Australia sees modest rise in dwelling approvals despite ongoing challenges

Westpac and Master Builders offer insights

Australia sees modest rise in dwelling approvals despite ongoing challenges

News

By Mina Martin

In December, the Australian housing market saw a slight rebound in the number of dwelling approvals, rising by 0.7% to 15,174, after a significant drop of 3.4% in November.

This data, released by the Australian Bureau of Statistics (ABS), indicated a modest recovery in the housing construction sector.

“The overall rise in December was driven by 15.2% growth in private dwellings excluding houses. Approvals for private sector houses fell for the third straight month, down 3%,” said Daniel Rossi, ABS head of construction statistics.

Mixed results in housing sector

Despite the overall growth in approvals, the private sector house segment showed continued weakness, with a 3% decline across Australia, bringing the total to 8,715 dwellings.

New South Wales was the exception, experiencing a growth of 2.9% in private house approvals.

On the flip side, private dwellings excluding houses showed significant strength, particularly driven by large apartment projects in New South Wales and Queensland.

Building values mixed

In December, the value of total building approved grew 3.5% to $14.94 billion, after a 6.6% rise in November.

Total residential building value fell 0.9% to $8.32bn. This was made up of a 0.5% drop in the value of new residential building approved ($7.22bn), and a 3.7% fall in alterations and additions ($1.11bn).

The value of approved non-residential building rose 9.7% to $6.61bn, after a 17.8% rise in November, ABS data showed.

Industry insights on housing market trends

Shane Garrett (pictured above left), chief economist at Master Builders Australia, expressed concern about the trajectory of higher density housing approvals, which saw a decline of 1.3% in 2024, marking the worst performance since 2011.

“The insufficient flow of new home building on the higher density side of the market is one of the main sources of rental price inflation,” Garrett said.

He also pointed out the broader economic impacts.

“Rents rose by 6.2% over the year to December 2024 – one of the biggest sources of inflationary pressure,” Garrett said.

Denita Wawn (pictured above centre), CEO of Master Builders Australia, emphasised the critical need for more housing.

“Australia desperately needs to boost housing supply, and this will only be achieved when the cost of new home building starts to moderate, and project costs stack up,” Wawn said.

Wawn highlighted the importance of the upcoming federal election, urging all parties to prioritise home-building policies.

Economic analysis from Westpac

Ryan Wells (pictured above right), an economist at Westpac, noted the precarious nature of the current uptrend, largely driven by volatile unit approvals.

“Private units bounced back 15.2% in December, more than retracing November’s decline (–10.4%) which followed a solid October (+25.9%), marking a volatile finish to the year,” Wells said.

He also expressed concerns about the sustainability of this growth, especially given the consecutive declines in detached house approvals.

Read more about the latest dwelling approvals figures from the ABS media release or  Building Approvals, Australia. Also read the Westpac report, "Australian dwelling approvals December".

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