Building approvals witness a decline: Are regulatory changes to blame?

Total dwelling approvals saw a drop of 6.1 per cent in the month of August, hitting 13,991. According to ABS head of construction statistics Daniel Rossi, private dwellings excluding houses were the main contributor to the decline.

“The result was driven by a 16.5 per cent fall in approvals for private dwellings excluding houses, following a July increase. The movements in dwellings excluding houses continue to be the result of volatility in apartment approvals, with the broad environment around apartments remaining subdued. Private sector house approvals continued to slowly rise, up 0.5 per cent,” Rossi said.

The drop in private sector dwellings excluding houses brings the total to 4,418. Meanwhile, the slight rise in private sector housing approvals brings the total to 9,338.

Furthermore, the value of total residential building fell 6.7 per cent to $7.96 billion and the value of non-residential building rose 11.5 per cent to $5.30 billion.

Despite the fall in August, HIA chief economist Tim Reardon said that confidence has boosted recently, with year on year figures up.

“Market confidence in new home building has strengthened in recent months, as investors and owner-occupiers return to the market. Detached house approvals rose by 0.6 per cent compared to July. House approvals in the three months to August 2024 were 11.2 per cent higher compared to the same time the previous year,” said Reardon.

“The steady increase in detached house approvals is offsetting a low volume of multi-unit approvals and total dwelling approvals in the three months to August 2024 were 5 per cent higher compared to same time in the previous year.”

However, there are challenges making development difficult. According to Reardon, rising taxes for foreign investors and rising regulatory costs are impacting figures.

“It has been almost 11 months since the last increase in the cash rate. Stable interest rate settings have provided the certainty needed to see a rise in home building confidence. This is complemented by stabilising price growth for building materials, a return to normal build times, strong housing demand and low unemployment,” he said.

“Detached house approvals in Perth and Brisbane are faring much better than in Sydney and Melbourne. Confidence in the Melbourne new home market has been adversely impacted by two new taxes. The Australian Government cannot tax its way out of achieving the agreed national target of 1.2 million new homes.

“Recent discussions on negative gearing and capital gains tax arrangements for residential property will undermine confidence in new home building. The government’s focus should be on lowering the taxes, regulatory costs and excessive charges that make up as much as 50 per cent of the final cost of a house and land package.”

Related: Are we on track to meet 1.2m homes?

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

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