Building approvals rise 12 per cent in September

“The decline in the cash rate and ongoing population growth is finally flowing through to a rise in building approvals,” stated HIA Senior Economist Tom Devitt.

The Australian Bureau of Statistics today released its monthly building approvals data for September 2025 for detached houses and multi-units covering all states and territories.

“New home building approvals strengthened in September, up by 12.0 per cent for the month to be 7.9 per cent higher in the quarter compared to the same three months the year prior. Both detached houses and multi-units saw an improvement in the month, up by 4.4 per cent and 23.7 per cent respectively,” added Mr Devitt.

“Home building in Sydney and Melbourne has been very slow to respond to the cuts to the cash rate this year. Recent new home sales data and now approvals data, suggest that this pickup in activity is finally emerging in the two biggest markets.

“In September, sales of new homes in New South Wales and Victoria increased by 34.4 per cent and 34.8 per cent respectively, and this should continue filtering into approvals data in the new year.

“Multi-unit approvals have also been trending up, from exceptionally low volumes, with the support of state government interventions to streamline approvals processes and purchase ‘off the plan apartments’. This could lead to an increase in apartment commencements in 2026.

“The biggest challenge in driving these home building volumes towards the government’s 1.2 million homes target is going to be the price of shovel-ready land.

“HIA’s recent Land Report has revealed that the price of residential land has re-accelerated across the country, increasing by 6.8 per cent in the 12 months to June 2025, more than three times faster than consumer price inflation over the same period.

“The largest price increases were seen in the smaller capitals, where relatively abundant and affordable shovel-ready land saw a surge in population growth and housing demand in recent years.

“A failure of policymakers to maintain a healthy pipeline of shovel ready land, with associated infrastructure, will limit improvement in home building volumes, threatening to undermine the affordability advantages in these smaller capitals and worsen the affordability challenges in the larger capitals.

“Lower interest rates alone will not be sufficient to produce 1.2 million new home builds over the Australian government’s target five-year period, especially with recent inflation data suggesting the RBA will be on hold until at least next year,” concluded Mr Devitt.

The volume of new home approvals in the three months September 2025, compared to the same quarter last year, in seasonally adjusted terms increased in New South Wales (+19.5 per cent), Queensland (+9.7 per cent), Tasmania (+9.0 per cent) and South Australia (+5.0 per cent), while declining in Western Australia (-2.5 per cent) and Victoria (-0.9 per cent). In original terms, new home approvals increased in both territories, up by 153.0 per cent in the Australian Capital Territory and 36.1 per cent in the Northern Territory.