Where Are Construction Approvals Sitting Post Budget?

Sammy Gordon (0:04)

Good day, listeners, and welcome to the APS Weekly News Bulletin. Guys, today, I'm breaking down everything to do with new home sales and how that's playing out across the country. Now, I've got an article here by Mackenzie Scott of The Australian saying that the new home sales slash has built a wall of further rate rise pain. Now, as I was saying, new home sales are down at 7.7 percent lower than the same time last year. But some of these numbers are pretty astonishing when you throw in the fact that supposedly the new policy changes brought in with the budget were supposed to ramp up new homes and new homes being built. Now, article by Mackenzie Scott here saying, new home sales have crashed 20 percent in three months, dealing a heavy blow to labor's attempts to funnel property investment into fresh housing supply and sparking sharp warnings that government is holding a stop sign to productivity.

In a damning report released on Tuesday, the HIA Housing Industry Association warned the nation's home builders will be unable to sustain further rate hikes on top of the Albanese government's change to property taxes. Specifically, it's banned on self-managed superannuation funds borrowing to buy houses. Now, former Treasury economist Chris Richardson said, To improve productivity, Australia needs to improve planning to encourage more development with that regulatory red tape. Our failure to build is a failure to prosper. If you want a productivity agenda in Australia, you would start in housing. We're just holding a massive stop sign in front of our ability to be more productive because we can't build anything at a reasonable cost. Now guys, this pop up I know will show on the screen as I'm explaining this, but pretty much this ranges back to August 2023, obviously to August 2026, the last three years worth, and it sat at a pretty steady rate, pretty much the whole way through there. You guys can see this on the screen popping up, around about kind of you sort of sitting there in the mid to high 3000s to, you know, at some points there, it kind of peaks out in around about the four to four and a half thousand. Now, very interestingly, you could see building approvals ramp up pretty aggressively. The start of last year, all of last year, from April, literally from April all the way through, we were sitting above 4,000. It peaked September 25 at 5,300, then peaked again in January, 2026 This was the last peak in the last three years. So in January, 2026, peaked at 5,410 dwellings approved in that month, then fell back. The next highest rise was at 5,300. So just over 5,400 in January 26, in April 26, just under 53, 5,300. And then in the budget in May, we've got 4,400, 4,200, 4,000, and now we're down to 3,600. So guys, we're down. It's over 30% since the peak in January. So over 30%, it's dropped in the last six months, effectively since January. That's August 26 data.

And guys, that is absolutely nuts. I mean, that's the lowest since March, 2025

So we're 18 months on from March, 2025, and we're literally the lowest it's been since then. You actually have a look back all the way through it as well. It's like, this is the lowest, almost as far back as it goes. And the crazy, crazy thing is that, you know, the whole idea behind this change in budget, change in policy, change all the rest of it, was that it was supposed to spike new home sales and new home construction in the investment sector. And it's clearly going seriously the wrong way. Now, as sentiment continues to get worse and worse, this is only going to continue. I'll finish the article, but guys, and then I'll throw in a few final cents on this thing as well. The survey, the largest volume builders across Australia's five largest capital cities on Tuesday, revealed a 10% drop in new home sales in August, reflecting a 19.3% decrease in the number of homes purchased off the plan over winter compared to the three months prior. Overall, new home sales are 7.7% lower than the same time last year, despite Jim Chalmers' budget of offering negative gearing and the capital gains tax for investors who contribute to delivering new housing stock. HIA chief economist Tim Reardon said that the broad-based deterioration in supply sales had confirmed the recovery in off-the-plan house and land packages recorded at the start of the year had been disrupted. So it had picked back up, guys. It had already picked up, and now they've smashed it again. The tax increases announced in the federal budget have weakened market confidence at the same time that three interest rate increases have reduced household borrowing capacity and increased mortgage repayments. Falling established home prices and rising construction cost outcomes from the rises in taxes and interest rates and are making new home projects increasingly difficult to finance. The largest falls in new supply purchase over the last three months were in Victoria, where sales were slashed by more than a quarter at 27%.