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{{propApi.successMessage}} {{region}} Change locationBuilding and lending approvals stall under weight of the RBA
Building and lending approvals stall under weight of the RBA
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The ABS released the Lending to Households and Businesses data for February 2023 today, as well as the same month’s building approvals data for detached houses and multi-units covering all states and territories.
“February saw the fewest loans issued for the purchase or construction of a new home in almost 15 years,” added Mr Reardon.
“Loans for new homes in February fell even further from its holiday low in January, down by 3.4 per cent to 4,267. The last time so few loans were issued for new homes was in November 2008.
“Owner occupiers and investors, alike, continue to retreat from the market. Even lending for renovations – the part of the sector expected to hold up relatively well during this downturn – had its weakest month in almost two years.
“The impact of the RBA’s tightening cycle has been evident in weakening finance data for a number of months and this is now flowing through to building approvals that are also around decade lows.
“While approvals for new houses in February bounced back from their holiday low, they remain 13.6 per cent lower than a year earlier. Approvals for multi-units also fell by 8.4 per cent in February, to be down by 51.9 per cent on a year earlier, with many projects recently being delayed in the face of labour and materials uncertainties.
“The large pool of building work that existed when the RBA started to increase the cash rate in May 2022, has been eroded.
“This slowing in home building will undermine the achievement of the Australian government’s target of one million new homes over the next five years and with migration at record levels, affordability will deteriorate further.
“Every state and territory needs to take action to attract remove blockages in the housing sector to improve the supply of new homes,” concluded Mr Reardon.
In seasonally adjusted terms, the total number of homes approved in February 2023 declined in most jurisdictions compared to the same month a year earlier, led by Victoria (-45.0 per cent) and New South Wales (-42.2 per cent), followed by Western Australia (-22.2 per cent) and South Australia (-8.9 per cent). Queensland (+14.7 per cent) and Tasmania (+11.8 per cent) saw increases, while in original terms, declines were seen in the Australian Capital Territory (-62.3 per cent) and the Northern Territory (-35.5 per cent).
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Signs of a pulse in Canberra building approvals
Building approvals for dwellings in Canberra for the year to the end of March have shown some signs that the market may be turning the corner but still remain well below government targets.
Low volume of home building but labour shortages linger
“Australia has just seen its two weakest years of new home commencements in over a decade, meaning these ongoing shortages of skilled trades are not being caused by home building activity,” stated HIA Chief Economist, Tim Reardon.
Building approvals strengthen in March quarter
“There were 48,620 new homes approved for construction in the first quarter of 2025, up by 20.8 per cent on a year earlier,” stated HIA Senior Economist Tom Devitt.
New Government must put housing as first order of business
“The Housing Industry Association (HIA) calls on the newly elected Federal Government to make housing a first-order priority from day one, any delay or political grandstanding will only deepen the nation’s housing crisis,” HIA Managing Director Jocelyn Martin said today.