Economists can see the writing on the wall. We’re going to miss.
We are on track to miss our housing targets by a wide margin.
Actually, it’s looking like we’re not even going to come close. It looks like we’re going to throw a dart at a dartboard and hit the vending machine with the chips and nuts over in the corner.
“Look out Gary!”
Analytics group Oxford economics reckon we’re falling 80,000 homes (30%) short every year:
Australia needs to approve about 80,000 more homes annually if the national cabinet is to meet its 1.2 million new dwellings target, according to Oxford Economics Australia.
The entrenched shortfall in supply is putting further pressure on soaring rents and dwelling prices, which are already at record levels, economists warned.
The total number of approvals for home construction declined by 5.8 per cent.
The total number of dwellings approved in February fell to 12,520, which is 5.8 per cent less than the same time last year, the Australian Bureau of Statistics reported on Thursday.
When extrapolating the ABS figures out to a trend estimate, that would equate to about 163,000 approvals annually, said Timothy Hibbert, Oxford Economics Australia’s Property and Building’s forecasting head.
That is “well below Australia’s national housing accord target”.
An almost 50 per cent increase in approvals annually – about 240,000 approvals – would be required to reach the federal housing target of 1.2 million new homes over five years, according to Mr Hibbert.
“There’s no mistake that this is a step down. There’s still a downtrend playing through, which is expected for the rest of 2024,” he said.
He’s not wrong. To get 240K a year, we need 20K a month. 12K is a long way shy of that.
But it’s not like we hit 20K the month before, or even the month before that. In fact, we almost never hit 20K in any given month. The idea that we’ll suddenly start doing it every month, for five straight years, is just a pipe dream.
And the thing is, when you dig into the data, it’s actually worse than it seems.
Because if we want to be smashing these ambitious housing targets, we need to be bringing housing to market ‘at scale’.
And the only way to do that is through units and particularly high-rises.
Trouble is, it’s high-rise and the unit sector where the weakness is. Approvals for attached dwellings were actually down 17.2% in February, and in rolling annual terms, is at the lowest level since 2012!
The lowest levels since 2012 are not going to cut it. No way! They need to lift to the highest level on record, and the stay there!
Hot tip: not going to happen.
Because, things in the construction industry are tough, and projects are just not stacking up financially:
Master Builders chief executive Denita Wawn, who represents the building and construction industry, said the pace of home building had slowed due to labour shortages and higher cost of materials.
“Despite the community’s high demand for more housing, especially higher-density rentals, there is a mismatch in the number of homes coming through the pipeline,” Ms Wawn said.
“When it comes to signing new contracts, the pen is not making it to paper as the investment does not stack up.”
Yup. At this rate, we’ll be lucky to hit the vending machine. We’ll be lucky to hit the toilet door. At this rate, everyone in Pub Australia should be nervous.
DB