Australian dwelling approvals rebound in September

Australian dwelling approvals lifted by 12% on the month in September, rebounding well above expectations (5%) after declining in July (-10.3%) and August (-3.6%). The result was driven by a wave of approvals in the volatile unit segment (23.7%) going through, but detached house approvals also put in a strong result (4.4%) to rise by their most since March 2024. Housing prices have picked up alongside the RBA's easing cycle, but the housing pipeline has been slower to respond.  

National dwelling approvals rose by 12% to 17k in September, recovering most of the drop seen over the prior two months. That took approvals to 48k across the quarter, little changed (0.1%) from their total in the June quarter. Although unit approvals surged in September (23.7%), they rose only modestly for the quarter as a whole (0.7%), weighed by falls in July (-22%) and August (-6.8%). House approvals posted their strongest rise in 18 months in September (4.4%) but still softened slightly in the quarter (-0.3%). 

Within the unit segment, larger developments will generate more approvals and so the high-rise category has been the key area of strength, particularly in Sydney, Melbourne and Brisbane. Townhouse and low-rise developments also look to have provided some support. 

Detached approvals have disappointed in 2025, yet to fire despite the RBA easing rates and housing prices accelerating, up a further 1.1% nationally in October - their fastest gain in 2 years according to today's report from Cotality. The approvals data are simply too volatile to have any firm view as to whether not September's 4.4% rise signals a shift in momentum. 

Australian household spending up 0.2% in September

Australian household spending increased by 0.2% in September, rebounding by less than expected (0.4%) from a flat month in August. Goods and non-discretionary categories were the key drivers of the gain in headline spending. Factors including the RBA's easing cycle and earlier fiscal support measures helped drive a rebound in consumption in recent quarters; however, that slowed to a 0.2% rise in inflation-adjusted spending in the September quarter - the softest outcome in a year. 

Spending rose by 0.2% at the top line level in September to $77.4bn, lifting annual growth from 4.9% to 5.1%. Gains were concentrated in areas of non-discretionary spending (0.6%), including food (0.6%) and health (0.7%). This offset another weak month for discretionary spending (0%), after it declined modestly in August (-0.1%). Discretionary spending was propped up by recreation and culture (includes holiday travel) rising by 1.1% as it rebounded from falls in July (-0.4%) and August (-1.1%); furnishings and household equipment also fell in the prior two months but saw a more modest recovery in September (0.4%). The major categories of weakness in September were alcoholic beverages (-0.8%), clothing and footwear (-0.6%), transport (-0.4%) and hotels, cafes and restaurants (-0.3%).  

In the latest quarter, household spending rose by 1.1%, but once adjusted for inflation, consumption volumes saw just a 0.2% rise, slowing from gains that ranged from 0.6% to 1% over the previous three quarters. That strong period for consumption underpinned the rise in GDP growth to 0.6% in the June quarter; however, based on today's number, with household consumption being the largest component of the economy, there are immediate downside risks to growth in the September quarter.