New building activity data released by the Australian Bureau of Statistics today confirms a bumpy road ahead in meeting housing targets without government focus says Master Builders Australia CEO Denita Wawn.

According to the ABS, new housing starts fell 5.2 per cent over the September quarter, and a fall of 21.2 per cent compared to September 2021. This included a 5.2 per cent reduction in the number of new medium/high-density home commencements, a fall of 25 per cent from September 2021, and detached house starts fell by 4.9 per cent over the quarter.

While the volume of new home starts is dropping, the total number of dwellings under construction are at record highs with over 244,000 home (0.6 per cent increase) in September.

“We are starting to see an easing in demand for new homes as cost of living and interest rates increase. However, the industry is facing immense pressure to deliver projects currently in the pipeline.

“There is still a record number of homes under construction, but due to supply bottlenecks such as labour and material shortages, the pace at which new homes can be built has slowed down,” Ms Wawn said.

“Despite strong intention from governments and industry to reach a target of one million homes under the Housing Accord, the data highlights that more needs to be done to tackle labour shortages and other supply constraints to speed up the delivery of new homes.

“Labour shortages can best be addressed over the short and medium term by making it easier for migrants to work in Australia. The bottlenecks in our migration system need to be addressed as a matter of priority,” said Ms Wawn.

Master Builders forecasts that new home building starts will fall significantly short of 200,000 per year, the volume of output that will be needed to meet demand. Our forecasts indicate this threshold will not be exceeded until 2026.

“Our 2022-26 residential forecasts predict a bumpy road with a downturn over the next few years. Forecasts will trend upwards as inward migration and interest rates stabilise, and pent-up demand shifts the dial.

“Builders continue to face regulatory burdens and prolonged delays in approvals for building applications, occupation certificates and land titles. Additionally, land shortages in the right places, high developer charges and inflexible planning laws are restricting opportunities to meet demand, speed up project timelines, and minimise costs to both builders and their clients.

“The industry remains committed to delivering the housing needs for today and the future and urges local, state, territory and federal governments to tackle these challenges head on,” said Ms Wawn.