Building approvals rise by 20.8 per cent despite falling short of housing targets

Building approvals rose significantly in the first quarter of 2025, with 48,620 new homes approved for construction, representing a 20.8 per cent increase compared to the same period last year.

HIA Senior Economist Tom Devitt attributed most of the improvement to multi-unit approvals, which surged by 52.6 per cent from what he described as “very low levels a year earlier”.

“Despite the improving numbers over the last year, building approvals are still running at around 180,000 per year, well short of what is required to commence 1.2 million homes over 5 years,” Mr Devitt said.

The economist cautioned that many recent apartment approvals could be “faux” approvals, with market conditions requiring previously approved projects to seek re-approval to comply with new construction codes.

Higher construction costs and what Mr Devitt termed “punitive taxes” effectively excluding certain investors are creating obstacles for apartment sales, even after projects receive approval.

“Multi-unit activity needs to be twice as large as recent levels for the Australian government to achieve its target of 1.2 million new homes over five years,” Mr Devitt said.

The housing economist projected that the government will fall approximately 20 per cent short of its housing target, adding that “a few interest rate cuts from the RBA won’t be sufficient” to bridge the gap.

Building approvals for the quarter showed significant regional variation, with South Australia recording the strongest growth at 49.4 per cent in seasonally adjusted terms.

Western Australia, New South Wales and Victoria all saw increases above 20 per cent, while Queensland recorded minimal growth at 0.8 per cent and Tasmania experienced a decline of 12.9 per cent.

In original terms, the Northern Territory and Australian Capital Territory showed substantial growth at 81.5 per cent and 43.8 per cent, respectively.