Commencements stuck in the mud… ABS data reveals the continued struggle to overcome the housing shortage in NSW
ABS data released today unveils the looming reality that homes are not coming to market quick enough, and that this trend is likely to continue under current policy measures to the detriment of the NSW housing shortage.
New completions in the year to September 2022 recorded a small increase compared to June, but remain 1% lower than total completions over the same period last year. This improvement was carried by incentives provided by the Federal HomeBuilder stimulus, creating a burgeoning detached house market which saw over 27,000 completions in a 12 month period for the first time since March 2020. This reflects the follow-on impacts of COVID lockdowns, leading to shifting preferences towards larger free-standing homes.
However, on the back of data released last week which showed apartment approvals at a 10-year low, commencements data remains extremely concerning for NSW.
Source: ABS Building Activity; UDIA NSW
The above graph highlights the downturn experienced by both detached house commencements and apartment commencements. The worrying drop in apartment commencements (-44% annually and -69% compared to peak) is reflective of the immense challenges facing apartment developers in particular, which is making it unviable for them to build, ultimately impacting supply.
These challenges have been highlighted in UDIA’s Apartment Supply Pipeline Report November 2022, which revealed that the backlog in apartments will continue to grow given that the current pipeline of projects is expected to continue to be pushed out.
“Now with a higher than expected increase in migration predicted to help resolve critical labour shortages in industry and fill the skills gaps that our economy desperately needs, it means we need more well located, well priced, and diverse housing to cater to the needs of the people of NSW,” said Steve Mann, CEO, UDIA NSW.
UDIA calls on the Government to work with industry to understand the constraints that are stopping developments from commencing and being delivered, across our state. The data released today reveals that we have a long road ahead if we are to achieve this goal.
Deanna Lane 0416 295 898 or firstname.lastname@example.org