Australia’s plans to build its way out of a building crisis one year on are well short of what is needed.
Australia is set to fall 60,000 homes short of the number of new home approvals needed to fix its housing crisis in the first 12 months of a five-year campaign to fix the problem.
Major industry groups are predicting shortfalls of up to 285,000 on the 1.2 million homes needed to be built by the 2029 deadline set by the nation’s leaders in 2024.
Australian Bureau of Statistics data released today shows 168,981 new homes have been approved in the 11 months since the Accord commenced on July 1 to the end of May, including a 3.2 per cent rise to 15,212 given the go ahead by planners in the past month.
RELATED: Australia predicted to miss National Housing Accord annual targets until 2028
‘Train wreck’ housing approvals mean nation needs to build 260k homes a year to meet target
Federal budget 2025: Nation’s biggest builder says housing crisis needs ‘wartime response’
In the most recent full year of data, from June 1, 2024, to May 30, 2025, there were 181,643 new homes approved — up from about 165,000 in the prior year.
But a National Housing Accord that commenced on July 1 last year required at least 240,000 homes be built each year until 2029 in order to build the 1.2 million homes needed to address the housing crisis.
And the cost of building a house is still becoming more expensive, hitting a $513,000 national average in May.
Victoria has approved the most homes since the Accord began, with 51,876 in the 11-month period and 55,531 in the full year.
New South Wales was next with 43,000 approvals since July, and 45,680 in the past 12 months.
The shortfalls in approvals are just the tip of the iceberg, with industry groups warning the number of homes actually being built is substantially less than the number being given the green light for construction.
New home commencements are even lower than building approvals data.
The Housing Industry Association has calculated about one in six apartments approved nationwide not under construction within two years, while about 5 per cent of houses and townhouse approved are also not commenced in that timeline.
With just 168,050 new homes started in 2024, the Housing Industry Association is predicting just 986,000 homes will actually be built over the five years.
HIA senior economist Tom Devitt said interest rate cuts were likely beginning to help raise confidence among buyers, explaining a wider increase in housing approvals — but warned the figures were not all that they seemed.
“Multi-unit approvals in the last three months were 25 per cent higher the same quarter a year earlier, but recent activity is likely driven by ‘phantom approvals’,” Mr Devitt said.
“Some apartment projects that were already approved for construction but hadn’t commenced yet, are returning for re-approval ahead of the introduction of the National Construction Code 2022 which will increase construction costs further.
“But you can’t live in an approval. These projects, which have not been viable over recent years, are unlikely to get the necessary sales to commence construction over the next couple of years.”
HIA senior economist Tom Devitt said Australia would fall 20 per cent short of its targets.
How “phantom approvals” are hurting housing construction in NSW, Victoria and Queensland.
The economist said approvals of apartments would need to double from current levels to reach those needed to reach the 1.2 million target.
“And, regardless of the increase in approvals, the volume of commencements will fall more than 20 per cent short of the government’s goal of building 1.2 million homes,” Mr Devitt said.
Master Builders Australia chief economist Shane Garrett said new home approvals were currently on track to deliver just 915,000 new homes in five years — a 285,000-home shortfall on the target.
Despite this rising numbers of new homes are believed to be having an impact.
“Rents are still rising, but the speed at which they are doing so has slowed,” Mr Garret said.
“Conditions for renters could be improved further if we achieve further gains in higher density home building.”
Master Builders chief executive Denita Wawn said governments should have one goal now.
“It’s not governments that build homes, it’s private businesses; what we need is for them to clear the path so we can get on with the job,” Ms Wawn said.
Who is approving the most homes
Victoria: Approved – 51,876;
NSW: Approved – 45,680;
Queensland: Approved – 34,301;
Western Australia: Approved – 21,069;
South Australia: Approved – 13,113;
Tasmania: Approved – 2153;
ACT: Approved – 2034;
Northern Territory: Approved – 496;
*Approval figures show 11 months from July to May
Source: Australian Bureau of Statistics
The Property Council of Australia’s latest expectations are that we will fall short by 262,000 homes.
The powerful lobby group’s policy and advocacy group executive Matthew Kandelaars said while there had been a modest uptick in May, it was still a “long way from mission accomplished” and too many projects were still being slowed by “red tape, slow planning and environmental approvals” as well as high costs.
“To hit the Accord’s 1.2 million homes target by mid-2029, we need to be approving at least 20,000 new homes every month and we’re still falling short of that mark,” Mr Kandelaars said.
“Today’s numbers confirm what we’ve long known – we don’t just have a housing crisis, we have a productivity problem.
“As the Treasurer rightly plots a course to lift national productivity, we must remember that when building slows, the whole economy feels it. Productivity in property means productivity for the nation. We’re building homes half as fast as we were 30 years ago. That must change.”
The Property Council Matthew Kandelaars said red tape and planning remained in the way of building the nation out of its housing crisis.
Property Council of Australia chief executive Mike Zorbas added that it was also time for state governments to review property taxes.
“With states in debt through the next decade, we also need a grown-up conversation about state-based apartment-killing foreign investor taxes that drive institutional investors away from
partnering with Australian companies on new housing, industrial and commercial projects,” Mr
Zorbas said.
Oxford Economics Australia lead economist Maree Kilroy said while they were now revising their forecasts for housing construction upward, they were not expecting the target to be reached by 2029.
Ms Kilroy said improvements in apartment approvals in NSW and Victoria, as well as a lift in house approvals in Victoria were positive signs, “but nothing you would right home about”.
“We are at the beginning of an upturn, and we would expect that the approval figures per state will pick up, particularly for housing as interest rates flow through,” she said.
“But it’s still really muted for housing at the moment.”
Oxford Economist Australia’s lead economist Maree Kilroy has labelled approvals as “muted”.
The economist added that it’s likely numbers aren’t accelerating more rapidly at least in part because the cost of building homes continues to rise, rising to $513,000 for the typical house around the country in May.
Institute of Public Affairs research director Morgan Begg said they believed the National Housing Accord would come up 55,300 new homes short in its first year.
“In its first year of operation, the National Housing Accord as failed to hit a single target,” Mr Begg said.
Further analysis of separate ABS data by the group shows the time it takes to build homes around Australia and the cost of them has risen by about 50 per cent over the past decade.
From 2014 to 2024, their analysis shows Western Australia has had the biggest timeline blowout, with an 85 per cent increase in construction time, alongside a 45 per cent increase in material costs.
Housing construction is outpacing apartments at present, which experts say needs to change.
South Australia was next with a 74 per cent increase in building times, and a 51 per cent lift in costs.
Queensland has had a 58 per cent increase in material prices and timelines.
NSW had a 39 per cent uptick in times and a 55 per cent cost increase, similar to Victoria where increases were pegged at 37 per cent and 56 per cent respectively.
Tasmania had a 29 per cent increase in timelines for builds, with a 55 per cent increase in building costs.
“IPA research shows between the 2022 and 2024 calendar years, the housing supply shortfall in Australia was almost 180,000 homes, highlighting the huge effect of the construction slowdown,” Mr Begg said.
Experts have varyingly suggested key ways to address the shortfalls in housing approvals would be to tweak property tax arrangements, particularly around international investment in property, increase tradie numbers both through training and migration, and to address land shortages and planning red tape.
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
MORE: Behind the rent crisis: Agents reaching breaking point
Australian home values hit record high as rates fall
National housing accord on track to be at least 300k homes short
English (US) · 