A surge in apartment approvals in NSW has lifted new dwelling consents to the highest level in more than two years, amid a broader recovery in private sector investment.
Australia-wide, 16,579 dwellings were approved in January, up 6.3 per cent on the month prior, the Australian Bureau of Statistics revealed.
That's still well below the 20,000 dwellings needed on average each month to meet the government's target of 1.2 million new homes by mid-2029.
And that doesn't factor in a drop-out rate of about 1-2 per cent of homes that gain approval but don't end up being constructed due to feasibility or other issues.
But Thursday's update confirms the trend is certainly heading in the right direction, up 30 per cent from the low of 12,836 dwellings approved in April 2023.
January's bounce was driven by a 12.7 per cent rise in private attached dwellings, like apartments and townhouses, said ABS head of construction statistics Daniel Rossi.
NSW led the way, with an increase in state significant developments and policies like height bonuses for affordable housing and train station re-zonings potentially contributing to the rise in apartments coming through the pipeline, Oxford Economics' Michael Dyer told AAP.
But it was still too early to tell, given apartment approvals tend to be pretty lumpy, he said.
"We expect further modest improvement over 2025," Mr Dyer said.
"Cash rate cuts are now in play. This is set to aid the release of pent-up housing demand, supporting a more meaningful double-digit recovery from 2026."
Policies encouraging supply will be increasingly felt in future years, although utility connection bottlenecks and labour shortages will continue to put a brake on the delivery of new homes, he added.
While it was pleasing to see approvals for apartments and townhouses reaching their highest levels since December 2022, they were still too low, said Property Council executive Matthew Kandelaars.
"We are approving thousands of fewer apartments now than a decade ago," he said.
"Regulations, opportunistic taxes and low productivity are hurting our ability to build the homes Australians need."
It comes after national accounts figures released on Wednesday showed private investment in dwellings fell 0.4 per cent in the December quarter.
But private investment more broadly rose 0.3 per cent after underperforming in recent months, as electricity projects and mining investments picked up.
Household consumption also strengthened amid a return to growth in real household incomes following a record seven quarters of declining GDP per capita.
Treasurer Jim Chalmers said the figures showed Australia's economy had turned a corner.
"One of the most encouraging elements of that is we're starting to see the private sector reclaim its rightful place as the primary driver of growth in our economy," he told reporters.
"Growth in our economy is rebounding strongly, it's rebounding broadly. We saw that in consumption, we saw that in business investment, we see that in the private sector more broadly, and this is a really important thing."
Australia's trade balance also recorded an improvement in January, up $696 million as exports rose 1.3 per cent, largely driven by growth in shipments of non-monetary gold to the US.
