The slump of new dwelling approvals recorded over the year to June in Victoria could result in a stark shortage of housing, according to an analysis by the Urban Development Institute of Australia.
New dwelling approvals declined to 59,719 in the 12 months to June, down from 75,613 last year. UDIA said this could result in a decline in completed dwellings from 58,978 to 48,581.
This decline in approvals could pose a problem given that the state’s population and new household growth could likely outstrip the housing supply.
Based on UDIA's estimates, this would push the demand-supply gap into a deficit of 6,846 homes, a massive difference from last year's surplus of 4,565.
"With Victoria's population growth expected to continue at record levels in the coming years, we need to be delivering around 66,000 to 68,000 new houses every year," UDIA's Victorian chief executive Danni Hunter told The Australian Financial Review.
Also read: Affordability Hinders Owners From Selling Homes
Suburbs close to Melbourne CBD would likely feel the impact of the shortage. Apartment approvals in the city's inner ring, which is composed of central Melbourne, Maribyrnong, Yarra, Stonnington, and Port Phillip council areas, declined by over 50% from 12,074 to 5,078. Townhouse approvals also fell sharply from 900 to 524.
Melbourne recorded the most significant decrease amongst the council areas, with approvals going down from 7,350 to 1,924.
Hunter said the lack of large sites available was partly to blame for the slump. However, she believes the state government's C270 development controls, which has put a lid on the size of floorplates and imposed restrictions, also played a part in the decline in approvals.
"What the industry is finding is difficulty in amalgamating sites — getting the right site with the right size that fits within the controls. One thing they could do is to relax those controls to facilitate and encourage more residential development in our CBD," she said.
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