Housing Approvals Decline 6.5% in June, Reaching a 12-Year Low Amid Economic Challenges
- Housing approvals fell by 6.5% in June, marking a twelve-year low, as rising interest rates and construction costs weigh heavily on the market.
- CoreLogic has expressed concern over this drop, labeling it a 'dismal result' for the housing sector.
- Economic factors continue to hinder the promise of new homes, compounding challenges for potential homebuyers and the industry at large.
New dwelling approvals in Australia have plummeted to their lowest level in over a decade, as developers grapple with high interest rates and escalating costs for labor and materials. According to the Australian Bureau of Statistics, approvals for houses and apartments fell by 8.5% year-on-year, totaling 162,892 for the year ending June 2023, marking the lowest figure since 2011-12. New South Wales experienced a significant decline, with private sector house approvals dropping 19% to 1,597 in June, the lowest since January 2013. In contrast, other states showed more resilience, with Queensland reporting a 16.1% increase in approvals, South Australia up by 7.1%, and Victoria by 2.6%. Economists suggest that worsening housing affordability in Sydney may be stifling activity in the market. The ABS noted that material and labor shortages have inflated the average value of new houses by $19,444 over the past year, further complicating the situation for developers. Despite government efforts to prioritize housing, the decline in building approvals indicates a lack of momentum in the sector. Many industry players are reportedly managing a backlog of approved projects that remain incomplete. The housing market is currently experiencing its 17th consecutive month of price increases, with construction costs rising by 0.5% in the June quarter, a decrease from previous highs. Experts highlight uncertainty regarding future land and house prices as a significant factor hindering the industry. With strong population growth, the current pace of construction is expected to result in fewer homes being built over the next five years than in any similar period in the last 25 years.