Australia’s housing market is seeing a surge in new home approvals and construction activity, hitting the highest levels in over a year. This trend is a welcome relief for many prospective buyers, who have faced skyrocketing property prices in recent years.
With construction materials prices now easing globally, market watchers are optimistic that more affordable housing options are on the horizon.
The increase in approvals is part of a national push to build 1.2 million new homes, with falling construction costs underpinning confidence in the industry.
Queensland is leading the boom, with home approvals up 26% in September compared to the previous year.
South Australia followed closely with a 14% rise, while nationwide, house approvals rose by 17% over the same period, the highest level since May 2023, according to data from the Australian Bureau of Statistics.
In terms of overall dwelling approvals, Queensland saw a 3% jump in September, with smaller gains in Victoria (2.6%), Western Australia (2.3%), and South Australia and Tasmania (both 1.5%).
Falling Material Costs Fuel Industry Momentum
The recent surge in home building activity is partly attributed to a steady drop in global construction material costs and rising domestic demand for houses.
While retail material prices in Australia remain above pre-pandemic levels, global trends suggest lower costs ahead for developers and home buyers alike.
Besides the expected interest rate cuts and lower immigration over the coming years, a key factor supporting this activity is the easing of access to construction workers.
Many smaller construction companies have shut down amid high-interest rates environment, freeing up skilled labor for larger players, which has further stabilized timelines and feasibility for new housing projects.
In addition, analysts expect material prices to ease further starting in 2025, driven by anticipated policy changes under the incoming Trump administration in the United States.
One potential catalyst for stabilizing global material supplies is Trump's promise of a peace deal to end the Russia-Ukraine conflict.
Russia, one of the world’s largest suppliers of raw materials, has been restricted from global markets since sanctions were imposed in 2022. Many countries turned to other suppliers, such as Brazil and the United States, which led to higher competition and rising prices.
Furthermore, potential adjustments to U.S. tariffs could lead suppliers to redirect materials away from the U.S., helping further reduce costs globally.
Meanwhile, China’s economic slowdown and weakened housing market have led to an oversupply of steel and other construction materials, which has helped to drive down global prices ove r the past months.
These international shifts are expected to bolster Australia’s home building efforts, as the country works towards ambitious housing targets to address its housing affordability crisis.
For prospective buyers, these global shifts bring good news. After years of rising prices and limited options, Australia’s growing supply of new homes—fueled by reduced construction costs—could provide long-awaited affordability. The rise in new home approvals signals that builders are more confident about project viability, potentially setting the stage for a more balanced housing market.
With the combined impact of lower construction costs and increased housing supply, there is fresh hope that housing affordability could improve in the near future.
