The housing construction industry shows signs of recovery driven by “home-building subsidies” and high interest rates. Harry Ottley from the Australian Bureau of Statistics stated, “The industry’s recovery is strong, with building permits in September rising 4.4% to 14,842—the highest since May 2023.” Detached housing growth was a key factor, with a 2.2% increase in September and an annual growth rate of 16.7%. Apartment permits rose 4.7% in September but dropped 12.2% annually. Boosted by subsidies and high interest rates, demand for detached housing grew significantly faster than for apartments, reflecting a stronger market preference for detached housing as a driving force in the recovery.
Harry Ottley also highlighted, “Multi-unit housing approvals are at their lowest level since 2010, as industry constraints and profit concerns make developers cautious in advancing projects.” The slowdown in Sydney apartment construction is impacting housing supply, and the market may be going through a period of adjustment or decline, so investment and development decisions need to consider industry cycle changes.
Australia’s housing construction sector is steadily advancing toward recovery, though housing approval rates vary significantly by state. New South Wales, with a high proportion of multi-unit housing, is seeing a slowdown in construction, contrasting with other states. Queensland has surpassed New South Wales in housing approvals, though apartment approvals are now only one-third of the peak levels seen in the 2010s.
HIA economist Tapang, in a detailed analysis of the current recovery in Australia’s housing construction industry, noted, “Sydney’s high land prices pose challenges for developers. Melbourne and Sydney have similar population sizes and inflow trends, yet detached housing approvals in Melbourne are double those in Sydney. In New South Wales, buyers are shifting to surrounding areas, with detached housing approvals climbing in some regions. Housing material costs are rising moderately, and construction timelines have returned to pre-pandemic standards, yet ‘shovel – ready land’ remains expensive, particularly in Sydney.”
The recovery in the housing construction industry and growth in building permits suggest that the market is undergoing positive transformation. This could attract more investment to the real estate market, fueling
economic growth. However, investors need to monitor industry cycle changes, as well as policy and economic influences, to make sound investment decisions. For developers, this period offers opportunity but also requires caution. They need to consider market demand, land prices, and building material costs to ensure project viability and profitability. Meanwhile, the government should continue providing support and stimulus measures to foster growth in the housing construction industry.
