A January uptick in new housing approvals has prompted a warning Australia’s big build projects mean we are not ready for the building boom needed to fix our housing crisis.
Latest Australian Bureau of Statistics figures show the nation green-lit 16,579 homes for construction in the first month of 2025, a 6.3 per cent increase from December.
It brings the 12 month total to 174,942 — almost 10,000 above the same time a year ago.
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The data precedes February’s interest rate cut, but market experts have warned the cheaper finance for Aussie homebuyers is unlikely to significantly impact the number of new homes being planned until 2026.
However, the January surge was driven by a massive increase in units, particularly apartments, being given the nod in NSW, with the state’s 6047 total approvals having risen 39.6 per cent in the span of 31 days, despite a modest decline in the number of new houses on the way.
Meanwhile Queensland recorded a massive 25.7 per cent reduction as the number of units being approved there fell dramatically compared to the end of 2025.
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New housing construction has risen around Australia, but there’s one major catch.
Victoria also lost ground, falling 1.5 per cent in the past month.
Housing Industry Association senior economist Tom Devitt said it was likely the increase in multi-unit approvals in NSW was simply relating to a handful of high-density projects getting off the ground, rather than it being a trend.
Mr Devitt also warned that Australia was not yet ready for another major apartment boom, with too much competition for trades between housing and major infrastructure projects.
Despite this, the economist said an apartment boom was needed to reach the 1.2 million new homes by 2029 target, equating to about 240,000 a year, set in the National Housing Accord.
“The big difference between now and the last apartment boom is that the total across Australia’s public infrastructure pipeline was less than $50bn, now it’s $150bn,” Mr Devitt said.
“In the last boom, residential was the only game in town. So the government really needs to do something in local workforce development and skilled migration so they can do housing and infrastructure at the same time.”
New housing construction figures have been improving in most capitals, except Melbourne and Sydney.
The biggest yearly figure for housing approvals in Australia’s history was recorded in August 2016, when more than 243,000 homes were given the nod in the prior 12 months — heavily influenced by apartments in Sydney in Melbourne.
He added that while there had been positive signs of stand-alone housing approvals improving, the fact that Victoria’s numbers continued to slip was “a bit disappointing” — particularly as it was expected to be the “next state out of the gate” for a housing upswing.
“Until late last year new development housing looked like it was picking up … but it was smaller or medium-sized builders who were servicing wealthier households with knockdown rebuilds,” he said.
South Australia and Western Australia both posted major increases in approvals at 17 per cent and 5.6 per cent up from December to January respectively, continuing their rise.
And while Queensland recorded a 25.7 per cent decline to 2558 approvals from December to January, the number of houses being green lit rose 4.6 per cent to 1946.
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Tradies are expected to be an increasingly competed for resource in the years ahead.
NSW is still expected to be the last state to have its new housing economy trend back upwards over a longer term view.
“Sydney is really facing the biggest constraints with the cost of land and construction, which are in a universe of their own … it will be the last one to start picking up,” Mr Devitt said.
While an interest-rate cut was welcome news, he said it was unlikely to influence approvals numbers before the federal election in either April or May.
Oxford Economics economist Michael Dyer said it would be 2026 before there was any substantial impact on new home approvals as a result of the interest rate cuts.
“Ultimately, the cash rate won’t change our outlook — it will be tough to hit that Housing Accord target and a lot of activity will need to happen at the back end of the five-year period, Mr Dyer said.
The economist added that while he agreed the latest figures were very much a reflection of Sydney’s apartment market, he was “becoming more positive” that those numbers could reflect a longer-term trend on the way.
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