Australia’s housing industry says more needs to be done to lift building approvals, with the country now two years into its 1.2 million-home Housing Accord target.
According to seasonally adjusted data from the Australian Bureau of Statistics (ABS), building approvals for May 2026 fell 1.1% to 17,019, following a decline in April.
Total building approvals fell 1.1% to 17,019 in May 2026. Picture: Getty
Much like April, the fall was largely driven by a 10.4% drop in private dwellings excluding houses, which includes townhouses, apartments, semi-detached, row and terrace houses.
Overall, the May result for the category was 8.6% lower year-on-year.
Results across the states were mixed. Queensland recorded the largest fall in total approvals, down 8.8%, followed by Victoria (-3%) and Western Australia (-1.3%). Approvals rose in South Australia (10.9%), Tasmania (4.8%) and New South Wales (2.2%).
Meanwhile, approvals for detached houses lifted 2.8% to 10,537 — the highest level for the category since September 2021.
It was also the fourth consecutive month with more than 10,000 detached houses approved, and the May result was 13.2% higher than a year earlier, largely driven by Western Australia and NSW, according to ABS head of construction statistics Daniel Rossi.
“Western Australia continued strong growth in detached housing approvals, rising 9.9%, to be up 24.5% compared to May 2025,” Mr Rossi said.
“New South Wales rose 7.8% in May, returning a fourth straight month with more than 2000 approved private houses. The result is 24.1% higher than one year ago.”
Queensland fell 3.6%, following its highest result since July 2021 last month, while South Australia fell 1%.
Two years into the Housing Accord
The numbers come as Australia reaches the two-year mark of the National Housing Accord, the country’s target to build 1.2 million new homes over a five-year period until June 2029.
Australia has reached the two year milestone of the National Housing Accord - the country's target to build 1.2 million homes by June 2029. Picture: Getty
To meet the goal, Australia needs to build 240,000 homes each year. Recent federal government modelling suggests the nation will not meet the target until June 2030 — one year after the Accord ends.
While the ABS figures only report progress to the end of May 2026, industry groups said the latest data highlights the scale of the challenge.
Master Builders Australia chief economist Shane Garrett said annualised data pointed to a growing shortfall.
“Annualised data shows a 91,000-homebuilding shortfall has marked the Accord’s first two years. The volume of approvals for new homes has been consistently below its long-term trend over the past two years,” Mr Garrett said.
“New home building activity across Australia was at its strongest during the mid-2010s. Then, we had a favourable mix of settings involving low interest rates, solid productivity, economic stability and an openness to foreign investment.”
The Property Council of Australia said the next 12 months represented the federal government’s “last clear window” to implement policy changes that could unlock more supply.
“We need a relentless focus on supply, especially the type that delivers new homes at scale,” Property Council Group executive policy and advocacy director Matthew Kandelaars said.
“Anything less than the true reform needed to unlock supply will lock in years of under-delivery when Australians can least afford it.”
The Housing Industry Association (HIA) said the figures reflected the “good momentum” of home building nationally, but warned confidence remained critical.
“There is only one factor that is more important to new home building than interest rates, and that is market confidence,” HIA chief economist Tim Reardon said.
“Households postpone buying a new home if they are not confident about their employment and the state of the economy.
“If market confidence returns quickly, as we expect, then the adverse economic indicators that we are seeing with the decline in home prices and anecdotal reports of a slowdown in home buying activity will not be observed in future building approvals data.”
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