Australia is set to build thousands more apartments, as approvals for new builds soared, even as interest rates rose in the month of February.
Fresh figures from the Australian Bureau of Statistics show dwelling approvals overall jumped 29.7 per cent in February to 19,022.
This was largely led by apartments and townhouses.
In original terms, the ABS states apartment approvals soared 191.2 per cent to 5398 dwellings.
They are now up 29.8 per cent higher compared to this time last year.
Townhouse approvals also rose in February, up 73.8 per cent to 2981 dwellings, after a 38.7 per cent fall in January.
AMP economist My Bui says approval figures bounce around, so it’s more useful to focus on the bigger picture, with approvals staying around the 196,000 home mark.
“With slowing population growth this is around balance versus demand, however, approvals don’t seem to be able to reach the Housing Accord target of around 240,000 per annum which is necessary to make up for the dwelling short fall in the strong population growth years of 2023-24,” she said.
“It does not help that actual building completions are still flatlining and haven’t seen the uptrend as indicated by approvals throughout 2025.”
To reach the housing accord, Australia needs to approve 20,000 and then build 20,000 homes a month.
The sharp rise in approvals came even as the Reserve Bank of Australia lifted the cash rate in February by 25 basis points to at the time 3.85 per cent.
They subsequently lifted interest rates again in March to 4.10 per cent and are largely tipped to increase the cash rate following their May meeting.
Residential value soars
According to the ABS, the total pipeline of Australia’s upcoming building approvals also soared in the month of February.
Building approvals lifted to $20.43bn, which is 14.4 per cent higher over the previous February.
Residential building drove the surge, soaring 30.8 per cent to a record high of $12.5bn.
New home builds were up 35.9 per cent to $11.21bn.
Offsetting was a fall in renovations and extensions dipped slightly by 1.2 per cent to $1.29bn
Non-residential buildings such as offices, shops and factories also slumped in February, down 4.4 per cent to $7.93bn, although it followed a strong January.
Clear turning point
As Australia begins building more houses, REA group says the housing market has had a “clear turning point in the cycle”, as rising interest rates finally cools runaway prices.
Fresh figures released by REA Group show national home prices increased 0.3 per cent in March, taking the national median home value to $908,000.
Prices are now 9.4 per cent higher than a year ago, adding about $94,800 to the value of the median home.
But REA Group senior economist Eleanor Creagh warned house price growth was moderating.
“This points to a slowdown in growth emerging across the country and a clear turning point in the cycle, as rising interest rates weigh,” she said.
While interest rates were keeping a cap on rising house prices, Ms Creagh said a lack of supply was stopping the market from falling.
“Recent rate rises will weigh on buyer sentiment, borrowing capacity, and erode already poor affordability, though a resilient labour market, population growth and first-home buyer support continue to underpin demand against limited supply,” she said.
