Building approvals continue to plunge, worsening Australia's housing crisis.
The total number of dwelling approvals in Australia declined 7.2% in January to 14,564, according to seasonally-adjusted data released Tuesday by the Australian Bureau of Statistics (ABS). That's on top of a 14.9% fall in December.
"While approvals can be seasonal around January, with the ABS noting people often take holidays or leave, annual growth in seasonally-adjusted approvals is down 16% year-over-year," Madeline Dunk, an economist at ANZ, wrote in a note.
"Expectations around possible further tightening from the [Reserve Bank of Australia] are likely to keep building approvals suppressed," she added.
That slump spells trouble for an already strained housing market. In 2023, Prime Minister Anthony Albanese set an ambitious target of delivering 1.2 million new homes nationwide by 2029 under the National Housing Accord, a goal that looks increasingly out of reach as approvals continue to slide.
"I think it will be a tall order to achieve that target by 2029," Saul Eslake, a Hobart-based economist, told Australian Broker.
In addition, fewer projects securing approval — much less actually reaching completion — a significant share may never be built at all, tightening supply even further and intensifying the housing crunch.
And with a shrinking pipeline of new homes coming onto the market, property prices that keep rising and competition intensifying throughout the market, critics argue that new housing isn't keeping pace with demand.
Much of January's downturn was driven by a 24.5% decline in private dwellings, excluding houses — or apartments, units and other non-house dwellings. That's on top of a 30% decline for the same thing in December. That follows an even steeper decline of roughly 30% in December for the same category of housing.
Dunk has noted that monthly apartment approvals can be volatile, often skewed by a single large project, rather than reflecting the underlying trend. A better measure is yearly data, which shows that apartment approvals are down 44.2%, year-over-year.
One bright spot was in Australia's commercial property sector. The value of total residential building approvals declined 1.2% to $9.48 billion, while the value of total non-residential building approvals increased 19.1% to $8.24 billion. Approvals for private sector homes during the month was up 1.1% to 9.753.
By state, in seasonally-adjusted terms, total dwelling approvals were down -11% in Victoria, -9.3% in South Australia, -6% in Queensland, and -5.1% in New South Wales. Meanwhile, total dwelling approvals rose in Tasmania and Western Australia, up 14.1% and 13.7%, respectively.
Private-sector house approvals varied across states. Western Australia led the gains with an 11.5% surge, while NSW and Queensland edged up 1.9% and 1.8%, respectively. In contrast, approvals dropped -8.9% in South Australia and -3.8% in Victoria.
