Australia’s home building industry is on track for more than one million new housing starts over the next five years, according to the Housing Industry Association’s (HIA) latest quarterly Housing and Economic Outlook Report.

The upgraded forecast lifted from 986,000 to 1.01 million reflects a combination of stronger-than-expected population growth and recent government policy moves designed to bring new supply to market faster.

“Recent policy announcements will see more than one million new homes commencing construction over the next five years,” said Tim Reardon, chief economist at the HIA. “Higher than previously anticipated population growth, and changes to government policy, have resulted in an upgrade to our forecasts.”

Detached Housing: A Steady Climb

Detached house construction remains the engine room of residential building.

The HIA recorded 28,620 detached commencements in the March quarter of 2025, with 28,240 expected in June. Numbers are forecast to rise through the second half of the year, reaching 29,470 by December.

That equates to 115,070 detached house starts for 2025, a 7.2% increase on 2024.

Looking further ahead, the detached pipeline is expected to peak at 125,840 in 2027 before easing back to around 116,370 in 2029, as greenfield land supply tightens and buyers increasingly turn to townhouses and apartments.

Multi-Unit: A Strong Recovery Phase

While detached housing has held steady, multi-unit starts are where the sharper rebound lies.

After a 13-year low in 2024, the March quarter of 2025 saw 19,450 multi-unit commencements. That number is projected to soften slightly to 17,440 by June but still deliver a total of 72,070 starts for the year, a 17.2% lift on 2024 levels.

By 2026, multi-unit projects are forecast to reach 76,570 starts, with momentum building sharply to 96,910 in 2028 and nearly 100,000 in 2029. Rising established home prices are expected to push more buyers and investors toward new apartments, improving project viability for developers.

Policy Shifts Supporting Growth

The HIA highlights several policy changes that are reshaping the construction outlook:

• NSW initiatives: Government underwriting of apartment sales, expedited approvals, and a new design pattern book. These measures aim to reduce developer risk and increase supply in one of the country’s most expensive housing markets.
• Federal support for first-home buyers: Reducing the cost of Lenders Mortgage Insurance (LMI) for buyers with just a 5% deposit could help an additional 10,000 households purchase each year.
• Monetary policy: The recent reduction in the cash rate is improving affordability and demand, though the effect is uneven across states and product types.

Despite these positive steps, the HIA stresses that current settings are still not enough to reach the federal government’s target of 1.2 million new homes in five years.

Population Growth Driving Demand

Australia’s population is expected to surpass 30 million before the end of the decade. That growth, coupled with record migration flows, is putting sustained pressure on housing demand.

As established home prices climb, new builds particularly in growth corridors and regional centres are likely to become more attractive for buyers priced out of inner-city markets.

The HIA forecasts suggest that this dynamic will continue to shift demand toward higher-density projects in the second half of the decade.

Regional Differences

Construction trends vary sharply by state:

• Western Australia, South Australia and Queensland are seeing stronger growth earlier, driven by lower land and delivery costs.
• New South Wales and Victoria remain constrained by high land values, more complex planning systems, and higher input costs, which are slowing the pace of new commencements.

For builders and suppliers, this divergence underlines the importance of keeping a close eye on regional market signals.

The TGB Take

The HIA’s revised forecast is a rare piece of good news for an industry that has weathered insolvencies, supply shortages, and wild swings in demand over the past three years.

One million homes over five years is no small feat but it still falls short of the government’s ambition of 1.2 million. The gap highlights the structural barriers still in place: land supply constraints, planning delays, and the challenge of keeping affordability within reach.

For builders, the message is clear: there is demand, there is policy support, and there is population growth to underpin activity. But delivery will depend on execution and on whether government can move from policy announcements to real, on-the-ground solutions.

Author: TGB Editorial