Australia’s housing market is experiencing a notable uptick in home approvals and construction activity, reaching the highest levels in over a year. This surge is promising news for prospective buyers who have struggled with high property prices in recent years.
With global construction material costs gradually easing, industry experts are hopeful that more affordable housing options may soon become available. The push to build 1.2 million new homes has gained momentum, supported by lower construction costs and rising confidence among developers.
Queensland leads the charge, with a 26% rise in home approvals in September compared to last year, followed by South Australia with a 14% increase. Nationwide, house approvals jumped by 17%, the highest level since May 2023, according to the Australian Bureau of Statistics.
The recent building activity is fueled by a global drop in material costs and strong domestic demand. While retail material prices in Australia remain higher than before the pandemic, global trends indicate that costs may continue to decrease, offering relief for both developers and buyers.
In addition, the availability of skilled construction workers has improved as many smaller firms have shuttered amid high-interest rates, freeing up labour for larger projects. This shift has improved project timelines and enhanced the feasibility of new builds.
Analysts expect material prices to drop further from 2025, partly due to anticipated policy changes under the Trump administration in the United States. One key factor is Trump’s proposed peace deal to end the Russia-Ukraine conflict, which could restore access to Russian raw materials that have been limited due to sanctions.
Moreover, expected U.S. tariff adjustments could redirect materials outside the U.S., helping reduce costs globally. Meanwhile, China’s economic slowdown and housing market struggles have resulted in an oversupply of steel and other construction materials, driving down global prices over the past few months.
These international developments are expected to bolster Australia’s efforts to address its housing affordability crisis. With an increasing supply of new homes and reduced construction costs, there is renewed hope for more balanced housing prices and greater affordability.
The Reserve Bank of Australia (RBA) noted in its latest Statement on Monetary Policy (SoMP) that the recent increase in housing credit and prices is unusual given the restrictive monetary conditions.
Typically, housing credit growth declines during a rate-tightening phase, but Australia’s strong population growth and limited housing supply have led to continued price growth.
In southern states like Victoria and Tasmania, prices have seen more significant decline, influenced by a broader trend of northward relocation over recent years. This trend is likely to continue, potentially easing prices in the south first while contributing to overall balance as new housing approvals surging in the north in response to the demand.
