As the federal budget approaches, new data on building approvals is putting fresh pressure on the government to address housing supply.
According to seasonally adjusted data from the Australian Bureau of Statistics (ABS), the total number of dwellings approved fell 10.5% to 17,300 in March 2026. This followed a 29.7% rise in approvals in February to 19,022 dwellings.
Total building approvals fell 10.5% in March 2026. Picture: Getty
Despite the monthly drop, approvals in March were still 9% higher than the same period last year.
REA Group senior economist Eleanor Creagh said March’s data reflects the volatility of the construction pipeline.
“The decline largely reflects a pullback in higher-density approvals, which are lumpy and sensitive to project timing, while detached house approvals continue a modest recovery, now at their highest level since late 2021,” Ms Creagh said.
“However, it’s clear approvals are stabilising at levels that remain insufficient to materially lifting future housing supply and at the right size to population growth.”
Ms Creagh pointed to the private other dwellings category as a key weak spot, with approvals falling 26% to 6632 dwellings.
“The unit segment continues to exhibit weak and inconsistent momentum, reflecting ongoing constraints from elevated construction costs, financing conditions and development risk,” Ms Creagh said.
“As a result, though approvals have recovered from historic lows, the pipeline remains too thin, implying that the delivery of new housing is likely to remain below levels required to meet demand over the next few years.”
According to the numbers, approvals for detached houses reached a four-year high in March, rising 0.9% to 10,194 dwellings — up 12% compared with a year earlier.
ABS head of construction statistics Daniel Rossi said this was the strongest result since November 2021, with varied outcomes across states.
“New South Wales recorded the largest rise in private sector house approvals, up 9.5 per cent, to the highest level since August 2022. This rise follows subdued levels for detached housing over the last few years,” Mr Rossi said.
“Western Australia had the largest fall in March, down 8.6 per cent. Despite the drop, house approvals remain higher than the twelve-month average.”
Results elsewhere were mixed, with Queensland approvals rising 7.2%, while South Australia and Victoria fell 6.2% and 2.5% respectively.
All eyes on the budget
The figures come ahead of next week’s federal budget, which will be delivered on 12 May and is expected to introduce measures impacting home building, including proposed changes to capital gains tax settings.
The budget will be delivered on May 12, with housing minister Clare O'Neil calling it a ‘housing budget for the country’. Picture: Getty
The federal government has already announced a $45 million plan over four years to fast-track environmental approvals across housing, energy and resources projects.
The data also follows recent analysis from the National Housing and Affordability Council, which modelled how conflict in the Middle East could further impact housing construction.
Housing Industry Association senior economist Maurice Tapang said those risks were not yet evident in approvals data.
“The adverse impact of recent global events and interest rate increases are yet to be observed in housing approvals data,” Mr Tapang said.
“Despite this, demand for housing in Australia remains strong off the back of population growth and low levels of unemployment.
“In order to meet that demand and address housing affordability in Australia, governments need to lower taxes and the cost of delivering housing.”
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