Less than 8000 new apartments were green lit for development in August.
Less than 8000 new apartments have been given the green light for development across Victoria in the past year, the second-lowest number since the global financial crisis.
Australian Bureau of Statistics figures released Tuesday show just 7616 apartments were approved in the 12 months to the end of August.
It’s the second time in three months the annual figure has dipped below 8000, with the last time it occurred before that in November 2009.
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Housing industry Association economist Maurice Tapang said apartment approvals were tracking at some of the lowest levels in more than a decade, with no sign of a remarkable improvement.
“(Victoria) has a huge pipeline of infrastructure projects that are really taking away labour from the (residential) sector; a lot of workers would be more inclined to be working in commercial and government-funded projects,” Mr Tapang said.
Ray White chief economist Nerida Conisbee said the cost to build apartments was a heavy burden for Melbourne developers, as well as the lack of demand for units compared to houses.
Ms Conisbee said Victoria’s tax environment was also prohibitive for people in the property industry like high land and foreign investor costs.
Ray White’s Nerida Conisbee said if the federal government decided to cut negative gearing, it would be a complete disaster for investors.
And if the federal government decided to cut negative gearing, she warned that would be a “complete disaster” particularly for those invested in Victoria.
ABS data also showed townhouse approvals remained flat, with 787 approved in August compared to 936 in July and 650 in June.
However, the development of new houses showed positive signs, with 33,971 approvals in a year to August — the greatest amount given the nod since the year to November 2023.
And Victoria had the largest amount of building approvals of any other state or territory in August, with 4535 and a total of 52,239 residential dwelling plans confirmed.
In relation to house approvals, Mr Tapang said there was confidence from Victorians that interest rates weren’t going to drop, which was encouraging them to build new homes.
He added that it was also taking less time for a house to be built compared to an apartment.
This comes as the Institute of Public Affairs (IPA) shows the nation is 30 per cent below its required 20,000 average monthly approvals required to meet its 1.2 million new homes commitment by 2029.
IPA’s Daniel Wild said home ownership was a funamental component of the Aussie way of life.
And IPA deputy executive director Daniel Wild said the Albanese government had yet to meet a single National Housing Accord target.
“It is very hard for mainstream Australians to have confidence in the federal government’s plan if in its first two months it has failed to reach anywhere near the targets of new dwellings promised,” Mr Wild said.
“Home ownership is a fundamental component of the Australian way of life. It is the basis of family formation and community participation.
“The family home is a core part of lifelong retirement savings for millions of Australians.”
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