The Albanese government’s National Housing Accord is all but certain to fail, with builders warning he might be about to make it worse. Picture: NewsWire/Martin Ollman.
Australia’s building approvals lifted dramatically in February, topping 19,000 in a month for the first time since August, 2021.
But the uptick still leaves the nation so far short of the numbers needed to reach the National Housing Accord’s 1.2 million new homes by 2029 target, that economists believe the Albanese government may look to shift the goalposts at next month’s federal budget.
The upshot being that Aussies are increasingly likely to face home price surges long into the future, despite government efforts to make housing more affordable.
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It comes as the Housing Industry Association has warned changes to Negative Gearing and Capital Gains Tax benefits for property investors could lead to an almost 80,000-home reduction in housing construction.
Australian Bureau of Statistics data released today showed there were 19,022 new homes green-lit for building across the country in February.
The almost 30 per cent increase from January was led by a surge in apartments and units, which doubled from January to account for 8922 of the approvals — with Victoria accounting for more than 3000 of the total itself.
However, the state was coming off two very weak months and Oxford Economics’ Maree Kilroy said it was unlikely to continue at those levels.
Housing approvals remain well below levels needed to reach the country’s building goals, 20 months after the National Housing Accord commenced.
Over the past 12 months, there were 196,491 new homes approved around the nation, including more than 115,000 houses and more than 81,400 non-house builds.
With 20 months of data now released since the National Housing Accord commenced a five-year timed goal to build 1.2 million new homes around the country — the nation is still falling short of levels needed to reach the federal government’s initial 1 million target, which was abandoned as insufficient not long after it was announced.
The latest figures are more than 15,500 above the same time a year ago, and a more than 30,000 uptick from the 12 months to February 2024.
But while it is the third time Australia has topped 196,000 approvals since the Accord was first announced by the Albanese government in 2022, the numbers have yet to top 200,000 — the amount needed in a year to reach the abandoned 1 million homes target.
Ms Kilroy said in light of the statistics and a worsening economic outlook, the nation would not reach its 1.2 millions home target — and the federal government might now look at revising either the timeline to reaching it, or adding homes under construction to the tally at the end of the five years.
Demand for new homes is tipped to reduce in response to rising interest rates and fuel costs.
“But I think we will still be in under supply,” she said.
HIA senior economist Tom Devitt noted that the latest approvals preceded both the conflict in the Middle East, and the latest interest rate rise.
“The data doesn’t reflect the effects of two more recent rate hikes by the RBA, and the surge in fuel prices with the latest events in the Middle East,” he said.
HIA managing director Jocelyn Martin added that analysis they had commissioned from an independent economics team had found even with “minimal grandfathering” the loss of Negative Gearing would lead to a 46,000 home reduction in future construction pipelines.
The end of Capital Gains Tax discounts would cut about 33,000 homes.
The two reductions would cause a $2.3bn and $3bn hit to Gross Domestic Product for the country respectively, and impact thousands of construction jobs.
Housing Industry Association managing director Jocelyn Martin has warned of an up to $5bn hit for Australia’s economy if CGT and Negative Gearing are scrapped.
With a 1.1 per cent vacancy rate already present in Australia, and the nation’s population still growing significantly, a reduction in future pipelines would lead to tenants being among the hardest hit, Ms Martin said.
“Private investors supply around nine in ten rental homes across Australia, the majority of whom are small-scale, mum and dad investors,” she said.
“If governments want to help renters, the focus must be on increasing housing supply. Targeting rental housing investment with new taxes will make the rental crisis worse, not better.”
Master Builders CEO Denita Wawn said behind the latest building approvals data, builders, especially small businesses, were drowning in red tape.
“According to the Productivity Commission (PC), the estimated regulatory cost burden on housing is as high as $47.5 billion per year, that’s up to $320,000 per new house,” Ms Wawn said.
“Australia cannot afford further setbacks in its civil, residential or non-residential pipeline and needs decisive action to curb the sheer volume of regulatory overload that the PC identified as one of the main culprits behind our industry’s poor productivity performance.”
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