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The Australian Bureau of Statistics (ABS) has revealed a total of 13,808 dwellings were approved in June 2023 (in seasonally adjusted terms), a fall of 7.7 per cent after the 20.6 per cent increase recorded in May.
Dwelling approvals across the nation were mixed; NSW and Tasmania faced the two biggest decreases of -33.9 per cent (to 3,550) and -35.6 per cent (to just 186), respectively, having led the increases of 52.9 per cent and 41.1 per cent in May.
Conversely, Queensland had a positive result for the month of June, with approvals rising 28.3 per cent to 2,952.
However, Victoria continued to lead the way with the most approvals. A total of 4,762 were approved in the southern state in June (a 26.4 per cent uptick) and Western Australia saw approvals rise by 8.7 per cent (to 1,094 dwellings approved).
Compared to June 2022, building approvals had dropped 18 per cent, when 11,323 dwellings were approved.
ABS head of construction statistics Daniel Rossi said the fall in total dwellings approved was driven by the “volatile private dwellings excluding houses series”, which fell 21 per cent.
“Approvals for private sector houses decreased 1.3 per cent, following a 0.8 per cent rise in May,” Mr Rossi said.
Values on the rise, particularly for non-resi buildings
However, despite the fall in building approvals the average value of new dwellings approved continued to increase year on year.
Mr Rossi noted that the average approval value for a new house was $461,200 in June 2023, 12.5 per cent more than the $409,900 in June 2022.
Overall, the ABS found the value of total building approvals rose 1.2 per cent in June, however, this was bolstered by the value of non-residential buildings approved, which rose to a record high, increasing 7.6 per cent in June.
Meanwhile the value of total residential buildings fell 4.6 per cent.
The bureau said June was only the third month in the past 10 years that the non-residential sector value exceeded the total residential value.
Industry warns more is yet to come
In its Economics Insight update the Commonwealth Bank of Australia said it expects “dwelling investment to contract again for Q2 23 GDP given the weakness in the sector, following on from weakness in Q4 22 and Q1 23”, as “the value of new residential approvals remains weak”.
Similarly, the Housing Industry Association (HIA) said the drop in dwelling approvals was problematic due to Australia’s “structural undersupply of housing”.
HIA’s chief economist Tim Reardon suggested that rising interest rates have been slowing the number of dwellings being built. As such, he said the government needed to “respond by reducing the tax on housing, attract more investment, improve the supply of land for greenfield and brownfield projects and invest in new public housing stock”.
“At its core, the shortage of housing is caused by a lack of investment. Investors are crucial to delivering new housing supply, especially in the increasingly important apartment sector,” Mr Reardon said.
“Governments cannot resolve this shortage of housing stock by increasing or imposing more taxes on housing.”
Master Builders Australia chief executive Denita Wawn added that, despite the RBA’s decision to hold interest rates yesterday (1 August), the “impact of interest rate rises exacerbating the housing crisis” had already occurred.
“Right now, many new home building projects are failing to get off the ground due to the combination of high costs and a declining investment appetite, inflamed by rising interest rates,” Ms Wawn said.
“We need to see governments working to make it easier for new projects to get the green light by kick-starting private investment and reducing development costs and delays.
“Taxes, regulations and the industrial relations environment all have an impact on the cost of construction.”
Given the slowdown in approvals, the property and building industry have reiterated their support for the Housing Australia Future Fund Bill, which is yet to pass Parliament.
The Property Council of Australia’s CEO Mike Zorbas vocally supported the government’s reintroduction of its Housing Australia Future Fund Legislation (HAFF), stating it was “the shot in the arm the nation needs to close the housing deficit”.
“Beyond the HAFF, the fastest paths to new housing remain, setting housing targets, creating incentives for more supply and fixing broken state planning systems,” Mr Zorbas said.
[Related: Labor renews Housing Australia Future Fund push]
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