New home building approvals in Australia have reached their highest level in 14 months, in a sign that confidence is starting to return.
According to the Australian Bureau of Statistics (ABS) there was a 10.4 per cent increase in residential building approvals for July 2024.
Master Builders Australia Chief Economist Shane Garrett said the rise was primarily driven by a 33.7 per cent surge in approvals for higher-density homes, while detached home approvals also increased slightly by 0.3 per cent.
“These increases mean that detached home building approvals are running at their strongest level since October 2022,” Mr Garrett said.
However, industry experts warn that significant challenges remain in meeting the ambitious housing targets set by the government.
Master Builders Australia CEO Denita Wawn said that while the July figures were encouraging, more work is needed to reach the 1.2 million target.
“Over the past five years, just 940,000 new homes were approved across Australia,” Ms Wawn said.
“If we remain at this pace, we’re looking at creating about 831,000 new homes over the next five years.”
The uptick comes on the back of another month of rising property prices.
According to CoreLogic, national dwelling values rose 0.5 per cent in August, marking the 19th consecutive month of price increases in Australia.
Property Council Group Executive Policy and Advocacy Matthew Kandelaars said that despite the monthly increase, the total number of approved homes remains 5.1 per cent below the five-year average.
“We simply won’t hit our housing targets if we don’t continue to increase the number of homes approved,” Mr Kandelaars said.
“We need to see results like this, month after month.”
HIA Economist Maurice Tapang said the uptick in approvals came down to improving market confidence and stable interest rate settings.
“It has been almost ten months since the last increase in the cash rate,” Mr Tapang said.
“Stable interest rate settings have provided the certainty needed to see a rise in home building confidence.
He also said that materials price growth and build times for homes have stabilised and returned to normal pre-pandemic levels, providing certainty with the cost to build.
Despite the uptrend, the data revealed significant regional variations in housing approvals.
Western Australia saw a 57.6 per cent increase in house approvals over the three months to July 2024 compared to the same time in the previous year, followed by Queensland (22.1 per cent) and Victoria (8.8 per cent).
However, some jurisdictions recorded declines, with Tasmania experiencing the largest drop at 19.3 per cent.
Industry leaders are calling for government action to address the challenges facing the housing sector.
Ms Wawn said there were still several issues holding back that need to be addressed.
“We cannot take the foot off the peddle when it comes to boosting housing supply and improving the investment environment for new projects,” she said.
“Workforce shortages, woeful industry productivity, a lack of critical infrastructure, high taxes and charges, slow approval process, and costly union Enterprise Bargaining Agreements all inhibit the building and construction industry’s capacity to get on with the job.”
