HOME approvals rose 4.4% in September, and housing commencements are tipped to gain with a sharper uplift in FY26, but analysts continue to voice concerns about the construction industry’s capacity to handle the huge demand for housing.
While the increase in starts would be welcome for those looking for a home, FY25’s expected annual figure of near 160,000 starts falls well short of the ambitious goals set out by the National Housing Accord.
Data from the Australian Bureau of Statistics yesterday showed total dwelling approvals in seasonally adjusted terms rose to 14,842 in September. National detached home approvals rose 2.2% to 9,745, with growth led by Queensland (up 6.4%), South Australia (by 10.3%) and Western Australia (by 5.9%). NSW (down 1.1%) and Victoria (by 3.1%) moved in the other direction.
After a moderate fall in August, apartment, unit and townhouse approvals rebounded 4.7% to 4,653. Apartment starts are running well below their average rate of the past decade and for the most part are treading water in 2024.
“While the positive momentum in house approvals is encouraging, supply issues are once again arising in some regions. This is reverberating through to costs and impacting progress on-site,” said Maree Kilroy, senior economist for Oxford Economics Australia.
Off the back of momentum in approvals, Oxford Economics Australia is forecasting house commencements to gain in FY2025, lifting national total dwelling starts to near 160,000. The National Housing Accord, which officially kicked off in July, aims to deliver 1.2 million “well-located” homes – or 240,000 per year – over five years.
A recent Oxford Economics Australia report forecasts total dwelling completions to total 940,000 over the five years to the middle of 2029 – some 22% below the National Housing Accord target.
“With the upturn spreading across all build forms and states, a sharper uplift is forecast for FY2026,” Kilroy said.
“We expect mortgage rate cuts will aid the release of pent-up housing demand, while traction on the housing policy front will become increasingly obvious.
The slowdown in both house price growth and inflation could lead to a potential interest rate cut in March, according to Domain. While this week’s inflation data showed trimmed mean inflation fell to 3.5%, the number remained relatively sticky enough for most economists to maintain the view that a much-anticipated interest rate cut wouldn’t land in 2024.
“Significant question marks” on capacity
“Significant question marks remain around industry capacity. Australia’s supply of tradies will influence the magnitude and speed of the recovery,” Kilroy said.
BuildSkills Australia estimates the country faces the impossible task of finding 90,000 extra tradies to meet the government’s housing program targets, and data from the National Centre for Vocational Education and Research showed building and construction apprenticeship numbers have continued to fall in 2024.
May’s federal budget included a $91 million investment to increase the building and construction workforce numbers.
In Brisbane in particular, there is going to be the major risk leading up to the 2032 Olympics and Paralympic of competition for both labour and materials between apartment and housing and infrastructure construction.
