Building Approval statistics released today by the Australian Bureau of Statistics (ABS) show approvals are at an 11-year low and 18% lower than a year earlier with NSW recording just under 43,000 new building approvals.
“Housing approvals are the canary in the coalmine and today’s data shows NSW is not refilling the pipeline of housing with enough approvals, which will make it difficult to achieve our state’s ambitious housing target of 75,600 a year and today’s data revealed that, day-by-day, that goal is getting more difficult to realise. This pressure is being felt across the whole state, and across all typologies,” said Stuart Ayres, CEO, UDIA NSW.
However, most concerning was the revelation that apartments returned the lowest annual approvals since August 2012, with just 10,400 approvals in the year to May.
As UDIA NSW analysis shows in the graph and table below, all typologies reported an annual decline, with apartments again showing the most dramatic of declines. This places the apartment market at 72% below its record peak in September 2016. This decline confirms recent UDIA research report Making TODs Work on the feasibility of development near Transport Oriented Development (TOD) sites, which revealed that it has never been more difficult to deliver feasible projects.
There is the real concern that these numbers could go lower without urgent intervention, like those recommended in the UDIA TOD report.
Source: ABS; UDIA NSW
UDIA is encouraged that the NSW Government is looking to face these challenges head on. The timeliness of recent announcements in the NSW Budget to back in development financing and support pre-sales is now even more vital given today’s data.
“These numbers are an early warning sign that the Minns Government has a lot more to do.”
“UDIA is advocating to Government to pause developer contributions and charges to help address the feasibility gap being faced by many apartment projects. The apartment sector, like the whole industry, is facing a slump in confidence, and we must consider measures to restore confidence and address feasibility,” said Stuart Ayres.
We must also closely monitor of new housing policies such as the TOD Program and the Low to Mid Rise Reforms in the coming months and government must be willing to pull other policy levers if it becomes clear the economic headwinds prove too challenging for projects to stack up.
UDIA calls on the Government to act quickly to redress what is in their power to improve market feasibility, to assist with project financing and feasibility to encourage development across the entire continuum of housing. This will ensure our industry will help play their part in delivering the housing targets for the people of NSW.
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Media Enquiries: Deanna Lane dlane@udiansw.com.au 0416 295 898