Australia’s residential construction industry is off to a slow start to 2024, with new data showing that building approvals and housing construction lending are close to their lowest levels for more than a decade.

In separate releases last week, the Australian Bureau of Statistics published its latest monthly data for building approvals and lending activity.

In terms of approvals, the data indicates that the seasonally adjusted number of dwellings that were approved for construction throughout the nation contracted by 1.0 percent in January to come in at 12,850.

This represents the third lowest level of monthly approvals that has been recorded over the past ten years (see chart).

The decline was led by a 9.5 percent drop in detached house approvals, which are now at their lowest level since June 2012.

This was only partly offset by a 14.5 percent increase in multi-unit approvals.

Meanwhile, lending data shows that the seasonally adjusted number of new loans that were issued to owner occupiers for the purpose of either constructing a new dwelling or purchasing a newly erected dwelling fell by 4.3 percent in January to come in at 4,194.

This represents the second lowest level of housing construction lending activity since the Global Financial Crisis.

The latest data represents a concerning picture for Australia’s residential construction industry.

Until last month, approvals and housing construction lending numbers appeared to have stabilised since bottoming out early last year (see charts).

The data also points to challenges in meeting the national housing target of delivering 1.2 million new homes over the five years from 1 July 2024.

To meet that target, the nation needs to complete 240,000 homes each year.

In its recently issued forecast, however, Housing Industry Association (HIA) said that it expects the nation to break ground on only just over 1 million homes over that period.

This represents a shortfall of almost 200,000 homes compared with the target.

Speaking about the approval numbers, HIA Chief Economist Tim Reardon said that the data points to a slow start to residential construction in 2024.

He says the primary cause is rising interest rates.

“The low volume of building approvals throughout 2023 will see the volume of homes commencing construction continue to slow this year,” Reardon said.