Dwelling approvals down after September surge

Australia’s building pipeline dipped in October after a September surge, with total dwelling approvals down 6.4 per cent, according to new Australian Bureau of Statistics (ABS) data.

In October, the total number of dwellings approved fell to 15,832 in seasonally adjusted terms, down from 17,019 dwellings approved in September.

The decline in total dwelling approvals was driven by a 13.1 per cent decrease in approvals for private dwellings excluding houses, after a 25.0 per cent gain in September.

In original terms, apartment approvals fell 39.2 per cent in October to 3,397 dwellings, down from 5,589 in September and 13.8 per cent below the 12-month average.

By contrast, town house approvals increased 16.4 per cent in October to 3,075 dwellings – following a 5.6 per cent rise in September – 13.7 per cent above the 12-month average.

Meanwhile, private sector approvals fell in most states, with Victoria seeing the sharpest fall (down 6.6 per cent).

The exception was Queensland, where private sector house approvals rose 2.7 per cent.

Daniel Rossi, ABS head of construction statistics, noted that despite the fall in October, total house approvals were 1.3 per cent higher than in October 2024.

Supply-side pressures

The latest ABS data raises questions about whether momentum in Australia’s housing market is starting to stall, with Westpac economist Neha Sharma noting that approvals are now tracking below their pre-COVID-19 average.

“On a three-month annualised basis, approvals have largely moved sideways in 2025. In the year to October, 192k dwellings were approved, slightly below the pre-COVID decade average of 197k,” she said.

“The composition has shifted: detached homes, which accounted for 66 per cent of approvals pre-COVID, now sit closer to 59 per cent, while units have gained ground in line with policy favouring higher-density living. There have been 161k approvals so far this year, keeping us marginally ahead of our forecast for 189k approvals.”

CBA economist Harry Ottley said a pullback was expected after the strong increase in September, noting 192,103 dwellings were approved in the year to October.

“This is a solid improvement from the low of approximately 165,000 in mid-2024 and is tracking a little above our forecasts,” he said.

“Momentum has slowed a touch however with quarterly approvals having peaked earlier in the year. A shallow RBA easing cycle likely caps some of the upside for approvals in 2026.”

ANZ economists Madeline Dunk and Adam Boyton also commented on the October dip.

“While this does follow a 11.1 per cent month-on-month rise in dwelling approvals in September, there has been a stalling in the upward momentum in approvals,” they said.

“On a three-month moving average basis, dwelling approvals are down 1.7 per cent quarter-on-quarter, and private units/townhouses have eased 3.1 per cent quarter-on-quarter. Feasibility constraints remain a challenge for many builders and developers.”

Housing Industry Association (HIA) senior economist Maurice Tapang noted that established home prices continue to rise as demand continues to outstrip the supply of available homes.

“The biggest challenge in driving these home building volumes towards the government’s 1.2 million homes target continues to be the price of shovel-ready land,” he said.

“In order to increase the supply of homes in Australia and improve housing affordability, governments need to remove the additional costs imposed on land development and new home building.”

Master Builders Australia chief economist Shane Garrett also commented on the approval dip.

“During the National Housing Accord’s first year, we built 60,000 fewer homes than needed. This means that an average of 255,000 new homes per year must be produced over the Accord’s remaining four years,” he said.

“We remain far from this calibre of housing output: today’s figures show less than 192,000 new homes were approved over the year to October 2025.

“Housing affordability has recently deteriorated to its worst on record. Our failure to build enough new homes will exacerbate this situation further.”

[Related: Housing affordability hits record lows]