If you’re not one for stats, here’s the bottom line: approvals for large apartment projects surged in January, while detached home approvals remain sluggish. But before we celebrate, it’s important to understand what’s really happening beneath the surface.

A Surge in Apartment Approvals

The latest Australian Bureau of Statistics (ABS) data shows a 6.3 per cent rise in total dwelling approvals for January, marking a significant 21.7 per cent jump from the same time last year. However, this growth is far from even. It’s primarily driven by a surge in approvals for large apartment projects, particularly in New South Wales, while approvals for detached houses have barely moved.

According to the ABS, approvals for private sector dwellings excluding houses – mainly apartments and units – jumped by 12.7 per cent in January, totalling 7,213 approvals. Meanwhile, private sector house approvals rose by just 1.1 per cent to 9,042. This disparity signals a shift in where construction activity is concentrated, and it raises a crucial question: just because these apartment projects are being approved, does that mean they’ll be built anytime soon?

If you look at the broader context presented by Tim Reardon, Housing Industry Association (HIA) Chief Economist State of the Nation Residential Builders Outlook, in Brisbane on March 18, the recent ABS data is less striking. You can certainly see the January 2025 surge, but in the right context, it’s less significant.

Apartments Priced Out of the Market

Despite the rising number of approvals, building new apartments is becoming increasingly challenging. According to the (HIA), apartments are being priced out of the market, particularly in Sydney and other major capital cities.

Tim Reardon presented several factors are contributing to this:

• Infill apartment projects face high statutory taxes, regulatory costs, and infrastructure charges, making them financially unviable in many cases.
• The idea that Australia can tax its way to higher density is flawed. Additional costs placed on developers deter investment rather than encourage the supply of affordable housing.
• Many approved projects are unlikely to break ground anytime soon due to these excessive tax imposts.

What Does It Mean for Builders and Tradies

While apartments dominate these latest approval figures, detached housing remains in a comparative approval slump. Many tradies and small builders should keep an eye on this space. Ivan Colhoun, Chief Economist at CreditorWatch, warns that builders could be ready to offer discounts on project homes, possibly limiting the demand for new detached home construction. However, that sentiment is easily countered if you look at the broader context presented by the HIA. As you can see in the charts below, there is not so much cause for concern when looking at the Australian Housing Starts Forecast and the NSW, for that matter.

Looking Beyond the ABS Data

It’s easy to look at the latest ABS data when it’s released and assume the construction sector is surging one way or the other, but these figures need to be placed in a broader context. While apartment approvals are increasing, actual commencements and completions are another story. Many apartment projects are still not financially feasible, and supply constraints will persist without changes to tax and regulatory settings.

The Reserve Bank of Australia (RBA) has hinted at further interest rate cuts, with another reduction expected in May. While lower rates could provide some stimulus, they won’t be enough to offset the structural issues preventing higher-density housing from being built at scale.

Director of The Good Builder, Peter Love, reflected on the recent State of the Nation economic data and added, “Don’t worry too much about what the ABS approvals are doing this month.” He continued,

“Getting a view of the broader economic picture is good for the soul from time to time.”

TGB Takeaways

• Approvals don’t always translate to construction. Many apartment projects face financial hurdles that could delay or even prevent their development.
• Taxes and regulations are major barriers. The HIA report makes it clear: increasing statutory charges on apartments is making them too expensive to build, slowing supply rather than boosting it.
• Interest rate cuts could help but won’t solve everything. While lower borrowing costs may encourage some investment, the bigger challenge remains affordability and cost pressures.

You can read Peter’s full recap of the HIA event here.

What’s Next?

For builders, tradies, and suppliers, now is the time to stay informed, plan strategically, and position yourself for emerging opportunities in a shifting market with some positive trends.

Let us know what you think!

Author: Jonathan Tibbits

Starting his career as a lawyer, Jonathan transitioned into project management, compliance, and certification for companies throughout the industry supply chain in Australia and New Zealand. With international experience in green building, sustainability and stakeholder communication, he is passionate about innovation and building transparency and trust.