Housing approvals continue to break records

Building approvals continue their unbroken upward trajectory, hitting new records over the past 12 months, according to the latest data released on July 1 by the ABS.

Nationally, the latest ABS Building Approvals data shows continued growth, with 218,442 new dwellings approved in seasonally adjusted terms for the 12 months to May 2015, up from 192,561 approvals for the 12-month period to May 2014.

Building approvals increased 2.4 per cent on the April 2015 figure and rose 13.4 per cent year-on-year nationally.

In just a few short years approvals have increased substantially – today’s level is an increase of 70,000 on the 12-month period to May 2012 when we recorded 147,727 building approvals nationally. 

Nowhere is the rise more clearly illustrated than in New South Wales where building approvals have risen from 34,0 for the year to May 2012 to 57,088 in seasonal terms for the year to May 2015.

Despite the increase in approvals, housing affordability will improve in places such as New South Wales only when dwelling completions pick up from long run levels of around 28-30,000 completions per year to match the current annual approval levels.

Not only does the gap between approvals and housing completions need to be reduced, but we still need to address decades of undersupply of housing in our major cities.

It is critical we sustain the current high levels of activity for the foreseeable future, and that means doing away with punitive, inefficient taxes like stamp duty that act as a handbrake on supply growth and are a barrier to home ownership.

Australia needs to deliver new housing supply at around the 190,000 dwellings per year, but it will take at least five years of building approvals at or above 200,000 annually to meet housing formation and supply deficits that have built up over the past decade.