- The latest building approval figures have revealed New South Wales isn’t approving enough new houses to be built, leading to expectations another severe shortfall is coming.
- Sydney is building 10,000 homes less per year than it needs to, according to targets set out by the Greater Sydney Commission.
- Urban Taskforce CEO Tom Forrest said prices can only go up in the state, while construction nation-wide wallows around 40% below its 2017 peak.
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Sydney’s property bounce may have a whole lot more in it.
The suggestion comes as the latest New South Wales building approval numbers reveal the state isn’t building anywhere near enough houses to satisfy demand. Property developer group Urban Taskforce said it should come as alarming news for the state.
“The approvals numbers released by the ABS today show a welcome improvement in the approval rate for residential apartments. But the number of houses approved was the lowest in a single month since August 2013,” CEO Tom Forrest said in a release.
That’s well below the building levels laid out by the Greater Sydney Commission (GSC) and the New South Wales government.
“In order to reach the new housing target of 36,000 housing completions each year, over 60,000 approvals per year are needed to meet the GSC target. Over the past 12 months, only 50,000 approvals have been granted and today’s release consolidates that downward trend.”
The shortfall ranks the state well behind Victoria and, according to Forrest, “can mean only one thing: prices [will] go up”.
It echoes a warning made last year by the Reserve Bank of Australia (RBA) that Australia wasn’t building enough homes for the future.
“Demand will continue to grow given population growth but supply is going to decline. So there is quite likely to be a shortfall again in the foreseeable future,” RBA deputy governor Guy Debelle said in October.
“The growth in demand without a meaningful supply response will lead to a larger price response.”
Given the time it takes to have a new dwelling approved and built, a lagging construction cycle can take time to kick back into gear meaning a shortage of houses can drive up prices for years. As Business Insider Australia has reported, construction nationwide remains around 40% below where it was at its peak in 2017.
As appetite appears to be returning to the market, it’s no wonder then that property research group CoreLogic new price records to be set by the middle of this year.