Housing starts rise but still below target

LOWER interest rates have seen the volume of new homes commencing construction increase, but the Housing Industry Association (HIA) has noted they still remain well below the federal government’s target.

On Wednesday last week, the Australian Bureau of Statistics released its building activity data for the September 2025 quarter.

This data provides estimates of the value of building work and number of dwellings commenced, completed and under construction across Australia and its states and territories.

“Dwelling commencements in the 12 months to September 2025 increased by 11.2 per cent, compared to the previous year, to 184,460,” HIA senior economist Maurice Tapang said.

“The volume of home commencements remains below the 240,000 new homes per annum needed to build to the Australian government’s target of 1.2 million homes over five years. They also remain below the average volume commenced over the past decade.

“These are positive signs that confirm our expectation that the number of homes commencing construction will see steady, not explosive, growth over the next couple of years.”

In Victoria, there were 55,227 residential dwelling commencements in the 12 months to September 25, compared to the 53,721 starts in the previous 12 months – a 2.8 per cent increase.

Tapang said the growth in the near future was expected to come from a resurgence in apartment construction.

“Apartment construction remains well below the volume commencing construction a decade ago and is one of the of keys to increasing supply,” he said.

“In order to increase the supply of homes, governments need to help lower the cost of delivering new homes to market.

“Demand is not the challenge. Delivery is. Land supply, infrastructure timing, planning bottlenecks and workforce capacity will shape the 2026 experience more than interest rates.”

The federal government says it remains focused on boosting housing supply across Australia, with measures including:

• Driving action across all levels of government and industry through the aspirational National Housing Accord target
• Speeding up construction through planning reform, streamlined environmental approvals and a pause and simplification of the National Construction Code
• Growing the construction workforce with Free TAFE and $10,000 apprenticeship incentives for tradies
• Delivering 55,000 social and affordable homes for Australians who need them most through initiatives such as the Housing Australia Future Fund, and
• Unlocking up to 80,000 new rental homes by cutting taxes for build-to-rent developments and supporting long-term leases.

“These are encouraging figures that show that the reforms federal Labor is leading with our state and territory government partners are starting to bear fruit,” Housing Minister Clare O’Neil said.

“Housing supply is starting to turn the corner, with more home building starting, more tradies on the tools, and ultimately more homes built for Australians.

“Building more homes is the only way to make housing more affordable long-term, and that’s exactly what this government is focused on doing.”