Fresh figures have shown higher-density projects significantly rebounding, yet advocates have warned that the numbers are masking lingering shortfalls and cost pressures.
Australia’s home building pipeline staged a major rebound in February as a surge in apartment and town house approvals lifted overall activity, yet peak bodies have said that supply remains well short of government targets.
Australian Bureau of Statistics (ABS) data showed that total dwelling approvals rose 29.7 per cent in February to 19,022, reversing a 7.2 per cent fall in January and marking a double‑digit annual increase of 14 per cent.
The upswing was driven overwhelmingly by higher‑density projects, while detached housing approvals were essentially flat.
The rebound in multi‑unit activity was substantial, with private sector dwellings excluding houses jumping 101.2 per cent in the month to 8,922 – a 24.6 per cent rise on a year earlier.
In contrast, private sector house approvals edged just 0.2 per cent higher to 9,847 in February, up 6.1 per cent over the year.
ABS head of construction statistics, Daniel Rossi, said the pick‑up was broad‑based.
He noted that “New South Wales recorded the largest rise in private sector house approvals, up 13.7 per cent to the highest level since December 2023,” while “in contrast, Queensland had the largest fall in February, down 13.4 per cent”.
Across the states, total dwelling approvals rose in Victoria (up 85.1 per cent), Queensland (14.7 per cent), South Australia (12.3 per cent), NSW (10.1 per cent), and Western Australia (3.1 per cent), while Tasmania recorded a 27.7 per cent fall.
Approvals for private sector houses were more uneven, with gains in NSW (13.7 per cent), Victoria (7.7 per cent), and South Australia (5.8 per cent) offset by declines in Queensland (13.4 per cent) and Western Australia (7.1 per cent).
Rossi said 195,434 dwellings were approved in original terms over the 12 months to February, representing a 9 per cent increase on the previous year.
Yet that figure is still well below the 240,000‑a‑year National Housing Accord benchmark, highlighting the scale of the supply challenge despite the recent pick‑up.
Builders hail rebound, yet warn of structural strain
Master Builders Australia welcomed the figures but stressed that the approval numbers were still well short of what was needed to meet government targets.
Chief economist Shane Garrett said higher‑density approvals had delivered their best result in almost a decade.
“However, detached house building approvals dipped (-0.2 per cent) and the value of non‑residential building approvals also fell (-4.4 per cent) during the month,” he said.
“Despite February’s strong gains, over the last year 196,491 new homes received approval, which is 58,509 homes below the yearly National Housing Accord target underscoring the need for major policy reform.”
Master Builders CEO Denita Wawn said many builders, particularly smaller operators, continued to be weighed down by compliance demands.
“According to the Productivity Commission (PC), the estimated regulatory cost burden on housing is as high as $47.5 billion per year, that’s up to $320,000 per new house,” she said.
She warned that “Australia cannot afford further setbacks in its civil, residential or non‑residential pipeline and needs decisive action to curb the sheer volume of regulatory overload”.
Wawn also cautioned that the apparent strength in approvals could prove fleeting as builders confront cost surges tied to the ongoing military conflict in the Middle East.
Banks flag volatility and rate sensitivity
Australia and New Zealand Banking Group (ANZ) and the Commonwealth Bank of Australia (CBA) noted that the approvals upswing was occurring against a backdrop of higher interest rates, cost uncertainty, and global instability.
ANZ also said that the steep rise in February needed to be read in the context of large swings in the multi‑unit segment over recent months.
“The series tends to be volatile on a month‑to‑month basis, and the sharp rise in private unit/town house approvals does follow a 47.3 per cent fall over the previous two months,” the bank said.
“We expect the more uncertain global environment, higher interest rates, softer housing price growth, and concerns around materials costs to flow through to building approvals signalling that approvals may struggle to maintain February’s pace.”
CBA struck a similar tone, emphasising that a handful of large projects contributed heavily to the monthly jump, particularly data centres.
The bank also stressed that trend measures told a more stable story of gradual recovery.
“Building approvals data is notoriously volatile. Trend data can help smooth volatility. Trend monthly approval figures indicate a continued lift in momentum since early 2024 and an acceleration in growth more recently,” CBA said.
At the same time, the bank underscored the sector’s sensitivity to monetary policy and external shocks, noting that “residential approvals and building activity are the most responsive sector of the economy to interest rates”.
The bank calculated that “in the year to February, a total of 196,491 dwellings were approved in Australia” and outlined that this was “below the housing accord target of 240,000”.
[Related: Unit approvals slump, while houses defy downturn]
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