In a recent announcement by the Australian Bureau of Statistics (ABS), it was revealed that dwelling approvals in Australia have taken a significant dive. The data, which was released on Wednesday, showed an 8.1% decrease in July, accounting for a 10.6% reduction year-on-year. Interestingly, the decrease was primarily driven by a drop in approvals for units and apartments, which plummeted by 15.8% in July. In contrast, approvals for detached houses saw a marginal increase of 0.1% within the same period.

In an annual comparison, the approval for houses dropped by 15.9%, while unit and apartment approvals saw a slight increase of 3.4%. The data clearly reveals that the overall dwelling approvals are at their lowest in nearly a decade.

The ABS data also highlighted that the decline in dwelling approvals is not limited to a particular region but is prevalent across all major states. However, there has been a slight rebound in New South Wales and Victoria.

Furthermore, the annual dwelling approvals data shows that national approvals are tracking at decade lows. The current decline in dwelling approvals mirrors a similar downturn in the value of owner-occupier finance commitments for new homes.

This downward trend is further corroborated by the Housing Industry Association’s (HIA) new home sales series, which has fallen by one-third compared to July 2022. This indicates a reduced level of home building activity in the coming years.

This aligns with the predictions made by Treasury Secretary Steven Kennedy to the Senate Estimates Economics Committee in May. He projected a decrease in new dwelling investment by 2.5% in 2022-23, 3.5% in 2023-24, and 1.5% in 2024-25. Similarly, Oxford Economics Australia has forecasted a significant 21% drop in overall housing investment over the three years to 2024-25.

The National Cabinet’s ambitious announcement of building 1.2 million homes over five years appears to be built on shaky ground. It’s worth noting that Australia has only once exceeded 220,000 dwellings in a single year (223,000 in 2017). The prospect of constructing 240,000 homes annually for five consecutive years seems unrealistic given the current high costs of materials and financing, coupled with labour shortages.

In light of these trends, it might be prudent for potential homeowners to seek professional assistance when navigating the property market. As a Sydney Buyers Agent and Northern Beaches Buyers Agent in particular we can provide invaluable support and guidance during this challenging period.

The solution to Australia’s housing issue seems clear: limit net overseas migration to a level that aligns with the country’s capacity to provide new housing and infrastructure, while also considering environmental carrying capacity. This situation is a wake-up call for policymakers and stakeholders alike to re-evaluate and reconsider their strategies to ensure sustainable development in Australia’s housing sector.