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“There are some signs that the decline in new home building activity may be coming to an end, with a sharp gain in new home building approvals during August,” commented Master Builders Australia CEO Denita Wawn.
During August, the total number of approvals for new homes saw a 28.1 per cent increase compared with July. Approvals for new detached houses inched up by 3.7 per cent. There was a near doubling (+98.6 per cent) of medium/high-density dwellings approvals.
“New home building approvals saw a huge dip once the elevated levels experienced during COVID had worked its way through the system. At the same time, demand for higher-density homes struggled amidst negligible volumes of inward migration to Australia.
“Today’s approvals data provides evidence that home building activity may have stopped falling and that we are entering into a new phase of stability. Nevertheless, a cautionary approach should be taken given the tough economic backdrop of rising interest rates, cost inflation, and ongoing supply constraints as identified by the Productivity Commission last week.
“Encouragingly, latest figures on lending show that investors are making a significant contribution to demand for new home building despite recent market headwinds. Expanding our pool of rental accommodation is crucial given the current rental crisis that will be exacerbated by inward migration being on the way back to pre-pandemic levels.
“The recently released set of Master Builders Australia forecasts envisage that new home building activity will expand over the medium-term and eventually top 200,000 starts by 2026. While positive, these forecasts need to be seen in the context that Australia will not be building enough homes for its future. We need to be building at least 200,000 every year to meet current and future housing needs.
“It is critical that policy settings remain conducive to helping our industry’s hundreds of thousands of small businesses build the homes we need for the future,” concluded Denita Wawn.