Industry warns of widening supply gap as Housing Accord targets slip further out of reach
Australia’s monthly building approvals fell again in October, with fresh data and industry commentary pointing to ongoing pressure on housing supply.
According to the latest figures from the Australian Bureau of Statistics (ABS), the total number of dwellings approved declined 6.4% in October to 15,832. Private-sector houses fell 2.1% to 9,251 approvals, while approvals for private dwellings excluding houses – mainly apartments and townhouses – dropped 13.1% to 6,253 following a sharp rise in September.
Private sector house approvals fell in most states. Victoria had the largest fall, down 6.6%, after a 4.7% rise in September. The exception was Queensland, where private sector house approvals rose 2.7%.
Despite the October drop, house approvals were 1.3% higher than in October 2024. By contrast, private-sector dwellings excluding houses were 3.3% lower than a year earlier.
Meanwhile, apartment approvals fell 39.2% in October to 3,397 following a strong September result of 5,589. That level was 13.8% below the average of the past 12 months. Townhouse approvals moved in the opposite direction, rising 16.4% in October to 3,075 and sitting 13.7% above their 12‑month average.
On the value side, the total worth of building approved slipped 2.8% in October to $16.16 billion after a larger fall the previous month. Residential work led the decline: the value of total residential building dropped 11.8% to $9.03 billion, driven by a 13.7% fall in new residential building to $7.85 billion.
The value of alterations and additions rose 3.5% to $1.18 billion. Non-residential approvals moved higher, with their total value up 11.6% to $7.13 billion and 32.4% higher than a year earlier.
Industry groups call for reform
Shane Garrett, chief economist at Master Builders Australia, said the decline in approvals further undermines progress towards the National Housing Accord, which commits governments to delivering 1.2 million new homes over five years.
“During the National Housing Accord’s first year, we built 60,000 fewer homes than needed,” he said. “This means that an average of 255,000 new homes per year must be produced over the Accord’s remaining 4 years. We remain far from this calibre of housing output: today’s figures show less than 192,000 new homes were approved over the year to October 2025.”
Master Builders Australia chief executive Denita Wawn (pictured top left) pointed to feasibility challenges at project level. “There is a clear gap between policy ambition and reality, with approvals going backwards, not forwards,” she said.
“Builders are struggling to make the numbers work. Construction costs have jumped more than 40% since 2019, and rising finance and insurance costs are pushing too many projects off the table. Without urgent action to ease pressures and restore confidence, more projects will stall before they even start.”
The Property Council of Australia, meanwhile, said the drop in apartment approvals underscored the need to overhaul planning systems if governments are to meet housing targets.
Property Council group executive, policy and advocacy, Matthew Kandelaars (pictured top centre), said the reversal in apartment activity was a concern after September’s improvement. “Apartment approvals are volatile, but seeing a fall after some positive figures in September is frustrating,” he said.
“We know we can lift our run rate. In October 2015, we approved 9,212 apartments - that should be the benchmark we set for ourselves. While ambitious, this is an achievable target, and it should be our goal heading into the new year.”
Kandelaars stressed that higher-density approvals would be central to meeting the national housing target. “Without approving large-scale apartment projects in higher numbers, our housing targets just get that much harder to reach,” he said.
“Addressing the housing crisis means building more homes and the best way to do that is at scale – apartments to purchase or to rent, retirement villages, land lease communities and purpose-built student accommodation.
“For these projects especially, we also need to look past planning systems, which are often just the first bottleneck in getting projects out of the ground. Soaring costs, labour shortages, low productivity and punitive state taxes mean even getting past the approvals hurdle is sometimes not enough.”
Urban Taskforce chief executive Tom Forrest (pictured top right) also criticised the federal government’s approach in dealing with the housing crisis. “The states need to be supported by serious Commonwealth support for housing enabling infrastructure,” he said.
“National data showed a falling away of approvals, led by the two major states - NSW and Victoria. The Albanese Government’s failure to treat the housing supply crisis as a ‘crisis’ and have all arms of his government fighting for housing supply and reducing costs is taking its toll on the states’ efforts. We urgently need to see investment in housing related infrastructure.”
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