearly 60% from their peak, exacerbating the housing shortage.
Home-building approvals fell by 5.7% in August 2024, highlighting ongoing struggles in addressing the housing crisis. The government’s goal of building 1.2 million homes in five years faces significant obstacles due to financial constraints and taxes on housing development.
Up to 50% of the cost of a new house and land package comes from taxes and government-imposed fees, making new builds less financially viable and further reducing supply.
Retail turnover rose by 0.7% in August 2024, reflecting Australians' spending resilience despite rising living costs. Warmer-than-usual weather also contributed to higher spending on seasonal goods.
National auction numbers surged, but clearance rates slightly dropped to 62.1% due to increased listings, providing more choices for buyers and increasing competition among sellers. Melbourne saw a sharper decline in clearance rates, while Sydney remained steady.
Australia's population grew by 2.3 per cent to 27.1 million people in March 2024, according to the latest figures released by the Australian Bureau of Statistics.
Our population grew by 615,300 people over the previous year.
Net overseas migration drove 83 per cent of this population growth, while natural increase made up the other 17 per cent.
Annual net overseas migration in the year to March 2024 was 509,800 people, down from a peak of 559,900 in September 2023.
But we’re just not building enough accommodation for all these people, and to make matters worse with more than one and two people household we need more dwellings just to house the same number of people.
And the latest building approvals give no comfort to those concerned about our housing crisis so in today’s Property Insider chat Dr Andrew Wilson and I discuss these statistics plus much more to give you some clarity on what’s happening in our economy and our property markets.
Home building approvals are down again
Today’s housing crisis has developed over more than 20 years and accelerated through the pandemic.
Despite the government’s aim at building 1.2 million dwellings over the next five years, the crisis can’t be resolved by any single government or within one term.
Watch this week’s Property Insider chat as Dr Andrew Wilson explains how home-building approvals were down by 5.7% over August, following a 10.4% rise in July.
And the more volatile unit approvals were down 16.5% while house-building approvals were up 0.5%.
The following chart clearly shows how building approvals for apartments (units), which are the government’s desired way of building accommodation at scale, are down close to 60% from their peak.
Of course, just because developments are approved doesn’t mean they get built.
Currently, most new apartment complexes are not financially viable to build, and you will hear how Dr. Wilson explains that there is significant “intrinsic value” in established apartments at the moment because you can buy them substantially below replacement cost.
Interestingly, Victoria is building more homes than any other state at present as the following chart shows.
What we don’t realise is how the Australian Government’s scope to increase housing supply is constrained.
State governments oversee infrastructure, transport, and hospitals, while local councils manage the availability of land for development.
There are around 11 million households in Australia, but increasingly the cost of achieving climate change goals, increasing public housing stock and paying for the maintenance of community spaces are being imposed on just the 200,000 households building a new home each year.
The inequity of a tax system that requires new home buyers to fund an increasing burden of government expenditure has seen a decline in the share of households building a new home over recent decades.
This, in turn, leads to fewer new home buyers bearing this ever-increasing tax burden.
- Also read:This week’s Australian Property Market Update – Latest Data, State by State October 22nd 2024
- Also read:Adelaide housing market update | October 2024
- Also read:Brisbane housing market update | October 2024
- Also read:Auction Report Oct 19th 2024 | More Solid Mid-Spring Weekend Auction Results
- Also read:Perth housing market update | October 2024
The more you tax housing, the fewer homes will be built.
Up to 50 per cent of the price that a consumer pays for a new house and land package is taxes, fees, charges and unnecessary costs imposed by governments.
Put simply - If you tax it, you will get less of it.
Retail turnover up
The rising cost of living means many Australians are doing it tough financially, however, seasonally adjusted figures released by the Australian Bureau of Statistics show that Australian retail turnover rose 0.7 per cent in August 2024.
This followed growth of 0.1 per cent in July 2024 and 0.5 per cent in June 2024.
Of course, there is Australian spending, and the cost of everything has gone up within inflation, but the following chart shows how spending today compares with pre-Covid levels.
Watch this week's Property Insider video as Dr Andrew Wilson explains the implications of this.
Robert Ewing, ABS head of business statistics, said:
“Retail spending was boosted this month by warmer-than-usual weather for this time of year.
This year was the warmest August on record since 1910, which saw more spending on items typically purchased in spring.
This included summer clothing, liquor, outdoor dining, hardware, gardening items, camping goods and outdoor equipment.”
Auction surge pushes down clearance rates
A surge in auction numbers this weekend has pushed down clearance rates in some markets by providing more choices for buyers and more competition among sellers.
The national weekend auction market reported a clearance rate of 62.1%, which was just below the 63.3% reported over the previous weekend – but below the 66.3% recorded over the same weekend last year.
National auction numbers were again predictably higher at the weekend with 2,499 listings versus the previous weekend (1,754) and remained significantly higher than the 1,810 listed over the same weekend last year.
The Sydney clearance rate remains steady as the market resumes surging after the holiday weekend.
However, the clearance rates in Melbourne fell sharply this weekend.
Although clearance rates were lower this weekend, results were nonetheless overall positive, given the extraordinary number of properties that went under the hammer.
