$500,000 house build price record set in 2024 as housing approvals 70,000 fall short of government target: ABS

The average cost of building a new house in Australia has hit a shock new high as the nation’s efforts to fight a housing crisis with more homes fell short by almost 70,000 last year.

The average cost of building a new house around the country surpassing $500,000 for the first time in December 2024.

Aussie home building costs hit a grim new record high at the end of 2024, as the nation fell almost 70,000 new home approvals behind a target set to fix the housing crisis.

Latest Australian Bureau of Statistics figures show there were 170,719 homes approved in 2024, the second worst annual figure since 2012, with experts warning government efforts to address the housing crisis so far have failed to make a difference.

And affordability is getting worse, with the average cost of building a new house around the country surpassing $500,000 for the first time in December, according to the ABS data, after new requirements for sustainable builds reached the nation’s biggest housing economy in May.

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From July 1 last year, the federal government has set a 240,000 annual new homes goal under the National Housing Accord to remedy the country’s housing affordability issues for everyone of the next five years.

The 2024 numbers are an about 6400 home (3.8 per cent) improvement from 2023, when that number was just 164,329.

But that was the softest figure since 2012 when only 157,000 were approved.

The ABS data also shows that the number of homes being approved for construction lifted substantially after the start date to the Accord’s timeline — rising by almost 9000 approvals compared to the prior six months.

But even with a stronger second half of the year, the nation still would have fallen short of the 192,000 new homes given the nod in 2022 — and come in far below the 240,000 goal.

It’s also a long way short of the 225,718 approved in 2021, amid a surge in activity caused by the Morrison government’s HomeBuilder grants scheme.

Just over 170,000 homes were approved to be built across the country in 2024.

Australia’s strongest year on record was in 2015 when 239,632 new homes were approved in the midst of an apartment boom in Melbourne and NSW.

Housing Industry Association senior economist Tom Devitt said so far state and federal governments had not done enough to move the dial on housing construction.

“They are very much short of where they want to be,” Mr Devitt said.

“And the improvements we can put down, mostly, to the natural turning point of the market, with population growth and an acute shortage of rental accommodation as well as stable, if not reduced, interest rates for more than a year.

“State and federal government efforts so far over the past few years are unlikely to have had a big impact.”

And, if there are not substantive policy announcements made around areas such as property taxes and both local and international investment, Mr Devitt said it was unlikely there would be a significant improvement in the years ahead.

“They need to be a lot more ambitious,” he said.

Oxford Economics economist Maree Kilroy said the ABS figures also showed the average value of homes being approved around the country had topped $500,000 in December.

“It’s the first time it’s done that,” Ms Kilroy said.

“The National Construction Code (NCC) changes have come through, and that will have had an impact … that will have increased costs for building.”

Housing Industry Association estimates have suggested building costs have risen as much as $30,000 in response to seven-star energy requirements that came into effect in Victoria under the NCC last year.

HIA estimates that costs of building have risen as much as $30,000 in response to seven-star energy requirements.

Sliding numbers of detached house approvals in Victoria have weighed heavily on figures nationwide for the past few months, something Ms Kilroy said was likely to continue as established home values fell in the state — making more expensive house and land packages less attractive to buyers.

While December’s ABS figures did show a large improvement in unit approvals, the economist said this was unlikely to be sustained, as the sector still faced significant headwinds.

“In 2025 we are expecting only soft growth,” Ms Kilroy said.

Oxford Economics are currently forecasting Australia will miss the 1.2 million homes goal set out in the National Housing Accord for the coming 4.5 years.

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Originally published as $500,000 house build price record set in 2024 as housing approvals 70,000 fall short of government target: ABS