Australia’s housing construction industry and the Albanese government’s goal to construct 1.2 million homes in five years have experienced yet another challenging week.
The Australian Bureau of Statistics (ABS) published information on Monday regarding finance commitments for buying or building new houses, and these figures remained close to historically low levels.
Australian housing starts fall to lowest level in a decade
On Wednesday, the ABS revealed dwelling commencement and completions data for the September quarter of 2023, which further worsened the situation.
Australia saw the completion of only 174,000 residential properties in the period leading up to September 2023, without considering the number of homes that were demolished and rebuilt.
New home construction in Australia crashes to 10-year low
Australian housing market crashes as new home construction falls
Even more concerning, the amount of homes that began construction dramatically dropped to just 165,600 in the year leading up to September.
Both clearly fall significantly short of the Albanian government’s goal of constructing 240,000 houses per year.
Tom Devitt, the Senior Economist of the Housing Industry Association (HIA), wasted no time in raising the alarm.
According to this data, there were 103,707 single-family houses that started being built between September 2022 and September 2023. This number represents a 17.0% decrease compared to the 124,940 houses that were started in the previous twelve months.
“This indicates a slow beginning for the National Cabinet’s goal to construct 1.2 million homes within the next five years, commencing in mid-2024.”
“After the Reserve Bank of Australia raised the cash rate in May 2022, there has been a significant decline in the sales of new homes. In addition, several previous construction projects are being cancelled as banks are pulling their financial support due to escalating building expenses and the decreasing ability of homebuyers to borrow funds.”
It is predicted that the absence of new projects in the construction industry will result in a significant decline in the number of new houses being built. In 2024, Australia will only begin construction on 95,400 new houses, which will mark the lowest number in more than ten years.
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Australian housing market hit hard as new home construction falls
The chart below illustrates the increasing disparity between different indicators of housing construction and the growth of the country’s population.
Increasing immigration dramatically at a time when the housing market is hindered by factors like high interest rates, expensive materials, a shortage of labor, and builder bankruptcies is extremely foolish and ensures that Australia will continue to face a severe rental crisis.
