Australian building approvals have reached three and a half year highs thanks to a spike in consents for apartment complexes across eastern states.

Released by the Australian Bureau of Statistics, the latest data indicates that the seasonally adjusted number of dwellings that were approved for construction across Australia jumped by 15.2 percent in November to reach 18,406.

This represents the highest level of approvals since February 2022.

 

The result was driven by a 34.1 percent surge in approvals for multi-unit residential dwellings (units, townhouses, apartments etc.), which occurred on account of a spike in apartment approvals across Queensland, Victoria and New South Wales.

It is important to note that monthly data in respect of multi-residential building is statistically volatile and can be distorted by the approval of one or more large-scale apartment complexes.

That said, the latest surge comes on the back of a sustained upward trend in multi-unit approvals which has taken hold since the middle of 2024 (see chart).

Meanwhile, approvals in the more statistically stable detached house sector edged up by 1.3 percent.

This represents a continuation of the recovery in detached housing approvals which began in the second half of 2023 (see chart).

Housing Industry Association (HIA) Senior Economist Tom Devitt welcomed the result.

Devitt said that higher approvals and recovering demand will see home building conditions continue to strengthen in 2026.

He says that the foundations for the recovery have been laid after nearly a decade of underbuilding.

In 2026 and beyond, Devitt says that higher activity levels will be supported by strong population growth, rising established home prices and a growing approval pipeline.

But he warned the magnitude of the recovery will depend upon the direction of interest rates.

“Australia’s home building industry is expected to strengthen through 2026, supported by gradually improving building approvals and a recovery in demand, but the pace of growth will ultimately depend on how quickly interest rates can fall further,” Devitt said.

“Building approvals are the clearest leading indicator of future home building, and they have been gradually rising over the past year as the cash rate fell …

“… We expect approvals to continue trending upward, which should translate into higher levels of home building activity through 2026, particularly once the impact of earlier rate cuts flows through to construction starts.”

In terms of specific sectors, Devitt says that detached home building activity is set to strengthen across most states.

This will be led to Queensland, South Australia and Western Australia – although New South Wales and Victoria are now beginning to recover after lagging earlier in the cycle.

Meanwhile, HIA expects the multi-residential sector to turn a corner in 2026.

This will occur as higher prices for established units improve project feasibility and a large pipeline of approved but not commenced projects begins to move forward.

 

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