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Double-digit growth expected in new dwelling starts in 2025 and 2026
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This report provides detailed forcasts for residential building activity in Australia, by state and by type of dwelling. The report forecasts total dwelling starts to increase by 10% in 2025 and by 15% in 2026.
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Activity has been improving since the middle of 2024 and unmet housing demand is very high, but further reductions in interest rates are required to maintain the upturn. Macromonitor expects two more interest rate cuts during 2025, and one further cut early next year. As a result, 2025 should see the first year of double-digit growth in dwelling starts since 2021.
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A surge in overseas migration has seen demand for housing, and the housing shortage, both reach unprecedented levels. Dwelling approvals are up strongly in 2024/25 year-to-date, while commencements also started to rise solidly in the September quarter of 2024. First homeowner grants, loans to owner occupiers and loans to investors are also rising. This points to a solid upturn in new building through 2025 and 2026.
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The current disruptions to global trade and financial market volatility are unlikely to interrupt the upturn in residential building. If anything, we feel this reinforces the likelihood of interest rate cuts and a flow of investment into new housing.
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Even after interest rate cuts, affordability will remain poor for first home buyers, which means the next upturn will be driven by investors and, to a lesser extent, change-over buyers and down-sizers. We also expect a significantly stronger upturn in apartments and other attached dwellings than in detached houses over the next few years.
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Our most recent reports:
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Australian Construction Cost Trends
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This report examines the outlook for construction costs, in detail be sector and type of input.
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Australian Construction Projects Database
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This latest list of projects corresponds with our fully revised set of forecasts published in November 2023.
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Australian Regional Construction Outlook
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Our latest regional forecasts for residential building and construction have just been released.
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Australian Construction Materials Forecasts
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Our latest forecasts assess the implications for construction materials demand of the current outlook for building and construction.
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Australian Road and Bridge Works
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This report examines the strength and composition of the current upturn, and determines the likely timing of the peak, and subsequent decline.
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