April approvals soften as Budget uncertainty weighs on housing pipeline
The Property Council of Australia said new ABS building approvals data for April shows a softening in approvals, reflecting a more cautious industry outlook as uncertainty continues to weigh on investment decisions.
The results show total dwelling approvals fell 3.4 per cent nationally in April, with a sharper decline in New South Wales where approvals dropped 9.5 per cent over the month.
Property Council's Group Executive Policy and Advocacy, Matthew Kandelaars, said approvals are an important indicator, but delivery and project feasibility ultimately determine how many homes get built.
"Across April we continued to see rising cost pressures, global volatility and increasing speculation and uncertainty in the lead up to the Federal Budget, all of which influence how projects stack up," Mr Kandelaars said.
"Softer approvals reflect a more cautious investment environment, higher costs and greater uncertainty."
Mr Kandelaars said the data reflects market conditions in the lead up to the Federal Budget, at a time of significant policy and market change, with the full impact of new policy settings still to play out as legislation moves through Parliament.
The Property Council welcomed the Government's recent National Housing and Homelessness Plan, including measures focused on enabling infrastructure, planning reform and modern construction methods, as part of a broader effort to address constraints across the housing system but noted that projects are only built when it is commercially feasible to do so.
"Up to 40 per cent of the cost of every new home comes from taxes and charges across three tiers of government and this is the greatest single barrier to making new homes feasible and increasing supply," Mr Kandelaars said.
"The housing targets are welcome and have turned focus to better approval processes, but the key now is fixing post-permit bottlenecks, including delays in last mile infrastructure and approvals, and getting tax and investment settings right."
Mr Kandelaars said the next phase for housing supply will be defined by how policy settings and market conditions translate into activity on the ground over the coming weeks and months.
"There's a lot of uncertainty in the market, and we are closely monitoring sales activity and project commencements to assess how state and federal budget settings are influencing the delivery of new homes."
"We need the Federal government to have the policy courage to monitor the budget tax hikes and amend them to support the delivery of new homes if the secondary effects are worse than they expect," he said.
