Australian Building Approvals Fell by More Than Expected in November

The Australian housing market has been grappling with a significant decline in building approvals, with the total number of dwellings approved falling by 3.6% in November 2023 to 14,998, following a 5.2% rise in October 2023. This unexpected drop in approvals has raised concerns about the future of the housing market and the potential impact on home prices. The decline in approvals was seen across all residential building types, with private-sector houses falling by 1.7% and private dwellings excluding houses dropping by 10.8%. Despite the declines, approvals for total dwellings remained 3.2% higher than in November 2022.

The decrease in private-sector house approvals follows a 4.0% drop in October 2023, but they remain 3.8% higher than a year ago. Queensland was the only state to see growth in private-sector house approvals in November, with a 4.3% rise. The value of total building approved rose by 6.6% to AUD 14.32 billion in November 2023, following a 2.3% fall in October 2023.

The fall in building approvals is a concern for the Australian economy, as it is a leading indicator of future building activity and contributes to employment and investment. The ABS head of construction statistics, Daniel Rossi, said: "The fall in dwellings approved in November was across all residential building types. Approvals for private sector houses fell 1.7 per cent, while private dwellings excluding houses dropped 10.8 per cent. Despite the fall, approvals for total dwellings remain 3.2 per cent higher than November 2022."

The decline in building approvals is likely to have a significant impact on the housing market and affordability in Australia. The ongoing housing shortage and affordability issues are expected to be exacerbated by the fall in approvals, as the limited supply of housing will struggle to keep up with demand. This will likely put upward pressure on house prices, making it increasingly difficult for first-home buyers to enter the market.

The Albanese government's housing targets may also be affected by the recent decline in approvals. The government had pledged to sharply increase housing supply over the coming years to ease the problem of housing scarcity and remove some of the upward pressure on prices. However, the recent decline in approvals may make it increasingly difficult to reach the government's target of building 1.2 million new homes in five years.

In conclusion, the unexpected decline in Australian building approvals in November 2023 is a cause for concern for the housing market and affordability in Australia. The ongoing housing shortage and affordability issues are expected to be exacerbated by the fall in approvals, as the limited supply of housing will struggle to keep up with demand. The Albanese government's housing targets may also be affected by the recent decline in approvals, making it increasingly difficult to reach the government's target of building 1.2 million new homes in five years.