Higher density slowdown adds pressure to Housing Accord targets
Home building approvals fell sharply in December, led by a steep decline in higher density projects, according to new figures from the Australian Bureau of Statistics (ABS).
Total dwelling approvals dropped 14.9% in December to 15,542. The fall was driven by a 29.8% drop in private sector dwellings excluding houses, reversing a 29.6% rise in November.
“The drop in total dwellings was driven by a 29.8% fall in approvals for private dwellings excluding houses,” said Daniel Rossi, head of construction statistics at the Australian Bureau of Statistics. “This follows a 29.6% rise in this series in November.
Private sector house approvals inched up 0.4% to 9,487 in December, after rising 0.8% in November. Approvals for houses are now 5.7% higher than a year earlier.
“South Australia recorded the largest rise, up 13.1%, to the highest level since April 2023. Western Australia rose 0.4%, to the highest level since July 2021,” Rossi said. “In contrast, New South Wales had the largest fall in December, down 5.5%.”
By contrast, private sector dwellings excluding houses fell to 5,855 approvals, giving back much of November’s jump. In original terms, apartment approvals dropped 37.6% to 3,470 after a 63.7% surge the previous month, leaving approvals 14% below the 12‑month average.
“While the fall in December was large, it came off the back of last month which had the highest number of private sector dwellings excluding houses approved since June 2018,” Rossi said.
“Victoria led the fall in apartment approvals in December,” said Rossi. “Victoria saw only 339 apartments approved this month compared with 1,496 in November.”
The total value of building approved fell 12.3% in December to $16.32 billion, following a 12.9% rise in November.
Residential work led the decline. The value of total residential building dropped 16.0% to $9.49 billion, coming off a record high in November. New residential building fell 17.8% to $8.30 billion, while alterations and additions eased 1.4% to $1.20 billion. The value of non-residential building decreased 6.4% to $6.83 billion, after a 1.8% fall in November.
Accord target at risk as higher density approval slows
Analysis from Master Builders Australia highlights the implications of the latest approval figures for the National Housing Accord. Chief economist Shane Garrett noted that December’s 14.9% fall in approvals was the weakest in four months, while higher density approvals are at their lowest level in eight months.
“Since the start of the National Housing Accord’s term in July 2024, 287,200 new homes have received approval across Australia, about 15,960 per month,” Garrett said. “This is in stark contrast to the 20,000 new homes per month that need to be delivered to hit the Accord’s 1.2 million target. For much of 2025, new home building approvals had been moving in the right direction making this reversal more disappointing.
“Higher density home building offers our best chance of meeting the Housing Accord target. When conditions are right, it can be rolled out quickly and on a large scale. However, doing so requires us to get conditions right around build times, supply chains, costs and importantly labour availability.”
Master Builders Australia chief executive Denita Wawn (pictured right) said changes to training and migration are needed to improve build times and project throughput.
“Significant reforms to the domestic apprenticeship track are needed to increase completion rates, retention and scale,” she said. “This involves a redesign of the apprenticeship incentives, starting with a further extension of the current Key Apprentice Program, as well as a strong school to trade pathway, that breaks down the university bias, and trade-specific pilots as well as digital skills initiatives.
“At the same time, an essential stopgap, while domestic reforms are fast-tracked, is skilled migration. The Federal Government must recognise construction as a national priority sector, aligning migration intake with verified workforce demand, reducing cost and administrative barriers for SMEs and regional businesses.
“It is also commonsense reform policy to do everything possible to activate skilled migrants already in the country. Around 18,400 permanent migrants in Australia hold building and construction qualifications but are working below their skill level. We need evidence backed, common sense and practical solutions implemented this year to continue momentum to deliver the National Housing Accord and beyond.”
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