Stalled Developments in Australia’s Housing Sector: A Market in Disequilibrium




The Australian housing market faces an intriguing paradox, underscored by a recent KPMG analysis. As of December 2023, nearly 40,000 approved housing projects across the country remain uninitiated. This significant backlog includes 15,593 dwellings in New South Wales and 7,897 in Victoria, signalling a stark inertia in urban development.

Economist Terry Rawnsley points out that Sydney and Melbourne, cities at the forefront of this phenomenon, host nearly half of these dormant projects. The primary culprits? Escalating construction costs and high interest rates, which dampen both developer initiative and buyer purchasing power, particularly affecting medium to high-density projects such as townhouses and apartments.

This scenario unfolds against a backdrop of governmental efforts to expedite housing availability, including New South Wales’ Transport Oriented Development Program and Victoria’s ambitious plan to create 800,000 new homes over the next decade. Yet, these initiatives face a tangible lag, with Rawnsley predicting a palpable impact not evident until possibly 2025.

The current state of affairs offers a blend of challenge and opportunity. As material costs may decrease with a predicted slowdown in government infrastructure expenditure and stabilising interest rates, there could be a rebound in building approvals. This potential shift in the market dynamics suggests a crucial moment for industry stakeholders to recalibrate strategies and prepare for an evolving landscape.

For a deeper insight into this pressing issue and to understand the potential trajectory of Australia’s housing market, delve into the full analysis by Benita Kolovos from The Guardian.

https://www.theguardian.com/australia-news/article/2024/may/28/house-construction-lagging-behind-planning-approval-australia-interest-rates-building-costs

Author: Kyrillos Ghaly



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