Australia’s apartment building sector is poised to commence a strong upswing in activity from next year onward, new forecasts suggest.

And the recovery in detached home construction is set to accelerate further.

The Housing Industry Association has released the December quarter edition of its National Outlook report.

The report provides an overview of the outlook for new housing construction and home renovations both nationally and across the eight states and territories.

According to the report, the overall level of activity is set to continue to increase in 2026 from a subdued base.

This will occur as the recovery in detached house construction gathers further momentum whilst the foundations tosupport the next upcycle in new multi-residential development (units, townhouses, apartments etc.) are now in place.

In terms of detached housing, HIA expects that the number of commencements for calendar 2025 to come in at 115,070.

This represents a 7.2 percent increase from the subdued commencement numbers which occurred in 2024.

Going forward, HIA expects commencement numbers to continue to grow in this sector for the next two years before peaking at 125,840 in 2027.

Beyond that, detached house commencement numbers are expected to moderate back to 116,370 to 2029.

This will occur as land constraints become more binding and new multi-units become relatively more affordable.

However, the more significant part of the story lies in multi-residential construction.

Here, HIA says that commencement numbers in calendar 2025 will come in at 72,020. This is 17.2 percent higher compared with the thirteen-year low recorded in 2024 but remains at historically subdued levels.

Going forward, HIA expects a further modest recovery in 2026, where starts are expected to increase by 6 percent to reach 76,570.

This will be the start of a much stronger recovery that will see annual commencement numbers reach almost 100,000 by 2030.

HIA Chief Economist Tim Reardon said that signs of life in the multi-residential sector are increasingly evident.

“After years of sluggish apartment construction, the foundations are being laid for a recovery in multi-unit commencements from 2026 onward,” Reardon said.

“Population growth remains elevated, migration is returning to metro areas and established apartment prices are rising faster than detached homes.

“These are the early signals of an emerging apartment cycle, as new developments once again start to stack up financially.”

Reardon says that the apartment building recovery will take place alongside continued growth in detached house construction.

It will also occur amid a strong pipeline of renovation work.

He says that the recovery is being driven by population growth and housing demand.

“This will not be a speculative boom,” Reardon said.

“It’s a necessary response to growing population pressures and rising demand for housing in our major cities.”

The latest forecasts comes as Australia is experiencing a recovery in new home construction.

The recovery followed a slump that was driven by the thirteen interest rate increases which occurred from May 2022 until November 2023.

Since bottoming out in March 2024, building approvals have been on an upward trajectory despite remaining at historically modest levels.

Initially, the recovery was focused on detached housing, and was concentrated in Western Australia, Queensland and South Australia.

The downturn in multi-residential construction has been comparatively deeper and longer as higher borrowing costs and higher construction costs since COVID have challenged feasibility for projects in this sector.

 

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