The latest housing approval data may suggest a surge in new homes, but approvals alone will not solve Australia’s housing shortage unless they translate into actual construction.

According to the Australian Bureau of Statistics (ABS), 16,580 residential dwellings were approved in January 2025, marking a 6.3% increase from December.

Over the three months to January, total approvals were 14% higher year-on-year, with detached homes up 6.1% and multi-unit approvals rising 27.3%.

However, rising construction costs and supply chain constraints mean many of these projects may not move forward in the short term.

HIA economist Maurice Tapping notes that while demand for new housing remains strong, ongoing challenges related to land supply, construction costs, and investment constraints continue to limit the pace of development.

“Despite modest improvements in housing approvals, Australia continues to face a significant shortfall in housing supply,” he says.

For lenders and mortgage professionals, this underscores the need for flexible financing solutions to support borrowers navigating a high-cost construction environment.

Rising building costs and delays may also impact loan structuring and risk assessments, requiring a strategic approach to lending in the current market.