Australia’s recovery in new home construction is gathering further momentum as another strong month of approval data is recorded.

Released by the Australian Bureau of Statistics, the latest data shows that the seasonally adjusted number of dwellings that were approved for construction in February came in at 7,113.

Whilst this is slightly lower (0.3 percent) compared with the January result, it represents the second highest reading since December 2022.

According to the data, approvals edged up by 1.0 percent in detached housing but contracted by 1.5 percent in multi-unit construction.

Despite this, multi-residential approvals are at their second highest level since December 2022.

The latest result provides further confirmation that the recovery in new home construction continues to gather momentum.

The recovery began in earnest in the middle of last year and has been focused predominately on the multi-unit sector (see chart).

In detached housing, approvals have edged back up over the first two months of the year after dropping back in the last few months of 2024.

CreditorWatch Chief Economist Ivan Colhoun welcomed the result.

But he added that the focus on multi-unit dwellings means that the recovery in approvals is not delivering as greater benefit to smaller builders.

Colhoun says that the more subdued conditions in detached home construction most likely reflect a combination of a short-term oversupply of project homes for sale, high interest rates and high construction costs.

“The gradual uptrend in approvals continues, with only a slight pull back in approvals in February after January’s strong increase,” Colhoun said.

“The improvement is concentrated in multi-dwelling (large) apartment approvals, which is not as favourable for smaller builders.

“Still, it’s a positive development for the construction sector and for the broader economy, and should be supported by an expected further interest rate reduction in mid-May.”

 

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