Australia’s new home building approvals rose 13.9% in the 2024/25 financial year compared to the previous year’s low point, according to data released by the Australian Bureau of Statistics (ABS). While industry observers welcome the surge, experts warn it falls well short of what is needed to meet the Federal Government’s ambitious housing targets.

Housing Industry Association (HIA) economist Tom Devitt says strong population growth, tight labour markets and a rebound in household incomes drove the rise.

“We’ve seen confidence returning across several markets over the past 18 months. Particularly in Western Australia, Queensland and South Australia,” he says.

Detached house approvals increased 6.1% year-on-year, while multi-unit approvals surged by 27.9%. Interest rate cuts in February and May also helped re-engage potential buyers, especially in higher-cost states that were still lagging in recovery.

Tom warns, however, that approvals remain far below the level needed to hit the government’s goal of building 1.2 million new homes over five years. Just 187,330 new homes were approved in 2024/25, well short of the 240,000 annual average required.

“Multi-unit developments need to double their output to hit these targets. But current policy settings, ranging from land and labour shortages to punitive taxes on institutional investors, are pushing momentum away from apartments and back toward detached homes,” he says.

Tom adds that unless there is a significant easing of regulatory and financial barriers, or a sharp rise in home prices to offset policy costs, the necessary boost in multi-unit activity is unlikely.

Across the states, new dwelling approvals rose most in Western Australia (32.3%) and South Australia (28.7%), followed by New South Wales (16%), Queensland (13.1%) and Victoria (9.1%). Tasmania saw a decline of 9.9%, while in original terms, the Northern Territory rose 22.5% and the ACT dropped by 39.9%.