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Housing and infrastructure supply heading in the wrong direction


There is increasing concern around meeting Australia’s housing and infrastructure needs with new home building approvals dropping to their lowest monthly figure in over a decade says Master Builders Australia CEO Denita Wawn.

“Despite the intention from governments and industry to reach a target of one million homes under the Housing Accord, today’s data highlights that more needs to be done to tackle supply barriers and to speed up the delivery of new homes and attract investment.

“Without sensible fiscal levers being pulled, we are seeing the negative consequences of rising interest rates playing out,” said Ms Wawn.

The ABS’s January building approvals figures show that new home building approvals dropped by 27.6 per cent, down 8.4 per cent from a year earlier.

Detached house approvals have seen a substantial reduction and they are now about 12 per cent lower than a year ago.

Ms Wawn said detached house approval volumes have fallen well below pre-covid levels. The figures suggest the increasing pace of a slowdown is a direct consequence of the sharp hike in interest rates and inflation over the past year.

“Insufficient supply of titled residential land, high developer charges and inflexible planning laws are preventing new home building projects from getting off the starting blocks.

“January saw a severe reduction in higher density home building approvals of 43.6 per cent and while this is still level with figures a year ago, over the long-term high density home building is still playing catch-up,” said Ms Wawn.

Rent prices have increased further in January from an annual rise of 4.1 per cent in December to 4.8 per cent in January, reflecting low vacancy rates and a tight labour market.

Ms Wawn said the latest inflation figures show growing pressures in the rental market and without a strong pick up in apartments and units entering the pipeline, this will be difficult to neutralise.

“High inflation is threatening to add to housing supply and affordability challenges in the owner-occupier and rental markets.

“Builders are seeing evidence of declining sales, and we anticipate this slowdown will continue over the course of 2023.

“The pain of higher interest rates and high inflation is real and if we do not get it under control we could be in for a lengthy period of pain and depressed construction activity,” said Ms Wawn.

Non-residential building approvals in January were about the same as a year earlier (-0.1 per cent).

“With the vast majority of money for building projects coming from private sector investment, the stagnant conditions in non-residential building suggest that productivity-enhancing building work needs to be incentivised,” said Ms Wawn.

Media contact:

Dee Zegarac | National Director, Media & Public Affairs

0400 493 071 |

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