Major blow to Albanian government: housing figures ‘far behind’ ambitious target

New South Wales Premier Chris Minns says housing is the “biggest expense” for Australians and one of the “leading drivers of inflation”. “Housing in particular is the biggest expense for everyone – it’s one of the biggest drivers of inflation in the economy,” Minns told Sky News Australia. “It’s a crisis, particularly in Sydney.”

The federal government has pledged to deliver 1.2 million “new, well-located homes” by the end of the decade, as part of a Homes for Australia plan agreed by National Cabinet late last year.

But ABS data released on Tuesday showed that just 13,237 homes were approved in June – a monthly decline of 6.5 per cent. Over the past year, home approvals have fallen by 8.5 per cent, with just 162,892 approvals compared with 177,936 in the previous 12 months.

Daniel Rossie, head of ABS building statistics, said this was the “lowest number of homes approved on a budget year basis since 2011/12”.

Shadow Housing Minister Michael Sukkar said the figures showed the housing crisis was “only getting worse” under Labour.

Mr Sukkar criticised the Prime Minister’s decision to appoint former Home Secretary Clare O’Neil as Housing Minister, saying it showed that Labour “is treating the housing portfolio as a dumping ground for failed ministers”.

“The newly appointed Housing Secretary – who is responsible for record migration – clearly did not read her incoming letter when she claimed yesterday that Labour is still on track to deliver on its promise of 1.2 million homes,” Mr Sukkar said in a statement.

“Based on Labor’s own figures, they are at least 350,000 homes short of this promise. This means that fewer homes will be built in this five-year period than in any five-year period in the last 25 years.”

According to the Housing Industry Association, governments should use all available tools to accelerate housing construction.

“Last year’s performance is well below the 240,000 new homes the Australian government wants to see built over the next five years,” said Tom Devitt, senior economist at HIA.

Mr Devitt pointed out that new home approvals fell by 18.7 per cent compared to 2021-22, partly due to interest rate hikes by the Reserve Bank of Australia.

“There remains considerable uncertainty about the RBA’s fight against inflation. It will be up to other policymakers to reduce construction costs if Australia were to build sufficient new homes,” the senior economist said.

“This means reducing tax and regulatory burdens, bringing infrastructure and land to market more quickly, implementing genuine planning reform and facilitating higher density development in existing suburbs close to jobs and transport.”

Master Builders Australia CEO Denita Wawn said the latest building permit figures were “on par” with what they had predicted, and “well below” the target set by the government.

“We’ve just started the first of the five-year construction targets which require us to build 240,000 homes a year. So if we’re going to hit that target we’re going to have to somehow have an additional 80,000 homes this financial year on top of what we’ve built,” Ms Wawn told Sky News Australia.

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The CEO of Master Builders said the government needed to focus on why housing supply is so limited.

Asked if the lower figures were a result of interest rates, the CEO of Master Builders said the RBA’s decisions played a role, but that other factors also played a role.

“It’s a lot of things. It’s high inflation. Construction costs are almost 40 percent higher than they were pre-COVID. And when you combine that with the instability in interest rates, people are just not willing to invest,” she said.

“There is a huge demand, but it is a latent demand. It is not being realised because people are worried about investing in buildings at the moment

“We’ve now reached a stage where some builders are telling me they don’t have much in their budget because private homeowners and the like are simply not prepared to spend money on housing at the moment.”

The CEO of Master Builders said residential investment would fall further if the RBA raises interest rates again next week.

“Demand will continue to decline, even though we need these homes and people want these homes, they won’t spend money on them if we have high inflation and rising interest rates,” she said.

“The economy is just not good enough right now to support private investment in housing.”

Ms Wown also blamed the CFMEU for driving up construction costs.

“We commend what the government is doing in relation to requesting an administrator to clean up the CFMEU Construction Division,” she said.

“They add a significant amount of delay in the time it takes and also in the price, and that’s part of the reason we’ve seen such a cost increase.”