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Dwelling Commencements

Published: November 28, 2024
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Definition of Dwelling Commencements

This report analyses the total number of dwelling construction commencements in Australia. Dwellings include both public and private houses and other private residential buildings. These other residential buildings refer to any buildings that include more than one dwelling, such as apartment buildings, blocks of flats and townhouses. Each unit in a multi-unit dwelling is counted as a separate commencement. The data for this report is seasonally adjusted and is sourced from the Australian Bureau of Statistics. The data is presented as the total number of dwelling commencements over each financial year.

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Recent Trends – Dwelling Commencements

IBISWorld forecasts the number of dwelling commencements to climb by 7.2% in 2024-25, to 170,168. This growth is expected to be driven mainly by recovering multi-unit commencements as rebounding migrants are set to support demand for apartments and multi-unit residences. While a large construction backlog will support dwelling commencements, labour and material shortfalls will keep construction costs elevated, placing downward pressures on dwelling commencements. Higher interest rates are encouraging consumers to save more money, reducing housing investment and demand for new detached homes. Elevated land costs and taxes are also constraining recovery in detached house commencements.

Australia’s growing population has supported many dwelling commencements over the past decade. Growth in residential housing prices in 2015-16 contributed to high levels of dwelling approvals and commencements. Developers sought greater returns on their developments, which drove more high-density and affordable dwellings like apartments. Nonetheless, the closure of Australia’s international border from March 2020 to February 2022 because of the pandemic caused a collapse in net migration. Likewise, falling business confidence and limits on foreign investment led to a sharp fall in demand for new dwellings. Government stimulus has partially supported demand, primarily through the Federal Government’s HomeBuilder scheme, which was implemented to support the residential construction sector. The number of building approvals surged for detached homes after the HomeBuilder scheme's introduction and the effects filtered through to dwelling commencements. Besides, low interest rates and further government stimulus, like the JobKeeper payment package, uplifted real household discretionary income, which contributed to increased dwelling commencements in 2020-21.

5-Year Outlook – Dwelling Commencements

IBISWorld forecasts the number of dwelling commencements to rise by...

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