A surge in new housing approvals in January has raised concerns that Australia is ill-prepared for the construction boom necessary to address the housing crisis. According to the latest data from the Australian Bureau of Statistics, 16,579 homes were approved for construction in the first month of 2025, marking a 6.3% increase from December. This brings the total number of approvals in the past 12 months to 174,942, nearly 10,000 more than the previous year.
Notably, the increase in approvals was driven by a significant rise in units, particularly apartments, in New South Wales (NSW). The state saw a 39.6% increase in total approvals, with 6,047 units given the green light in just 31 days. However, there was a modest decline in the number of new houses being approved. In contrast, Queensland experienced a substantial 25.7% reduction in approvals, primarily due to a sharp decline in the number of approved units.
Despite the interest rate cut in February, experts predict that it will not have a significant impact on the number of new homes being planned until 2026. Housing Industry Association senior economist Tom Devitt warns that Australia is not yet ready for another major apartment boom, as there is fierce competition for trades between housing and major infrastructure projects. However, Devitt acknowledges that an apartment boom is necessary to meet the target of 1.2 million new homes by 2029, set in the National Housing Accord.
Devitt also highlights the difference between the current situation and the last apartment boom, noting that the total value of Australia’s public infrastructure pipeline has increased from less than $50 billion to $150 billion. He emphasizes the need for the government to focus on local workforce development and skilled migration to handle both housing and infrastructure projects simultaneously.
While NSW is expected to be the last state to experience an upswing in its new housing economy, Devitt believes that the recent increase in multi-unit approvals could indicate a longer-term trend. However, Oxford Economics economist Michael Dyer cautions that it will likely be 2026 before there is a substantial impact on new home approvals as a result of the interest rate cuts.
Overall, while the surge in new housing approvals is a positive sign, there are still challenges to overcome in order to address the housing crisis effectively. The government must carefully manage the competition for trades and ensure that housing and infrastructure projects can progress simultaneously.
