Breaking Down Australia's Construction Crisis

**Sammy Gordon** (0:05)
Good day, listeners, and welcome to APS Weekly News Bulletin, keeping up to date and well informed on the Australian housing market. Today, guys, we're talking everything about breaking down Australia's construction crisis. And I've got our resident build expert, Mr. Liam Correy, back in the studio, mate, how are you, big fella?

**Liam Correy** (0:19)
Yeah, doing well, Sammy. Great to be here. Thank you for inviting me up.

**Sammy Gordon** (0:22)
Mate, absolute pleasure to have you back. Now, man, you're back in, you've flown in for the team event that we've got kicking off tomorrow, man. So it's good to have you back on deck and back on Aussie soil, mate. And, man, looking forward to a couple of big days here.

**Liam Correy** (0:34)
Andrew, Sam, man, really looking forward to it. I flew down quickly last night into Sydney and I'm still thawing out from there. So it's nice to be up at the Gold Coast where it's a little bit warmer.

**Sammy Gordon** (0:43)
Yeah, beautiful, mate. Definitely is, mate. It was nice today, bro. It was like 22, 23, sun was out. Who would think that we're in the middle of winter? No one that comes from the dirty South. But, mate, I wanna jump straight into this. We've got the news bulletins. People love these quick and punchy. Now, mate, Australia's construction crisis isn't real. Is there actually a construction crisis?

**Liam Correy** (1:02)
Yeah. So the construction crisis is very interesting when you start to peel through the numbers. And I've got some numbers for the listeners today.
But on the surface, things look okay until you start to poke and prod, and you start to see some cracks starting to emerge. So when we look at pure approval numbers, everything looks okay. I think we were surprised when we looked at the approval numbers, roughly 202,000 being approved over the last sort of 10 months or so, which puts us in line with, okay, that looks reasonable on numbers. You know, I think housing accord numbers were always around 240,000 that we needed to build. So when you look at pure approval numbers, they look okay.

**Sammy Gordon** (1:41)
It doesn't look too bad.

**Liam Correy** (1:42)
But when you start looking at the actual-

**Sammy Gordon** (1:44)
Still 20% down, that's still 20% off what it's supposed to be.

**Liam Correy** (1:47)
We are, yeah. And I don't think anyone's under the belief that we're going to actually hit the numbers. We are at a deficit. We're about 81,000 short, which is quarter on quarter. That's the last five official quarters that went down officially 81,000. So we are behind, right?
And there's a few reasons we are going to unpack today as to why we're sort of behind on those numbers. But I think when you look at- So there's a few key numbers. So approvals are one. The approvals look okay, right?

**Sammy Gordon** (2:18)
So approvals sitting around about 200,000 a year.

**Liam Correy** (2:20)
They're around 200,000 at the moment. Yep. When we look at the commencements, commencements start to drop off a little bit. So in terms of recent numbers, quarter on quarter, or the last quarter anyway, March quarter, we were up at roughly 48,000.
And that looks okay. But again, it's short of the 240 that we needed to do. And if those are the numbers that we're running off, when you look at the deficit and you look at how on track we are a building, we really now need to be at around 261 And in case listeners don't recall our conversations a couple of years ago, when we were talking about all of this back then, about 223,000 was our highest number of builds ever recorded. And that was pre-COVID when the industry was rather healthy. Now, since then, a few things that we'll look at today have appeared. And so the numbers keep adding up. The more we fall behind the deficit, the further we are from achieving any realistic numbers.

**Sammy Gordon** (3:18)
So talking about 200,000 approvals over the last financial year, we're obviously just freshening to the new financial year. We've got around about 200,000, which doesn't sound too crazy. We're around about 20% off the target, which in all years has been before, it isn't too bad. Commencement's down again around about another 10,000. So if we're talking about 48K per quarter, that means annualized over the year. We're talking about 190 What I'm interested in though is what about completions?
Because that to me is probably the biggest indicator. Approvals are one thing, commencments are another, but where are completions and how are they sitting as well? Because you both got builders going under, you got people pulling plans if things might be getting approved, or they may go to start a build. But then if they don't actually get to completion, and this is people economically not being able to do it. But then again, we throw into the fact that the equation of builders becoming insolvent during jobs, that's a major risk and a major factor at this thing. But where do completions sit at?