Which New Homes Are Getting the Green Light?

The latest housing data shows that approvals are gaining steam more swiftly in some sectors than in others.

According to data from the Australian Bureau of Statistics, across the country in 2024, Australian governments at various levels gave the go-ahead for a total of 171,394 new homes to be built, which represents a 4.7% increase from 2023.

Of those green-lit applications, 108,167 were approvals for standalone houses constructed by the private sector, an increase of 7.3% in 2023.

A new apartment complex mid-development in Sydney’s inner-city. Image: Getty

All eyes on apartment approvals

Despite more houses getting the rubber stamp over the course of the year, approvals for multi-dwelling builds such as apartments and townhomes fell 1.3% to 59,312, indicating the challenging conditions faced by those looking to pursue higher density building.

Noting that 2024 was the worst year for higher-density approvals since 2011, Shane Garrett, chief economist of Master Builders Australia, attributed the widespread, persistently high rental price growth to the lack of supply on that side of the market.

“The insufficient flow of new home building on the higher density side of the market is one of the main sources of rental price inflation,” Mr Garrett said.

He pointed to recent data indicating rents rose by 6.2% over the year to December 2024, which he noted was “one of the biggest sources of inflationary pressure”.

Moreover, the Property Council’s executive of policy and advocacy, Matthew Kandelaars, noted that higher-density building is expected to play a key role in meeting the nation’s target of building 1.2 million new homes in five years.

With the clock already ticking on that ambitious goal, he said that a turnaround in apartment approvals would need to be seen soon.

“Apartments take nearly three years to go from approval to construction and have volatile approval patterns. Despite their key role in easing the housing crisis, we have seen approval rates for apartments fall in 2024,” Mr Kandelaars said.

“We must consider the factors impacting project feasibility that stop approvals from progressing to commencement, and then completion.”

He urged policymakers to pull all levers to incentivise multi-dwelling construction, including tackling “rising construction costs, labour shortages, planning delays, slow approvals and shifting state property taxes that punish foreign investment”.

Approvals headed in the right direction, albeit slowly

The December figures painted a somewhat more positive picture of apartment approvals, even while industry leaders stressed that more work needs to be done.

In fact, over the month, detached house approvals fell by 2.8% in the month to 8,860, while multi-units increased by 6% to 6,310 nationally.

NSW saw the greatest uplift in dwelling approvals, with a 4.6% increase over the month, with much of that driven by apartments.

Of the 4,298 dwellings that were approved across the state throughout December, just 1,790 of those were standalone houses.

Bringing new apartments to the market will be key for improving rental supply in particular, according to experts. Image: Getty

Katie Stevenson, the Property Council’s executive director of NSW, noted that the latest ABS data represented a “welcome uplift after months of flat or declining approval figures”.

Ms Stevenson said that “while monthly numbers can be volatile” the latest data is “the strongest sign we’ve seen in more than a year that efforts to boost housing supply may be starting to gain traction”.

However, CEO of the Urban Taskforce, Tom Forrest, noted that with NSW’s approvals coming in at 43,000 per year, the state was moving forward with about half of the number of new builds needed to deliver on its part of the Housing Accord target.

Even so, he added that a measure of relief might come as interest rate settings shift and policy changes start to make their impact felt.

“With prospects of interest rate reductions growing for coming months, there is some cause that the planning and macroeconomic settings are beginning to turn in the right direction,” Mr Forrest said.