Anthony Albanese’s plan to build 1.2 million homes in five years looks even shakier with building approval numbers now 30 percent lower than necessary.
Under Labour’s plan to solve the housing crisis, 20,000 new homes would need to be built every month until June 2029.
But 13,991 new homes were approved in August, mainly by local councils, marking a huge drop of 6.1 per cent in just one month, new figures from the Australian Bureau of Statistics show.
The apartment sector saw an even bigger drop of 16.5 per cent in just one month, with Labor and state premiers seeing high housing density as key to boosting housing supply.
Daniel Wild, deputy director of the Institute of Public Affairs, said high immigration was causing social problems as construction activity could not keep pace with rapid population growth.
“The federal government has yet to meet one target of the National Housing Agreement, yet out-of-control migration inflows into Australia remain at record levels,” he said.
“It’s a recipe for social and economic disaster.”
Mr Albanese last month backed his government’s plans to boost social housing, with his government also pledging to reduce immigration this financial year.
‘I grew up in social housing. “I know how important a roof over your head is and the opportunities it provides,” he said.
In August 2023, the Prime Minister set an ambitious target for the National Housing Agreement to build 1.2 million homes in five years from July 2024.
But high levels of immigration in 2022 and 2023 meant that unaffordable markets like Sydney continued to post double-digit annual property price growth, even as the Reserve Bank hiked interest rates 13 times.
Anthony Albanese’s plan to build 1.2 million homes in five years looks even shakier as construction approval rates are 30 percent lower than needed
Interstate migration, rather than overseas migration, is now the biggest driver of property values, with Brisbane becoming Australia’s second most expensive housing market after Sydney, ahead of Melbourne and Canberra.
But if fewer migrants flow into Australia, it could also have flow-on effects on interstate migration, causing younger families to flee Sydney in search of affordable housing.
AMP chief economist Shane Oliver said high immigration was the main cause of Australia’s affordability crisis.
“The chronic housing shortage took precedence over high interest rates last year as immigration levels soared and this remains the main driver of rising property prices,” he said.
Immigration levels remained high at the start of 2024 with a net 509,800 foreigners arriving in the year to March, but by July the annual inflow had fallen to 432,150.
The Treasury expects this to slow to 260,000 in 2024-2025, based on permanent and long-term arrivals and departures.
“Government forecasts for a sharp decline in immigration and therefore population growth point to some easing in underlying housing demand in the coming year,” Dr Oliver said.
CoreLogic research director Tim Lawless said a slowdown in immigration was needed to ease the rental crisis, even if it meant more people living in shared housing.
“The slowdown in rental growth is likely to be a factor in easing net foreign migration, but also pressure on rent affordability, forcing a restructuring of demand,” he said.
‘Rent growth appears to have peaked now that supply and demand are back in balance.
‘On the demand side, slowing net overseas migration and a gradual trend towards larger households should help ease demand-side pressures.’
Labor’s plan to solve the housing crisis would see 20,000 built per month (pictured is a rental row outside Sydney’s Bondi)
New South Wales
House prices in Sydney – Australia’s most expensive property market and the city where the most migrants live – rose by just 0.1 percent in September.
This brought the median home price to a still very unaffordable $1.474 million, but the 4.9 percent annual increase was still less than half of March’s 10.7 percent level, CoreLogic data released Tuesday showed.
Queensland
South-east Queensland remains a tough spot for renters and a hot property market, acting as a magnet for interstate migrants.
House prices in Brisbane rose 13.5 per cent over the year to $973,534, overtaking both Melbourne and Canberra to become Australia’s second most expensive housing market.
The more affordable suburbs are seeing the biggest price increases, with house values in the Springwood-Kingston area of Logan rising 23.7 per cent over the year to $732,044.
But Townsville in northern Queensland was one of Australia’s best-performing regional markets, with prices rising 25.8 per cent over the year to $512,452.
It even outperformed the Gold Coast, where house prices in Southport rose 16.5 per cent to $932,434.
House prices in Sydney – Australia’s most expensive property market and the city where the most migrants live – rose by just 0.1 percent in September
Victoria
Melbourne, the city with the second highest influx of migrants, even saw house prices fall by 1.3 percent over the year to $925,762.
Investor interest in Victoria has waned since the state government imposed a $975 land tax this year.
Daniel Wild, deputy director of the Institute of Public Affairs, said high immigration was causing social problems as construction activity could not keep pace with rapid population growth
But the other mainland capitals are still showing double-digit annual growth.
Western Australia
Perth remained the best performing housing market for major cities in Australia, with the average house price rising 24 per cent over the year to $830,965.
The monthly growth rate of 1.6 percent was 16 times stronger than Sydney’s 0.1 percent increase and double Brisbane’s 0.8 percent increase in September.
The Swan area, in Perth’s north-eastern suburbs from Beechboro to Bullsbrook, saw the strongest annual growth of 30.5 per cent, taking the average house price to $740,953.
South Australia
Adelaide was again a strong capital market, with house prices rising 14.4 per cent over the year to $856,856, even though South Australia’s population growth of 1.5 per cent is well below the national average of 2.3 per cent.
Tasmania
House prices in Hobart fell 1.6 per cent over the year to $692,504, while Tasmania also saw slow population growth of 0.4 per cent.
Australian Capital Territory
House prices in Canberra rose just 1.7 per cent to $966,684, with the national capital now in third place, behind Sydney and Brisbane but ahead of Melbourne.
Northern Territory
Darwin, Australia’s most affordable capital, saw the average house price rise by 3.4 per cent over the year to $592,507.
The Northern Territory capital is the only metropolitan market where an average full-time worker earning $100,000 can buy a typical home with a 20 per cent mortgage without experiencing mortgage stress.
Housing supply
The gap between housing supply and housing demand will only narrow as immigration levels fall, with construction companies most likely to collapse.
In the year to August, 161,233 new homes were approved, mainly by municipalities.
With an average of 2.5 people living in Australian homes, this meant there would still be a shortfall of 16,567 even after these homes and units were built, compared to the most recent annual immigration increase.
Federal Housing Minister Clare O’Neil announced last month that 13,700 new social and affordable homes would be built under the first round of the Housing Australia Future Fund and National Housing Accord program.
But Queensland, where housing affordability is worsening, will get 1,315 new social homes, compared to 4,135 in Victoria, where house prices are falling.