Victoria’s new house pipeline plunged by more than 10,000 homes in 2022, and is forecast to fall about 7000 more to a decade low by 2024.
After pandemic-driven support packages drove bumper years with more than 40,000 approvals in 2020 and 2021, the number of stand-alone properties given the green light across the state fell to 36,859 last year.
The Australian Bureau of Statistics figures mark a 22 per cent plunge from the record 47,405 approvals recorded across 2021.
RELATED: Construction sector insolvencies surge in final months of 2022: ASIC
Home builder cuts price of new builds by $50k as caution grows
Melbourne high-density development vs heritage: population booms as affordability declines
HIA chief economist Tim Reardon said the falls, which brought Victoria back in line with its 36,674 10-year average, was not a result of interest rate rises.
“Much of the decline between 2021 and 2022 was the expected consequence of the end of the
HomeBuilder grant in 2021,” Mr Reardon said.
He warned the impact of last year’s eight straight interest rate hikes by the Reserve Bank of Australia would take about 18 months to appear in the approvals data.
As a result HIA estimates indicate there will be 35,700 new houses approved in Victoria in 2023, before the figure plunges to a decade low of about 30,000 in 2024 as a result of last year’s rate hikes.
“This will be a long slow down,” Mr Reardon said.
Master Builders Victoria policy executive director Megan Peacock said the industry group remained optimistic that improvements in material supply chains and even in some costs could alleviate the projected pain, while rising immigration could also help avert the worst of declining new build volumes.
“But we are seeing that softening in the market and we are worried for the industry in so far as it is a big decline,” Ms Peacock said.
Nationwide the number of new builds fell from 147,552 in 2021 to 115,358 in 2022, a 21.8 per cent reduction.
The figures follow HIA’s release of a 2023 federal budget submission earlier this week, which urged them to take measures to increase the supply of land available for new homes to be built on and to work with state governments to reduce tax imposts on new construction.
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
MORE: Melbourne suburbs with homes making and losing $1k a day revealed: REIV
Beachside on a budget: Where you can get a holiday home for $275k
Story Credit: news.com.au