Key takeaways
The average time to build a home in Australia has increased significantly, with standalone house construction times rising from 9 months (15 years ago) to 12.7 months today, a 40% increase.
Apartment construction timelines have seen an even more dramatic rise, from 18.5 months to 33.3 months—a nearly 80% increase.
These extended timelines contribute directly to Australia’s housing shortage by delaying market supply, thereby driving up prices.
The Consumer Price Index (CPI) for the September 2024 quarter rose by only 0.2%, marking an annual increase of 2.8%, the lowest level since March 2021. The significant reduction from the 2022 peak of 7.8% was influenced by energy rebates and declining petrol prices. Trimmed mean inflation, preferred by the Reserve Bank of Australia (RBA), rose 0.8% quarterly and 3.2% annually, indicating persistent inflationary pressures in services.
The declining inflation suggests that any further interest rate hikes are unlikely. Instead, attention has shifted to when rates will start falling. While major banks anticipate rate cuts to begin in February 2025, Dr. Andrew Wilson predicts rate cuts might not start until May 2025 due to specific underlying factors he elaborated on during the discussion.
September 2024 saw a 4.4% rise in dwelling approvals, following a decline of 3.9% in August. Private sector house approvals reached their highest levels since August 2022, up 2.2% month-on-month and 16.7% year-on-year. South Australia and Western Australia showed the most notable increases, with South Australia up 10.3%.
Capital city auction listings were down overall due to reduced activity in Melbourne (affected by the Melbourne Cup holiday), but clearance rates held steady. The national auction clearance rate was 57.8%, down from the previous week's 59.8% and significantly lower than the 66.1% recorded the previous year. Sydney's rate remained stable at 64.7%, while Melbourne’s rate increased to 66.1% despite fewer listings.
The time it takes to build a home has blown out over the last couple of years, resulting in the time between building approval and completion of apartments increasing by a staggering third.
Of course, this makes housing more expensive and in this week’s Property Insider chat Dr Andrew Wilson and I discussed the implications of this
We also discuss how the Consumer Price Index is now at the lowest level since the March quarter of 2021 and well below the peak of 7.8 per cent at the end of 2022, meaning any talk of further interest rate rises is now off the table and the question is when will rates fall?
Dr Andrew Wilson gives his forecast in this week’s Property Insider chat, and you may be surprised.
CPI at lowest level in 3.5 years
Watch this week’s Property Insider video as Dr Andrew Wilson gives his thoughts about the latest inflation figures and explains when he sees interest rates falling
According to the ABS, the Consumer Price Index rose 0.2% in the September 2024 quarter and 2.8% annually.
The quarterly rise is the lowest since the June 2020 quarter.
The significant fall in headline CPI was mainly on the back of energy rebates kicking in, and cheaper petrol prices.
Trimmed inflation, the RBA’s preferred measure, which excluded the substantial drops in electricity and automotive fuel, rose by 0.8% in the September quarter and 3.2% annually.
Of concern is that service inflation rose in the September quarter from 4.5% to 4.6% annually.
As a result, all four big banks now expect the first cut to be in February 2025, with the total number of cuts ranging from three to five.
But you’ll hear Dr Wilson has a different view, suggesting rates may not fall until May 2025 and he gives a good explanation is why this may occur.
| Potential impact of cash rate forecasts | ||
| Cash rate forecast | Potential change in monthly repayments
$600k loan |
|
| ANZ | 3 x 0.25% cuts starting Feb-25 | -$270 |
| CBA | 4 x 0.25% cuts starting Feb-25 | -$357 |
| NAB | 5 x 0.25% cuts starting Feb-25 | -$442 |
| Westpac | 4 x 0.25% cuts starting Feb-25 | -$357 |
| Source: www.canstar.com.au - 30/10/2024. Repayments based on an owner-occupier paying principal and interest on the average variable rate of 6.35% (RBA) with a $600k loan over 25 years. Assumes banks pass cuts on in full the following month. | ||
Dwelling approvals rise in September
Watch this week’s Property Insider video as Dr Andrew Wilson explains how the total number of dwellings approved rose 4.4 per cent in September to 14,842, following a 3.9 per cent fall in August.
The rise this month was driven by increases across all dwelling types.
Private sector houses reached 9,745 approved in September, to be at the highest level since August 2022.
Despite mixed results across the states, private sector house approvals across Australia rose 2.2 per cent, to be 16.7 per cent higher than September 2023.
South Australia recorded the largest increase of the states at 10.3 per cent.
Western Australia also continued to rise, approving 1,661 private sector houses, its highest number since May 2021.
Apartment building approvals rose 4.7 per cent (4,653 dwellings), to be 12.2 per cent lower than one year ago.
- Also read:Auction Report Nov 9th 2024 | Auction Clearance Rates Steady as Season Winds Down
- Also read:Latest Asking Prices State by State | New Property Listings rise 6.2%.
- Also read:Look how long it takes to build a home today! | Property Insiders
- Also read:This week’s Australian Property Market Update – Latest Data, State by State November 5th 2024
- Also read:The latest Corelogic Rental Market Report
The September result was driven by a rise in approvals for high-density apartments.
There were 1,815 apartments approved in nine or more storey blocks in September, compared to 1,201 in August.
Look how long it takes to build a home
Looking back 15 years, the average build time for a standalone house was about nine months.
Fast forward to today, and it’s stretched to a whopping 12.7 months – a jump of over 40%!
And that’s just houses.
For apartments, the time from approval to completion has exploded from an average of 18.5 months to a staggering 33.3 months.
That’s nearly three years to bring a single apartment building to life, an 80% increase in the timeline.
This blowout isn’t just an inconvenience; it’s a direct factor worsening Australia’s housing shortage.
Every extra month added to the build process means fewer homes are hitting the market, pushing up demand and, inevitably, prices.
Lower auction numbers overall this week, but clearance rates are steady
Capital city auction listings were lower overall this week, reflecting a big fall in Melbourne activity due to the Melbourne Cup long week holiday.
Other capitals, however, reported rises in weekly listings.
The national weekend auction market reported a clearance rate of 57.8% over the past week, which was again below the 59.8% reported over the previous week – but well below the 66.1% recorded over the corresponding weekend last year.
Sydney's clearance rate was steady at 64.7%, with the highest regional rate in the Lower North at 75.7%.
Melbourne's clearance rate rose to 66.1% despite fewer listings.
Brisbane, Adelaide, and Canberra all experienced varying clearance rates, with notable top sales across cities.
