Master Builders calls for focus on supply constraints

Fresh data on building approvals and lending indicators released by the Australian Bureau of Statistics (ABS) points towards the crucial need to address growing supply constraints in the housing pipeline, according to Master Builders Australia. 

As new home building and lending see a decline, the CEO of Master Builders Australia, Denita Wawn, emphasises the necessity for all political parties to focus on resolving these issues.

"Resolving supply constraints should be the focus for all political parties in fixing our housing crisis, and until they are addressed, Australians will continue to struggle with housing affordability," Denita said. 

The ABS data highlights a 1.0 percent dip in new dwelling approvals compared to December, which includes a significant 9.6 percent drop in approvals for new detached houses. This marks the weakest monthly total since June 2012. In contrast, there was a notable 14.5 percent jump in approvals for higher-density homes.

“Despite the increase in higher density approvals, the volume of new apartments and units remains below historic standards," Denita said.

"We need to significantly boost the supply of this housing type to alleviate pressures in the rental market."

Constraints such as planning restrictions, infrastructure capacity concerns, tax burdens, slow approval processes, and workforce shortages are pervasive issues she says, affecting both detached housing and higher-density building projects.

Lending volumes related to new home construction also experienced a downturn in January 2024, according to ABS, with dwelling construction loans dropping by 4.3 percent seasonally. Loans for purchasing new dwellings faced a 3.9 percent fall, while investors continue to exert substantial influence in the industry, accounting for a robust 40.3 percent of new dwelling construction loans during January.

“We must ensure that sufficient support is provided to encourage investment in housing development," Denita said.

"This includes steering clear of any changes to negative gearing and capital gains tax."