Annual housing inflation accelerated to 5.5 per cent over the year to June 2024, well above the average inflation rate of 3.8 per cent.
Master Builders Australia chief economist Shane Garrett said this was predominantly driven by rental price growth of 7.1 per cent over the year reflecting a lack of rental properties.
“For owner occupiers, the price of new dwellings is 5.4 per cent up on a year ago. This is partly the result of labour shortages and other cost pressures in the new home building market.
“It’s further evidence that if we are to win the battle against inflation, we need to pull out all stops to build new homes.
“Building approvals released earlier this week show that June 2024 was the worst month since 2012 for higher density home building approvals.
“We need much higher volumes of new home building on this side of the market if rental market pressures are to be relieved.”
CEO Denita Wawn said: “Whether it’s detached housing or higher density, the same constraints and cost drivers apply: workforce shortages, woeful productivity, lack of critical infrastructure, high taxes and charges, slow approval processes, and costly union EBAs.
“Inflation will remain too high if we don’t get a circuit breaker from Government to facilitate the building of more homes for both owner-occupiers and renters.
“The housing shortage makes it difficult to contain inflation. This puts pressure on the Reserve Bank to lift interest rates leading to even higher rental inflation and less building activity.”
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