‘Meaningful progress’: Home building data signals recovery on the rise

With home building commencements hitting their highest level since June 2022, industry bodies are urging further attention on boosting productivity.

Nearly 50,000 new homes started construction in the three months to March 2025, marking the strongest quarter since June 2022.

The new data released by the Australian Bureau of Statistics on Wednesday showed a total of 47,645 homes began construction during the first three months of the year, up 11.7% compared to the previous quarter and 17.3% higher than the previous year.

Among those, new private sector house commencements rose 6.3% to 27,923 dwellings over the quarter and other residential commencements – which includes units, townhouses and semi-detached homes – rose 21.8% to 18,161.

The numbers follow encouraging building approvals, which increased 3.2% to 15,212 in May 2025.

But despite the uplift in homes getting off the ground, the total number completing construction fell 4.4% to 43,517.

RSM Australia economist Devika Shivadekar said this reflected the industry’s ongoing challenge of rising costs.

“While the sector is successfully initiating new projects and maintaining strong commencement activity, it’s clear the industry is still battling completion timelines,” Ms Shivadekar said.

“This is likely influenced by ongoing supply chain and labour market dynamics affecting the industry’s ability to finish projects at pace.”

To meet the government’s National Housing Accord target of building 1.2 million new homes by 2029, Australia needs 60,000 new homes per quarter.

Master Builders Australia CEO Denita Wawn said the country is approximately 25% short of that pace.  

“While there is room for optimism that the worst is now behind us, the government and industry need to play catch-up if we’re going to meet the 1.2 million new homes target under the National Housing Accord,” Ms Wawn said.

RSM Australia national real estate and construction lead Adam Crowley said while the numbers were below the required average, the uptick could build confidence among the building sector.

“While still below the target average of 60,000 homes per quarter, the 47,645 commencements for the March quarter represents meaningful progress and will hopefully contribute to replenishing Australia’s dwelling supply pipeline – key in addressing the ongoing housing shortage,” Mr Crowley said.

“As capital continues to come down and developers gain more confidence that their finished product will maintain value, we expect to see this optimistic sentiment grow among the industry.”

The Property Council of Australia said the data was a reminder for governments to focus on productivity in the sector.

“Progress against our housing targets was never going to be linear, but we’ve reached the point where we need to hit housing delivery in top-gear just to keep pace, let alone get ahead,” Property Council Group executive of policy and advocacy Matthew Kandelaars said.

Mr Kandelaars noted that it takes more than a year to build a home and more than three years to build an apartment project.

“We’re building homes half as fast as we were 30 years ago. That’s not just a housing issue but a productivity problem,” he said.

“We can’t lift productivity if we’re not building the homes our workforce needs. Housing isn’t just a social priority – it’s economic infrastructure. The private sector is ready to build but we need all governments to clear the path and support a system that actually delivers homes.”

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