The commencement of house builds fell 5.5% in the first quarter of 2023.

Construction of around 26,200 new homes kicked off over the three months to March, according to new Australian Bureau of Statistics (ABS) data.

That’s 39% less than in the peak of the June quarter of 2021, Housing Industry Association (HIA) senior economist Tom Devitt said.

“This decline in detached housing commencements is part of the ongoing cooling of the market that is expected to continue well into next year.

“Incredibly tight rental markets around the country require concerted efforts to increase the supply of housing.”

Sales of new homes have tumbled since the RBA started its rate hiking spree in May 2022.

“This is compounding the high volume of earlier projects that are being cancelled across the nation as home buyers struggle to secure finance in the face of ballooning home building and finance costs," Mr Devitt said.

Rising interest rates were previously found to have lessened the appeal of building in Victoria and NSW, thanks to higher land prices in the two most populous states.

Meanwhile, South Australia and the ACT were crowned the best places to build in Australia.

The March quarter was also the first since 2020 that completed builds outnumbered commencements. Construction finished on more than 28,000 houses last quarter.

That suggests labour shortages have put pressure on builders tasked with completing the “significant volume of work” entered into during the pandemic, Mr Devitt said.

And it’s not just new house builds being impacted.

“Costs and supply uncertainties are also holding back the multi-units sector,” Mr Devitt said.

New constructions of residential buildings aside from houses climbed 56% last quarter to nearly 20,000.

Though, Mr Devitt says that’s a long way from the 25,000 to 30,000 kicking off each quarter during the 2015-2018 “apartment boom”.

“There are still 136,000 multi-units under construction around Australia," Mr Devitt said.

"These need to be completed in order to help accommodate the rapid return of overseas migrants, students, and tourists that Australia has seen since it re-opened its borders in late 2021."

Dwelling approvals improve, but not by much

The latest ABS release comes on the back of news more than 16,000 new dwellings were approved in May – a 20.6% month-on-month improvement.

However, approvals for new private sector houses lifted just 0.9%.

A large chunk of the uptick came from apartment or attached dwelling approvals.

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Building a home? This table below features construction loans with some of the lowest interest rates on the market.

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Filters
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.14% p.a.
6.20% p.a.
$2,047
Interest-only
Variable
$0
$835
70%
6.43% p.a.
6.68% p.a.
$2,143
Interest-only
Variable
$0
$530
90%
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6.43% p.a.
6.68% p.a.
$2,143
Interest-only
Variable
$0
$530
90%
6.45% p.a.
6.20% p.a.
$2,515
Principal & Interest
Variable
$0
$1,520
60%
6.74% p.a.
6.42% p.a.
$2,247
Interest-only
Variable
$0
$600
90%
6.92% p.a.
6.95% p.a.
$2,307
Interest-only
Variable
$0
$300
80%
6.94% p.a.
7.19% p.a.
$2,313
Interest-only
Variable
$0
$530
80%
7.09% p.a.
7.45% p.a.
$2,363
Interest-only
Variable
$0
$500
80%
7.81% p.a.
7.84% p.a.
$2,882
Principal & Interest
Variable
$0
$600
69.99%
8.29% p.a.
8.62% p.a.
$3,016
Principal & Interest
Variable
$0
$0
80%
8.56% p.a.
8.58% p.a.
$2,853
Interest-only
Variable
$0
$600
69.99%
8.68% p.a.
8.75% p.a.
$2,893
Interest-only
Variable
$0
$800
95%
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

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