Revised outlook highlights impact of government policy changes
The Housing Industry Association (HIA) has updated its projections for residential construction, anticipating that more than one million new homes will begin construction across Australia in the five years to June 2029.
This forecast adjustment from 986,000 to 1.01 million, outlined in the HIA’s latest quarterly Housing and Economic Outlook Report, reflects recent policy developments and higher population growth.
According to the report, 28,620 detached houses commenced construction in the March quarter of 2025, with a similar figure of 28,240 forecast for the June quarter. Numbers are expected to rise to 29,470 by the end of 2025, resulting in a total of 115,070 detached house starts for the year – an increase of 7.2% compared to 2024.
The outlook suggests a continued recovery, peaking at 125,840 in 2027 before easing to 116,370 in 2029, as land availability becomes more limited and multi-unit dwellings become relatively more affordable.
For multi-unit dwellings, 19,450 commencements were recorded in the March quarter of 2025. This is projected to decrease to 17,440 in the June quarter and remain steady for the rest of the year, leading to a total of 72,070 for 2025. This represents a 17.2% rise from the 13-year low seen in 2024.
The report forecasts a gradual increase to 76,570 in 2026, with a sharper rise to 96,910 by 2028 and 99,960 in 2029, as rising established home prices improve the viability of new apartment projects.
“HIA forecasts show that recent policy announcements will see more than 1 million new homes commencing construction over the next five years,” said Tim Reardon (pictured right), chief economist at the Housing Industry Association. “Higher than previously anticipated population growth, and changes to government policy, have resulted in an upgrade to our forecasts for the number of homes that will commence construction over the next five years.”
Despite the improved outlook, the association notes that current policy settings are still insufficient to reach the government’s goal of 1.2 million new homes in five years. The report points to the recent reduction in the cash rate as a factor supporting increased home building, though the impact varies by region and housing type, with government policy remaining a key influence on construction volumes.
The HIA expects Australia’s population growth to remain strong, surpassing 30 million before 2030. This trend is likely to drive up established home prices and make new builds a more attractive option for buyers.
The report highlights recent policy changes aimed at reducing the costs and barriers to new home construction, which are expected to further boost supply. In New South Wales, measures announced in the state budget—including government underwriting of apartment sales, the introduction of a pattern book, and expedited approvals – are projected to increase commencements in the coming years.
The federal government’s decision to lower the cost of Lenders Mortgage Insurance for buyers with a 5% deposit is also expected to support more first home buyers entering the market, potentially adding up to 10,000 new homes annually. The HIA suggests that further review of macro-prudential restrictions could provide additional support for new home supply.
For mortgage brokers, these trends point to increased demand for their services, as more buyers seek finance for new builds and first home purchases. Brokers are likely to find greater opportunities in regions where construction activity is rising, making close attention to local market shifts essential.
Western Australia, South Australia, and Queensland have experiencied earlier increases in market activity due to lower delivery costs. In contrast, New South Wales and Victoria continue to lag, reflecting higher land and supply costs.
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