Half of approved but unbuilt homes located in Sydney and Melbourne
Nearly 40,000 newly approved homes in Australia remain unbuilt, with developers citing high interest rates and construction costs as primary obstacles.
A KPMG analysis revealed that as of December 2023, 15,593 approved dwellings in New South Wales had not begun construction, including 11,170 homes in Sydney.
In Victoria, 7,897 homes, including 6,840 in Melbourne, remained unstarted, down from 9,577 the year before.
Brisbane experienced a 3.8% rise in stalled dwellings, primarily detached houses, over the past year. The Australian Capital Territory saw a significant increase in unstarted homes, nearly doubling from 864 to 1,772. In contrast, Adelaide and Perth’s figures remained stable.
Almost 40,000 homes across Australia waiting to be built as interest rates and building costs hit developers https://t.co/MVB1Ks8Shu
— Guardian Australia (@GuardianAus) May 28, 2024
According to Terry Rawnsley (pictured), urban economist at KPMG, Sydney and Melbourne represent nearly half of the country’s “approved but not yet commenced” projects, with approximately 80% being townhouses and apartments. Rawnsley pointed to the rising costs of materials and finance, along with increased interest rates, as factors complicating the profitability of larger projects.
“With all the construction price increases and where interest rates have landed, it’s hard for developers to make those more medium- to high-density projects stack up,” Rawnsley told The Guardian.
“Sometimes people also forget that interest rates also impact on the developer side as well – it means they can’t borrow as much to get the projects up and running.”
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