An increasing number of new homes are set to come online, which should reduce shortages and ease price pressures.
There were 19,652 building approvals issued in October, according to new data from the Australian Bureau of Statistics.
That represented a 3.9 per cent increase on the previous month and a 12.3 per cent increase on the previous year.
Private sector house approvals actually fell to 9,349 – that was down 2.1 per cent on the month and 1.9 per cent on the year.
However, that was offset by approvals for private sector dwellings excluding houses, which reached 10,091 after 10.6 per cent monthly growth and 29.6 per cent annual growth.
Peter Jones, chief economist at Master Builders Australia, said there is a strong pipeline of work to keep builders busy well into 2016.
“Master Builders expects the high level of approvals to translate into 220,000 starts this financial year taking the cumulative total to more than 600,000 in three years, for an increase of 30 per cent on the previous three years,” he said.
“The surge in new supply coming on stream will work to eat into the large housing shortage accrued in the previous decade due to underbuilding.”
Housing Industry Association senior economist Shane Garrett said the strength of new homebuilding has been the big economic story of 2015 in Australia.
“Residential building is making a crucial contribution to economic growth, at a time when other areas of investment are quite weak,” he said.
“The performance of new homebuilding is commendable given that the taxation burden on the sector is so high.”
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