Building approvals fall 6.4 per cent in October amid shifting housing dynamics
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Photo by Andrea Piacquadio
In a significant development for the Australian housing market, the volume of new dwellings approved for construction fell by 6.4 per cent in October 2025, marking a notable shift in the sector’s momentum. The Australian Bureau of Statistics (ABS) released the latest building approvals data, highlighting a decrease to 15,830 new dwellings approved for the month.
HIA Senior Economist Maurice Tapang elaborated on the figures, stating, “The volume of new dwellings approved for construction decreased by 6.4 per cent in the month of October 2025 to 15,830.” This decline is attributed to a 2.0 per cent decrease in approvals for detached houses and a more pronounced 12.1 per cent fall in multi-unit approvals, with New South Wales and Victoria being particularly affected.
Despite the monthly downturn, the broader picture remains somewhat positive. Over the 12 months leading up to October 2025, new housing approvals reached 192,100, which is 12.6 per cent higher than the previous year. Tapang noted the role of economic factors in this trend, saying, “Interest rate cuts have provided the confidence boost for home buying activity. Households are increasingly turning to new home building as an alternative.”
The rise in established home prices is another factor driving the shift towards new home construction. As demand continues to outpace the supply of available homes for purchase, more households are opting to build new homes. Tapang explained, “This comes as established home prices continue to rise, as demand outpaces the supply of homes available for purchase.”
Regionally, the performance varied significantly. Western Australia saw the most substantial increase in seasonally adjusted terms, with approvals rising by 28.1 per cent compared to September. South Australia and Queensland also experienced growth, with increases of 11.2 per cent and 2.4 per cent, respectively. Conversely, New South Wales and Victoria faced substantial declines, with approvals dropping by 20.6 per cent and 24.7 per cent, respectively. Tasmania also recorded a 15.0 per cent decline. In original terms, the Northern Territory saw a 7.5 per cent increase, while the Australian Capital Territory experienced a dramatic 634.1 per cent rise, albeit from a low base the previous month.
The disparity in regional performance highlights the broader trends impacting the housing market. Tapang observed, “Detached housing approvals continued to rise over the last 12 months in Queensland, South Australia and Western Australia, while New South Wales and Victoria appear to just be at the bottom of their cycles.” He added that these two markets have been lagging behind the mid-sized states, where approvals had been rising before the recent cuts to the cash rate.
Looking ahead, the path to achieving the government’s ambitious target of 1.2 million homes remains fraught with challenges. Tapang identified the cost of shovel-ready land as a significant hurdle, stating, “The biggest challenge in driving these home building volumes towards the government’s 1.2 million homes target continues to be the price of shovel-ready land.” He emphasised the need for government intervention to address this issue, saying, “In order to increase the supply of homes in Australia and improve housing affordability, governments need to remove the additional costs imposed on land development and new home building.”
As the housing market navigates these complex dynamics, stakeholders will be closely monitoring the interplay between interest rates, land availability, and regional performance. The October data serves as a reminder of the challenges and opportunities within the sector, as policymakers and industry players work towards balancing supply and demand in Australia’s evolving housing landscape.