Building numbers are up, but not enough
It is well known that housing affordability has become a key issue in Australia, and one of the key factors impacting this issue is the imbalance between demand and supply.
The simple fact is that we are not building enough homes to cater for all the people that live here. As a result, increased competition between homebuyers for available properties for sale (and renters for available rental properties) is helping to keep prices higher. Good news for property owners and sellers, but not for those who want to move in…particularly those trying to get their foot in the door for the first time.
The good news for anyone being impacted by the shortage of available housing options is that there has been an increase in the number of building approvals around Australia over the past year after a noticeable drop-off since the pandemic.
For example, the number of new homes approved to start construction in November last year was up by around 15 percent when compared with October. Whilst these numbers can be quite volatile from one month to the next, it was notable that November’s numbers included a 34 percent increase in approvals for high-density residences.
The important fact is that these numbers seem to be trending upward, with year-on-year comparisons showing a 17 per cent rise in activity. Having said that, though, it is equally important to be aware that these increased approvals are still not at a level that would see us reaching the Federal Government’s five year target of 1.2 million new homes. In fact, our current rate of approvals, (an average of around 16,000 per month) is still close to 20 per cent below what is needed.
Other positive trends include the belief that construction costs aren’t rising at the rapid rate we were seeing back in 2022 and 2023, with availability of tradespeople improving and average build times showing signs of decreasing a little.
Hopefully this will see further improvements in the supply vs. demand equation as we move forward, making the cost of new housing less intimidating for buyers.
As I am always reminding our readers in these pages, the most important asset you can have when making decisions about today’s property market is experienced and objective advice. So if you would like an obligation-free chat with one of the team at Barry Plant Thomastown, whether you are thinking of building a new home or buying an established one, you are welcome to give us a call on 9466 3233.
Best wishes,
Con Constantinou
Barry Plant Thomastown
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