Good news for housing supply as apartments get the green light

The latest building data shows that approvals for apartments have hit a high not seen in years.

According to the Australian Bureau of Statistics, the total number of dwellings approved during the month of September across Australia reached 17,019, inching nearer to the monthly benchmark that the nation needs to achieve for its housing goals.

While not quite hitting 20,000 – the minimum number the nation should be approving each month to reach the goal of creating 1.2 million new homes in five years – September’s figures were still taken as good news for housing advocates, who welcomed positive momentum across several categories.

Overall, the total number of dwellings approved rose 12% in September in seasonally adjusted terms. This followed declines in July (of 8.2%) and August (down 6%).

The upswing was driven by multi-dwelling constructions such as apartment blocks, townhomes, and semi-detached houses. This category saw a 26% rise in September with 7,219 dwellings approved during the month, which is 55.2% higher than one year ago.

Apartments were the strongest contributor to this category and indeed powered much of the overall momentum during the month, with approvals for apartments coming in 81.7% higher in September than August in original terms. This is the highest number of apartments approved since December 2022.

House growth more cautious

Detached house approvals also supported the monthly rise, increasing by 4% in seasonally adjusted terms to 9,547 dwellings, after a 1% decline in August.

This puts detached house approvals at roughly the same level seen at this point in 2024.

Queensland was the only state to experience a decline in detached house approvals, with private sector house approvals down 6.9%. The largest rise was in New South Wales, up 7.8%, with Victoria also seeing a healthy level of improvement at 7.3%.

Cash rate cuts fuel buyer interest

The Housing Industry Association (HIA) put much of the momentum down to positivity generated by declining interest rates on mortgages.

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

He noted that an increase of approvals in Sydney and Melbourne was particularly welcome, as Australia’s two largest cities had been particularly show to respond to cash rate adjustments.

“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,” Mr Devitt said.

But HIA also noted that lower interest rates alone could not inject the growth needed to meet Australia’s housing targets, and urged lawmakers to continue focusing on supply side issues like helping maintain a healthy pipeline of shovel-ready land.

The Property Council’s executive of policy and advocacy, Matthew Kandelaars, similarly noted that “one strong month alone is not enough to meet our welcome and ambitious housing targets”.

He urged lawmakers to continue to prioritise the speed of the approvals process, noting that long delays were particularly injecting volatility into approvals for apartment buildings.

“The years it takes for some housing projects, particularly large-scale apartments, to get through approval processes is putting a handbrake on supply,” he said.

Are you interested in learning more about home building across Australia? Check out our dedicated New Homes section.

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