Housing approvals hit decade low, industry calls for action

New housing approvals in Australia have fallen to their lowest level in over a decade, prompting calls for urgent action to address the nation’s housing crisis.

According to data released by the Australian Bureau of Statistics, only 163,320 new homes were approved for construction in the 2023/24 financial year.

HIA Senior Economist Tom Devitt said this figure falls far short of the Australian Government’s target of 240,000 new homes built annually over the next five years.

“New home approvals are down by 18.7 per cent compared to 2021/22, just as the RBA started increasing interest rates,” Mr Devitt said.

The data shows approvals for detached houses dropped 1.3% to 105,920, while multi-unit approvals plummeted 17.8% to 57,400 – the lowest figure since 2009/10.

Mr Devitt noted that the last time Australia saw such low approval numbers was in 2011/12, following the Reserve Bank’s previous rate hiking cycle.

“At that point, the RBA had already started dramatically cutting rates again,” he said.

The economist highlighted a divergence in performance across jurisdictions, with Western Australia showing signs of recovery while New South Wales and Victoria lag behind.

“The weakness of Australia’s two largest states is due to the high cost of delivering a new home to market in Sydney and Melbourne,” Mr Devitt said.

He called on policymakers to take action to reduce construction costs and boost housing supply.

“This means easing of tax and regulatory burdens, bringing infrastructure and shovel-ready land to market faster, implementing genuine planning reform and facilitating higher density development in existing suburbs close to jobs and transport,” Mr Devitt said.

The data showed Western Australia was the only state to record an increase in dwelling approvals, up 23.3% compared to the previous year.

All other states experienced declines, with New South Wales (-17.8%) and Tasmania (-15.1%) recording the largest drops.