A national recovery in home building is gaining momentum, but Sydney continues to lag behind other major markets.
According to the latest HIA Economic and Industry Outlook report, demand for new homes is accelerating due to stable interest rates, strong population growth and low unemployment.
Building approvals have seen significant increases in Western Australia (60.1 per cent), Queensland (24.2 per cent), and South Australia (16.3 per cent) in the September quarter compared to last year.
HIA Senior Economist Matt King said the outlook is promising for most markets except Sydney.
“A national new home building recovery is in sight, but state government housing policies risk stalling the recovery,” Mr King said.
“We have confidence that new home building activity across most markets will continue to improve as we transition into the new year.
“However, Sydney remains an outlier and there is still no indication of a near-term rebound in both detached house and multi-residential building.”
The detached home sector is showing particular strength, with approvals reaching their highest level in two years at 9,890 in September.
“The detached home building sector looks promising, evidenced most recently by detached house approvals across Australia rising by 6.1 per cent in the month of September,” Mr King said.
However, the apartment sector continues to face challenges and isn’t expected to recover until mid-2025 due to labor shortages and credit constraints.
Detached house starts are forecast to rise from 100,230 in 2023 to 115,690 in 2027, while multi-unit commencements are expected to increase from 62,190 in 2024 to 104,380 by 2028.
Mr King warned that government policies could impact the recovery.
“Housing investment is encouraged by certainty of policy settings,” Mr King said.
“Recent state government announcements to levy increased surcharges on foreign investors and introduce taxes on short-term rental accommodation are unhelpful at a time when stability is needed to achieve the 1.2 million home target.”
