Housing shortfall continues to grow as dwelling approvals slump
Australia faces a “tough road ahead” to meet its housing targets, a property industry advocate has warned, citing a combination of falling building approvals, policy instability, and rising construction costs as key hurdles.
Matthew Kandelaars (pictured above), group executive policy and advocacy at the Property Council of Australia, said the latest house approval figures were “another reminder” of the structural challenges the sector must overcome.
“March saw a fall in approvals across all housing types, with a particularly stark fall in apartment approvals reflecting the challenges faced to hit our national housing target,” he said.
Data from the Australian Bureau of Statistics showed that dwelling approvals fell by 8.8% in March to 15,220 — a six-month low and well short of the volume needed to reach the government’s target of 1.2 million homes by 2029.
The warning comes as new data analysis reveals that Australia is already significantly behind schedule. According to figures released in January, just three months into the five-year initiative, the country was more than 15,000 homes short of the expected pace. Further data showed that only 171,394 dwellings were approved in 2024, falling well short of the 240,000 approvals needed annually to stay on track.
To catch up, experts now estimate that 276,994 new homes would need to be approved each year over the next four years — a steep increase from current activity levels.
Kandelaars highlighted the need for stable regulatory settings, especially for multi-residential projects that require long lead times. “Apartment approval data is volatile, but their long project timelines need stable tax and planning policies,” he said. “Certainty is critical when these projects take years to build.
“Even once a project is approved, labour shortages, state-based development-killing taxes and elevated construction costs are all putting pressure on new housing starts. We need an ‘all-in’ approach to turn these figures around.”
The impact was particularly stark in Victoria, where apartment approvals dropped from 2,294 in February to just 671 in March. New South Wales recorded a modest rise in total approvals to 4,032, though the state remains below the monthly benchmark required under its National Housing Accord commitments.
Kandelaars urged swift action from policymakers. “The past three years have established the strong foundations for Australia to build more homes, and with the election behind us, now it is time to shift to the delivery phase,” he said. “We look forward to early industry engagement to get the detail of the government’s election commitments right and to maximise their housing benefits right across the country.”
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