Building approvals decline as costs and shortages climb

Denita Wawn, chief executive of Master Builders Australia, has attributed the 32.4 per cent decline to a number of different factors such as the rising costs of building materials as well as labour and production shortages.

“The sharp decline in approvals over the past year is the result of a number of factors. These include the phasing out of the HomeBuilder scheme as well as emergence of challenges in the business environment,” Ms Wawn said.

“The cost of building materials is growing at its fastest rate in over 40 years while delays and shortages with respect to both labour and products continue to obstruct building activity.”

In a positive sign, Ms Wawn did state that demand for new detached housing remains firm; however, this steadiness is countered by lower approval rates for other types of homes. 

“Even so, today’s figures do indicate that demand for new detached house building is up reasonably well. There was a 0.5 per cent increase in approvals for detached houses during April and the level of activity is still a bit higher than it was immediately before the start of the pandemic.

“In contrast, approvals for medium and high-density homes are much lower than their pre-pandemic levels. April saw a 6.1 per cent drop in approvals in this category. We do expect demand for higher density homes to recover once inward migration to Australia moves closer to where it was before the pandemic,” she said.

Ms Wawn concluded that “for our industry, the most immediate challenge relates to the supply of building products and the people we need to carry out the work. We look [forward] to working with the new federal government to assist with finding and delivering solutions.”

The figures come after new research found that the value of new loans delivered throughout April fell by $2.3 billion, with month-on-month lending to owner-occupiers down 7.3 per cent.