Australia’s recovery in new residential construction continues to gather momentum as new data shows that housing starts have reached four-year highs.

On a seasonally adjusted basis, data from the Australian Bureau of Statistics indicates that the number of dwellings that were commenced throughout the nation surged by 8.0 percent in the December quarter to come in at 53,567.

This represents the highest number of commencements since the September quarter of 2021.

On an annual basis (not seasonally adjusted), commencements rose by 14.9 percent during calendar 2025 to reach 194,604 – the highest annual number of starts since the Commonwealth Homebuilder period in 2021.

At an immediate level, the latest quarterly surge was driven by a 45 percent jump in multi-residential commencements (units/townhouses/apartments etc.) in New South Wales.

This drove a 23.4 percent quarterly surge in overall multi-residential commencement numbers across the nation to reach their highest level since the September quarter in 2018.

In detached housing, commencements eased back by 0.9 percent but remain at elevated levels (see chart).

By state, quarterly commencement numbers surged by 28 percent in New South Wales on account of the aforementioned jump in multi-unit commencements in that state.

Across Western Australia, Queensland and South Australia, quarterly commencement numbers continued to grow by 7.1 percent, 4.5 percent and 3.5 percent respectively whilst commencements contracted by 0.5 percent in Victoria.

Over the longer term, commencement numbers have been growing steadily across Queensland, Western Australia and South Australia (see chart).

Starts are also trending higher in New South Wales, although the latest quarterly surge in that state is likely to represent somewhat of a statistical anomaly caused by the start of work on a small number of large-scale apartment projects.

In Victoria, however, conditions remain relatively subdued and are expected to remain that way across 2026.

The latest data comes as Australia has experienced a recovery in new home building activity over recent years following a decline which occurred across 2022/23 in response to the Ukraine war and the subsequent rise in interest rates.

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

Since the start of last year, however, momentum has picked up in the multi-unit sector (see chart).

Going forward, in its recent forecasts issued last month, the Housing Industry Association said that it expects the number of starts to continue to rise over coming years.

This will be supported by ongoing population growth and labour market strength.

HIA does not expect the Iran war to have a major impact on home building volumes unless the conflict escalates or drags on for longer than expected.

 

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