What’s driving the comeback in approvals – and can it last?
Australian dwelling approvals rose 12% in September 2025, rebounding from weaker results in July and August, according to a report released by Westpac Economics on Monday.
The surge was attributed to a 26% monthly increase in private unit approvals, which dominated the upswing despite the segment’s typical volatility. On a rolling three-month basis, private unit approvals climbed 26% year-on-year, marking the strongest growth since 2015.
“We had anticipated some bounce-back given the surge in new home sales at the start of spring, but it was a surge in the often-volatile private units segment that drove the bulk of the surprise,” Westpac economist Ryan Wells wrote in the bulletin.
High-rise units led the charge with 31% annual growth, while low-to-mid-rise units contributed a solid 22% year-on-year increase. New South Wales recorded the strongest state performance with 47% annual growth, followed by Queensland at 37%. Victoria’s unit approvals remained flat compared with the previous year.
Private detached house approvals rose 4% in September, aligning with expectations following a surge in Housing Industry Association new home sales during the month. However, the annual trend for houses proved less impressive, with approvals tracking nearly flat on a year-on-year basis and down 1.5% on a rolling three-month measure. Queensland and South Australia experienced more pronounced weakness in this segment, according to the report.
Total dwelling approvals for the year now stand 15.3% higher than the previous year. Of the 145,000 dwellings approved so far in 2025, approximately 40% have been higher-density unit approvals, with the remainder consisting of private detached houses.
The value of renovation approvals increased 1.2% in September but failed to recover from an 8.1% decline in August that pulled the segment off record highs. Non-residential approvals remained highly volatile on a monthly basis, with momentum appearing positive overall but potentially losing steam at 3.8% year-on-year growth on a rolling three-month basis – the weakest reading in more than two years, Wells said.
Wells also noted that the broader trend for dwelling approvals remains positive and broadly in line with expectations. The report indicated that Westpac anticipates a similar split between units and houses for new dwelling completions by 2027.
The September figures follow July’s 10.3% decline and August’s 3.6% drop in total dwelling approvals, making the rebound more pronounced than initially forecast.
