The first quarter of 2023 saw the lowest number of building approvals since 2012, as new home approvals edged 0.1% lower across the country in March. 

There was a 2.8% fall in new house approvals and a 5.6% increase in unit approvals in March, according to new Australian Bureau of Statistics data.  

It comes after 3.9% rise in total approvals in February.  

Daniel Rossi, ABS head of construction statistics, said new house approvals remained 15% lower than March 2022. 

“This is the sixth consecutive month where the trend result has fallen for total dwellings approved,”  Rossi said. 

Across Australia in seasonally adjusted terms, total dwelling approvals decreased in Tasmania (-42.1%), South Australia (-19.1%), and Queensland (-6.7%). Western Australia (+27.2%), New South Wales (+3.1%), and Victoria (+1.7%) rose in March. 

HIA Senior Economist Tom Devitt said the first quarter of 2023 saw the lowest number of building approvals since 2012, just as population growth reached a record high. 

“This continues the long-lagged response of Australian homebuyers to the RBA’s interest rate hiking cycle, with further declines expected in the coming months,” Devitt said.   

“The adverse impact of last year’s cash rate increases is still to fully flow through to the official data. Further cash rate increases this year will have only added further weight to these declines. Multi-unit approvals in 2023 have recorded their lowest levels since 2012. The combination of construction cost blowouts, labour uncertainties, increased compliance costs and taxes on investors has seen approvals for multi-units stall. 

“These disappointing approvals numbers are occurring as population growth surges with the return of overseas migrants, students and tourists. This imbalance will see the affordability and rental crisis deteriorate further.”  

Master Builders Australia CEO Denita Wawn said building approvals were heading in the wrong direction at a time when communities are crying out for more housing. 

“We can see the impact of rising interest rates in the homebuilding market, and without appropriate fiscal measures at a federal and state level, we will continue to see further softening in the housing pipeline,” Wawn said.   

“The budget needs to ensure that carefully targeted spending boosts productivity for business and allows for more favourable outcomes when it comes to the cost, quality and quantity of building and construction output. We hope the Senate reviews today’s data as they debate the Housing Australia Future Fund this week. Parliament has an opportunity to send the right signal and kick-start a vital piece of housing reform. 

“We know some members of the crossbench are looking for more funding, and while that would be welcome, it cannot come at the expense of doing nothing at all as each month of building data heads in reverse. There is no silver bullet to solving the housing crisis in Australia. There are a multitude of levers that the federal, state and local governments can pull.”  

The value of total building approvals fell 5.9%, following a 19.5% rise in February.  

The value of total residential building approvals fell 6.5%, comprised of a 6.4% decrease in new residential building and a 7.4% fall in alterations and additions.  

The value of non-residential building approved decreased 5.1%, following a 41.0% rise in February.