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What Building Approvals Tell Us About the Housing Market
REAL STORIES
The current state of building approvals in Australia paints a concerning picture for the future supply of housing.
As a key indicator of what lies ahead in the property market, building approvals offer valuable insights into the potential volume of new housing stock coming onto the market in the near to medium term. Unfortunately, the latest data suggests that we may be facing a period of sustained supply constraints.
Building approvals are down approximately 17% from the 10-year average, signalling a significant slowdown in the development pipeline. This reduction in approvals suggests that the supply of new housing stock will remain limited for the foreseeable future. As a result, the housing market will likely continue to experience a tightening in supply, which could further exacerbate the existing supply-demand imbalance in many suburbs.
The decrease in building approvals comes at a time when demand for housing remains strong, fuelled by population growth, a post-pandemic desire for more space and lifestyle options. However, with fewer new homes being built, this demand is set to put even more pressure on the limited supply available, particularly in high-demand areas.
Building approvals are down
Signalling a significant slowdown in the development pipeline
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For prospective buyers and renters, this means continued competition for available properties and potentially higher prices. For investors, the constrained supply may present opportunities for capital growth, particularly in areas where demand remains robust. However, the broader impact of reduced housing supply on affordability and accessibility should not be underestimated, as it could lead to longer-term challenges for both buyers and renters alike.
In light of these trends, it is more important than ever for all market participants—whether buyers, sellers, or investors—to stay informed about the evolving market dynamics and to seek professional advice when making decisions. At MRE, we are committed to providing our clients with the latest insights and guidance to help them navigate these challenging conditions and achieve their property goals.
While the reduction in building approvals is a clear indicator of future supply constraints, it also presents an opportunity for policymakers, developers, and industry leaders to come together and find innovative solutions to address the supply-demand imbalance and ensure a more sustainable and accessible housing market for all.
The decrease in building approvals
comes at a time when demand for housing remains strong
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If you’re considering buying, selling, or investing in the current market, understanding the impact of future supply constraints is crucial. At MRE, our team of experienced property advisors is here to provide you with tailored insights and guidance to help you make the best decisions for your situation.
Explore the opportunities that lie ahead
Get in touch with MRE's Residential Sales Team, today to discuss how these market trends could affect your property journey