Building approvals dip in December, but 2025 ends on a high note for the housing sector
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Photo by Josh Sorenson
In a surprising turn of events, the volume of new dwellings approved for construction in Australia decreased by 14.9 per cent in December 2025, bringing the total number to 15,540 for the month. This data, released by the Australian Bureau of Statistics, highlights a decline primarily driven by a significant drop in multi-unit approvals. However, despite the December dip, the year 2025 concluded on a high note with a notable increase in overall approvals compared to the previous year.
Tim Reardon, the Chief Economist of the Housing Industry Association (HIA), shed light on the figures, explaining, “The volume of new dwellings approved for construction decreased by 14.9 per cent in the month of December 2025 to 15,540.” Despite this monthly decline, the annual data paints a more optimistic picture. “This brought the total number of dwellings approved in 2025 to 195,730, which is 12.8 per cent higher compared to 2024,” Mr Reardon added.
The December downturn was largely due to a 31.4 per cent fall in multi-unit approvals, a category that includes semi-detached homes and apartments. This sharp decline was only slightly balanced by a modest 0.3 per cent increase in approvals for detached houses. Mr Reardon noted the inherent volatility in the multi-unit sector, stating, “Multi-unit approvals, which include semi-detached homes and apartments, are volatile on a month-to-month basis.”
However, he emphasised that this volatility should not overshadow the upward trend observed throughout the year. “The December month’s volatility does not detract from the clear upwards trend in approvals, including for units, over the previous 12 months,” he remarked. In 2025, there were 82,330 multi-unit dwellings approved for construction, marking a significant 31.4 per cent increase compared to 2024.
The detached housing sector also saw growth, albeit at a slower pace. “Detached house approvals have been slowly but steadily picking up. In the 2025 calendar year, there were 113,410 detached homes approved for construction, which is 2.4 per cent higher compared to 2024,” Mr Reardon observed. This gradual increase in approvals reflects a broader trend of rising market confidence and sustained demand for housing.
Several factors have contributed to this positive trajectory. Interest rate cuts in 2025 have played a crucial role in bringing more households back into the market. “Interest rate cuts in 2025 have helped bring more households back to the market. Many households remain in employment, which provides them with certainty of income,” Mr Reardon explained. This financial stability, coupled with rising established home prices, has encouraged more buyers to consider new housing as a viable option for home ownership.
The renovations market has also experienced growth, with council-approved renovation work increasing by 5.3 per cent in 2025, reaching a total value of $14.3 billion. This trend suggests that some households are opting to renovate their existing homes rather than move. “This suggests that some households are turning to renovating their existing homes as opposed to moving out,” Mr Reardon stated.
Despite the positive developments, Mr Reardon cautioned that the current level of approvals still falls short of the targets set by the National Housing Accord. “The pickup in approvals data in 2025 is positive but remains below the 240,000 new homes required each year to reach the National Housing Accord’s 1.2 million homes target,” he warned. Achieving housing sufficiency will require addressing the additional costs imposed on land development and new home building.
Regionally, South Australia led the way with the largest increase in dwelling approvals, up by 22.3 per cent in seasonally adjusted terms. New South Wales followed closely with a 21.0 per cent increase, while Western Australia, Queensland, and Victoria saw rises of 13.4 per cent, 10.5 per cent, and 2.1 per cent, respectively. Tasmania, however, recorded a decline of 2.5 per cent in 2025. In trend terms, the Australian Capital Territory and the Northern Territory experienced significant boosts, with increases of 86.1 per cent and 51.6 per cent, respectively.
As the housing sector navigates these fluctuations, the focus remains on meeting the nation’s housing demands and ensuring the necessary infrastructure and investment are in place to support future growth.