The latest data from the Australian Bureau of Statistics (ABS) shows that the number of new homes receiving building approvals is down 32.4 per cent from the same time last year.
April saw a 2.4 per cent drop in the number of new homes approved for building Australia-wide.
Master Builders Australia CEO, Denita Wawn, has attributed the drop to the rising cost 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,” 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.”
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,” Wawn said.
“For our industry, the most immediate challenge relates to the supply of building products and the people we need to carry out the work.”
Wawn said the Reserve Bank’s decision to substantially increase official interest rates is a wake-up call for the economy.
"While there is a need to temper the economy to tackle inflation there is also a need to maintain economic growth so that building and construction activity is not depressed,” she said.
“There are more than 420,000 building and construction businesses that have been weathering the storm of inflation in advance of the rest of the economy while also shouldering much of responsibility for completing economic recovery,
“The Federal Government can work to reduce the cost of creating new homes by tackling issues like land supply, regulation and the tax burden on new home building.”