Australian Home Building Approvals Surge in July, But Challenges Persist
Australia: New home building approvals have reached a 14-month high, signaling a return of market confidence. According to the Australian Bureau of Statistics (ABS), residential building approvals increased by 10.4% in July 2024, driven primarily by a 33.7% surge in higher-density home approvals. Detached home approvals also rose slightly by 0.3%. Master Builders Australia Chief Economist Shane Garrett noted that detached home building approvals are at their strongest level since October 2022. However, challenges remain in meeting the government’s ambitious target of 1.2 million new homes, as highlighted by Master Builders Australia CEO Denita Wawn. Over the past five years, only 940,000 new homes were approved, and at the current pace, about 831,000 homes might be created in the next five years.
The uptick in approvals coincides with another month of rising property prices, with national dwelling values increasing by 0.5% in August, marking the 19th consecutive month of price hikes. Despite the positive trend, the total number of approved homes remains 5.1% below the five-year average. Property Council Group Executive Policy and Advocacy Matthew Kandelaars emphasized the need for consistent monthly increases to meet housing targets.
However, the data revealed significant regional variations in housing approvals, with Western Australia seeing a 57.6% increase, followed by Queensland (22.1%) and Victoria (8.8%). Conversely, Tasmania experienced the largest decline at 19.3%
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Industry leaders are urging the government to address ongoing challenges in the housing sector. Ms. Wawn stressed the need to boost housing supply and improve the investment environment, pointing out issues such as workforce shortages, low industry productivity, lack of critical infrastructure, high taxes, slow approval processes, and costly union agreements as factors inhibiting the industry’s capacity to meet demand.
Source: Elite Agent