Australian Housing Crisis Deepens as Building Approvals Plunge to 11-Year Low

In an unwelcome setback for the Australian housing market, building approvals have plummeted to an 11-year low, posing a significant obstacle to the nation’s housing and rental crisis resolution efforts​1​. Private sector house approvals have continued their downward trend, dropping 3.8% in April, which follows a 3.7% decrease in March​1​. This slowdown in construction activity could further exacerbate Australia’s housing and rental crisis in the near to mid-term​1​.



The decline in construction rates has raised concerns among industry experts and stakeholders. Master Builders Australia, a leading industry association, warns that the slowed pace of construction could jeopardise Australia’s ability to meet its housing targets​1​. The recent dips in new home building approvals follow a year marked by escalating interest rates and inflation at a 30-year peak, the Acting CEO of Master Builders Australia, Shaun Schmitke, pointed out​1​.

Compounding the issue, the most significant reductions were observed in higher density home building approvals and home renovations, with decreases of 16.9% and 26.6%, respectively. Despite the surging demand for medium and high-density housing, the pipeline for new stock is rapidly shrinking​1​. Consequently, the decrease in new builds could intensify pressures in the rental market, with rent payments taking up an increasing portion of income – a trend not seen since June 2014​1​.

In response to the crisis, the Albanese Government has committed to building one million homes over five years starting from 2024​1​. However, looming challenges in the construction industry and rapid population growth – partly due to record high immigration – could potentially hinder these efforts​1​.

The construction sector plays a crucial role in supporting economic growth and meeting the housing needs of Australia’s burgeoning population. Addressing the crisis will require a careful examination of the impact of government regulations and policies on the cost of building homes and social infrastructure​1​. As Australia grapples with these complex challenges, it is clear that a multi-faceted approach will be necessary to ensure that the housing market can keep pace with the demands of a rapidly growing population.

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