Despite the increase in the building activity for apartments and units, it appears overall commencements are still not enough to meet the housing targets.
According to Australian Bureau of Statistics (ABS), there were 26,285 new houses that started construction over the first quarter of the year. This figure was lower by 16.4% from last year and 39.1% from the peak in the June quarter of 2021.
Meanwhile, there was a surge in higher density dwelling commencements, which went up 44.8% during the quarter.
Overall, dwellings under construction increased 1.3% to 240,813 during the quarter — new houses accounted for 103,778 of this figure.
Master Builders Australia chief economist Shane Garrett said the sharp increase in higher density home building and public sector home building is desperately needed at a time of severe rental accommodation shortages.
“The figures show around 175,000 new homes were completed across Australia over the year to March 2023 which is expected to house about 440,000 people across the country,” he said.
“This is still falling short of the 200,000 homes needed per year.”
Master Builders Australia CEO Denita Wawn said this makes it crucial for state and federal governments to prioritise housing over the coming years.
“We need to pull out all the stops. That’s why it’s vital the Housing Australia Future Fund legislation is passed as quickly as possible,” she said.
In October last year, the federal government pledged to address the housing supply and affordability crisis by targeting to build one million well-located homes over five years starting 2024 through the National Housing Accord.
“Building enough of the new homes we need is difficult against the backdrop of rising interest rates, high costs and hesitant demand — any unfavourable changes to the rules and regulations that apply to home builders magnify these challenges even further,” Ms Wawn said.
For Housing Industry Association senior economist Tom Devitt, the decline in detached housing commencements over the first quarter of the year is part of the ongoing cooling of the market, which is likely to continue into next year.
“New home sales have declined sharply since the RBA started increasing interest rates last May,” he said.
“This is compounding the high volume of earlier projects that are being cancelled across the nation as homebuyers struggle to secure finance in the face of ballooning home building and finance costs.”
Mr Devitt said these conditions led to the first quarter in almost three years that Australia has completed more houses in a three-month period than it has commenced.
Overall, 28,094 detached houses were completed in the first quarter of 2023, 9.6%fewer than in the same quarter last year.
“There remain almost 104,000 houses under construction in the first quarter of 2023,” Mr Devitt said.
“Ongoing labour constraints continue to make it very difficult for builders to complete the significant volume of work taken on during the pandemic.”
While there was an increase in multi-unit commencements, the current level was down from the apartment boom that lasted from 2015 to 2016.
“There are still 136,000 multi-units under construction around Australia — these need to be completed in order to help accommodate the rapid return of overseas migrants, students and tourists that Australia has seen since it re-opened its borders in late 2021,” Mr Devitt said.
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
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