New data from the Australian Bureau of Statistics has sparked concerns after revealing a decline of 4.6% in total dwellings approved in September in a seasonally adjusted estimate. Private sector houses were down 4.6% to 8,338, while private sector dwellings, excluding houses, fell 5.1% to 4,553.
Louis Christopher, SQM Research founder, has described the numbers on X as “ugly.”
“Down by just over 20% year-on-year. Last month, just over 13,000 dwellings were approved. These approval numbers are putting us on track to complete about 135,000 dwellings for 2025,” he said. He noted that with actual figures being a little over half the 240,000-a-year run rate required to meet the federal government’s target of 1.2 million completed dwellings over the next five years, that target is becoming highly unlikely.
A news.com.au report noted economists are saying Australia’s housing market is being hit by record immigration, further decreasing the short rental supply. Net overseas migration in the period of 2022-23 came in at about 500,000, which is more than double the forecast in last October’s budget.
“The rebound in prices reflects a far worse than expected shortfall of supply relative to underlying demand for homes as immigration rebounded driving the fastest population growth rate since the 1950s at the same time that the supply of new dwellings slowed,” Shane Oliver, AMP head of investment strategy and chief economist, said in a note.
“This accentuated already tight rental markets, forcing rents up and driving renters to consider buying. So, demand improved but supply remains weak with total listings below normal. Talk of rising prices and shortages further boosted demand from less interest rate sensitive buyers.”
MacroBusiness chief economist Leith van Onselen noted in an analysis that only 174,400 dwellings were constructed in Australia in the period of 2022-23, while the population increase in the same period was 626,000, commenting that the housing crisis could only get worse if the numbers continue in that manner.
“Further interest rate hikes could constrain construction activity further, leading to an even bigger gap between supply and demand,” he said.
“With net overseas migration running at a record rate of around 500,000 per year, implying population growth of more than 600,000, Australia’s housing crisis can only get worse. The only solution is to cut net overseas migration to a level that is below the nation’s ability to supply housing and infrastructure. It is patently obvious.”
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