National building approvals are at a 15-month high for September, signalling a turnaround in the new homes sector, Australian Bureau of Statistics data reveals.
Welcoming figures show new dwelling approvals rose nationally by 4.4% in September, with total approvals now 6.8% higher than a year ago, according to ABS data.
"For new home building approvals, September was the best month we’ve seen since May last year," said Master Builders Australia’s chief economist, Shane Garrett.
It's an encouraging trend for the industry, which has been battling issues spanning project viability, planning and approvals red tape, labour shortages and high interest rates.
"It has been a year since the RBA last raised interest rates," said Housing Industry Association (HIA) economist, Maurice Tapang.
"Unchanged cash rate settings, supported by strong population growth, low unemployment levels and acute housing shortages, have helped lift consumer sentiment.
"The result seen in house approvals data continues to confirm that the market is past its trough, and more buyers are building a new home."
Both houses and units trending up
September saw a 2.2% increase in detached house building approvals while year-on-year, that figure rose by a notable 16.3% – the highest in two years.
"Detached house building approvals enjoyed their strongest month since August 2022," said Mr Garrett.
"Multi-unit approvals rose by 8.5% in the month of September to 4950," said Mr Tapang.
"Approvals for multi-units have been bumpy and trending at decade-low levels amid challenges with capacity, labour availability and materials costs.
“There were 14,890 multi-unit approvals in the September quarter 2024, which is 10.7% higher than in the previous quarter and 1.2% higher than at the same time in the previous year."
Multi-unit approvals rose by 8.5% in the month of September. Picture: Midtown Mac Park/ realestate.com.au
WA leads the way
Detached house approvals in the September quarter 2024 rose by 49.9% in Western Australia compared to the same time in the previous year. This was followed by South Australia (+21.1%), Queensland (+17.8%), and Victoria (+9.3%).
The other jurisdictions recorded a decline over the same period, led by the Australian Capital Territory (-20.9%), followed by Tasmania (-19.1%), New South Wales (-5.1%) and the Northern Territory (-1.9%).
Multi-unit approvals in the September quarter 2024 rose by 179.1% in WA compared to the previous year. This was followed by Queensland (+39.6%) and SA(+0.3%).
The NT recorded no change over the same period, while declines were recorded in the ACT (-75.2%), Tasmania (-10.9%), NSW (-8.4%) and Victoria (-4.2%).
Change is on the horizon
The new homes sector has been a point of focus of late, with developers calling for reform as they attempt to meet ambitious Housing Accord targets.
State governments are shifting into gear with policy shake ups in a bid to move the dial on housing supply.
Victorian premier Jacinta Allan, for example, has recently announced a range of changes, such as scrapping stamp duty on off-the-plan homes for a year; allowing easier subdivision; establishing a tough new building watchdog; and unlocking greenfield sites for building houses over the next 10 years.
The same week, New South Wales introduced amendments that now allow dual occupancies, duplexes and semi-detached homes to be built in 97% of local councils, and Queensland announced a $2 billion housing infrastructure fund.
Both New South Wales and Victoria have introduced reforms to make it easier for property owners to subdivide their own lots, increasing housing supply in critical middle and inner-ring established suburbs. Picture: realestate.com.au
Industry commentators tend to agree it's a positive step, but further reform is needed.
"Home building approvals seem to be finding some momentum – but the challenge of ending the housing crisis is still formidable," Mr Garrett said.
“More action is still needed to bring down the high costs and timelines associated with building to encourage even more people into the new home building market.
"Addressing labour shortages, speeding up planning approvals, [and] ending housing legislative stalemates in the Senate are some examples of how to improve the investment environment in new home building," he concluded.
REA Group senior economist, Eleanor Creagh, shared the sentiment, with the 14,842 new dwellings approved last month continuing to fall short of the target necessary to address the housing crisis.
"Though the increase in dwellings approved is a step in the right direction, despite the uplift, the annualised number of dwellings approved through the month is still tracking 25% below the Housing Accord’s goal of 1.2 million new homes," she said.
"Higher labour, materials and financing costs compress margins, resulting in a potentially lower return on investment, which has delayed many projects. These challenges are contributing to the persistent housing supply deficit flowing through to both prices for existing homes and the rental market, fueling continued upward pressure on home prices and rents.
"As such, it's evident barriers hindering homebuilding need to be addressed not just at the approval and planning phase, but right through to completion," Ms Creagh added.
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