Building approvals are experiencing a significant slowdown in the housing industry, signalling a pressing need for reform.

According to the Australian Bureau of Statistics, the overall number of approved dwellings dropped by 6% in August. This decline was marked by an 8.1% decrease in private dwellings excluding houses, following a staggering 25.8% decline in July.

 The most notable downturn was observed in apartment approvals, which plummeted by 33.4% in August, representing the second-lowest figure recorded in the past year.

In Australia’s most populated states, New South Wales (NSW) and Victoria led the downward trend, as highlighted by Daniel Rossi, head of construction statistics at the ABS. 

The past year saw a total of 2,704 apartment approvals, with NSW witnessing a decline of 8.3% (527 approvals) and Victoria experiencing a 6.2% drop (342 approvals). Conversely, Queensland showed a positive trend, with 1,368 approvals, representing a 2.9% increase. 

The Australian Capital Territory approved 199 units, Western Australia 198, and South Australia 70, all reflecting a rise of 1.7%.

Townhouse approvals also fell sharply, decreasing by 19.1% to 2,424, which is below the monthly average of 2,632.

 “Only 6,763 apartments were approved in July and August this year, compared to 18,031 during the same period in the 2016 apartment boom. We know we can do better,” stated Mike Zorbas, CEO of the Property Council of Australia. He attributed this decline to a combination of rising construction costs, labour and skill shortages, and low productivity. Additionally, complex approval processes and burdensome state taxes create challenges for investment.

 Despite these issues, Zorbas noted that recent reforms in NSW demonstrate potential improvements nationwide. He emphasised the need for the government to lower costs for institutional investments in apartment construction, particularly considering student accommodation in national housing target calculations.

 Considering the unsatisfactory performance in August, the Property Council of Australia is urging the government to pass the NSW planning system reform bill. This proposal seeks to amend the Environmental Planning and Assessment Act by:

– Establishing a Development Coordination Authority to centralise and expedite agency referrals.

– Enshrining the Housing Delivery Authority in legislation.

– Introducing a Targeted Assessment Pathway for low-risk applications.

– Expanding complying development and implementing a statewide Community Participation Plan.