A record number of ACT home builds have stalled, amid high construction costs and reduced borrowing power among buyers, analysis from one of the big four consulting firms reveals.
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The number of dwellings that were approved but construction had not commenced rose to 1777 in the December 2023 quarter, data from KPMG Australia shows.
It was a 64 per cent rise on the ACT's five-year December average (1084 homes), the analysis showed.
Across the country, more than 37,000 dwellings were approved but had not yet commenced.
While Canberra made up a small portion of the country's approved dwellings, the capital's lagging construction activity drove the national figures 20 per cent higher than the five-year average, the firm said.
KPMG urban economist Terry Rawnsley said the figures were "abnormal".
"There is always a lag between housing being approved and construction commencing, but current estimates show an abnormal number of dwellings sitting in this category, suggesting other market factors are stalling the pipeline of new builds," he said.
![Construction is lagging across the country. Picture by Elesa Kurtz Construction is lagging across the country. Picture by Elesa Kurtz](/images/transform/v1/crop/frm/146508744/cefb37b5-1de1-4ac8-b9fe-6ca17c3cd063.jpg/r0_276_5392_3308_w1200_h678_fmax.jpg)
High construction costs, coupled with buyers' reduced borrowing power had contributed to the delays, Mr Rawnsley said.
Among the stalled projects in Canberra is a plan for 16 public housing units in Kingston, which was approved in 2021. The ACT government said a dispute with the builder, followed by a development application amendment, had contributed to the delays.
Apartment construction needs to double: housing association
Sydney and Melbourne made up nearly half of the stalled projects, with 11,170 and 6840 dwellings respectively that were approved but not yet commenced.
Of those, 80 per cent were townhouses or apartments, the KPMG report noted.
The Housing Industry of Australia recently raised concerns about a decline in construction activity across the country.
HIA chief economist Tim Reardon said significant numbers of high-rise apartment projects will "remain on the shelf" if conditions persist.
He said apartment commencements will need to double in order for the federal government to achieve its housing target of 1.2 million homes over the next five years.
"The volume of multi-unit commencements has fallen to almost half the volume commenced in 2016, before the impact of taxes on investors took effect," Mr Reardon said.
"More recently, apartment construction has also been constrained by labour and material shortages and cost. This appears likely to continue for another year."
As part of the National Housing Accord, the ACT is expected to build 5800 to 6380 new dwellings a year for the next five years.
Last week, the ACT government signalled further law changes could be ahead to allow more housing on suburban blocks.
Planning Minister Chris Steel released a statement of planning priorities, which included developing a design guide for missing middle housing.
Missing middle housing includes townhouses, duplexes, terraces and row housing.
Mr Rawnsley said there were signs to suggest the backlog of builds may begin to ease soon.
"With housing prices now rising, strong population growth, and construction costs starting to stabilise, developers could be gaining more confidence to start housing projects," he said.