The rate of new home builds across Australia’s capital cities has jumped by up to 19.5 per cent over the past year, with approved dwellings beginning construction faster to meet the country’s housing crisis.
Research by KPMG Australia has found the number of approved builds yet to be constructed had fallen by 7 per cent nationwide, compared from December 2024 to December 2025.
This marks the latest improvement in Australia’s efforts to ease bottlenecks on new home builds, following a large backlog thanks to construction and labour pressures.
The backlog of Australia’s approved homes yet to be built eased by 7 per cent over the past year, with improvements of up to 19.5 per cent in capital cities such as Melbourne.
KPMG urban economist Terry Rawnsley said the interest rate cuts in 2025 and relaxed build costs had helped meet the rising demand for homes over the past year.
“The downturn across most major cities hints at a pivotal shift, with long-stalled housing projects finally breaking ground, easing the build up of homes stuck in the pipeline,” he said.
“This signals a cautiously optimistic outlook for boosting future housing supply.”
KPMG Australia urban economist Terry Rawnsley said the demand for new Aussie homes was being met faster, signalling positive signs for future supply.
The analysis of ABS housing data found Melbourne saw the largest drop over the year, taking its backlog from 5,705 builds to 4,592: an improvement of 19.5 per cent.
Sydney, which had the largest backlog at 10,426 approved builds, went down by 10.1 per cent to 9,376.
Perth saw its bottleneck decrease by 6.9 per cent, going from 3,268 approved builds to 3,044. Adelaide saw a much smaller decrease of 1.8 per cent, down from 3,196 builds to 3,139.
The analysis of ABS housing data saw almost every major capital city decrease in their backlog of approved but not yet built dwellings.
Brisbane was the only city where tight demand for housing increased the building backlog, going up by 10.2 per cent. Picture: iStock
Brisbane was the only capital city to see its bottleneck increase, showing the city had yet to catch up with the pressures of its population and supply.
In December 2024, the city had 2,296 approved homes, jumping by 10.2 per cent over the year to 2,531.
Mr Rawnsley said while the latest federal budget would impact housing supply thanks to infrastructure investment and changing investor behaviour, the market would see greater improvement with more homes at cheaper prices and construction costs.
“Clearing the backlog is an important step, but sustained increases across the entire development pipeline will be essential if housing shortages are to be meaningfully addressed,” he said.
Mr Rawnsley said easing backlogs in cities such as Sydney was “an important step”, but needed to be a part of many improvements across the housing pipeline.
Mr Rawnsley said Sydney was a useful example of Australia’s improvements in build pipelines. Typically, for every dwelling that starts construction, there ranged between 1.0 and 1.2 dwellings where building was approved but not yet commenced.
This number rose to 1.8 in 2023 and early 2024, but fell to 0.84 in December 2025: the lowest since around 2020.
“Sydney is the epicentre of the nation’s housing crisis and the most constrained market when it comes to residential construction,” Mr Rawnsley said.
“To see the backlog of stalled builds finally moving shows Sydney’s construction sector has shifted from congestion toward catch up mode.”
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