Victoria’s supply of new housing approvals is going backwards despite government efforts to ramp it up.
Victoria’s new housing pipeline is going backwards, despite a long list of government efforts to bolster the state’s housing supply.
New Australian Bureau of Statistics data released today shows there were 54,687 new houses, apartments, units and townhouses green lit for construction in the past year.
In March, 2025, the stats show there were 56,346 approved in the previous 12 months.
The annual decline includes a more than 1000-home reduction in new approvals from February to March this year, and makes it likely the supply of new homes actually being built across the state will decline in the year ahead.
RELATED: February: Victorian apartment approvals rise as new house dream pulls back
Melbourne homeowners ‘short-changed’: housing policies cost $100k
‘More complex’: Grim warning for Victorian homebuyers
This would have come from sales made before interest rate rises and oil market volatility stemming from the war in Iran, with experts indicating those factors are still a few months away from impacting approvals, meaning it likely only reflects faltering confidence at this stage.
It’s a blow to the Allan government’s aspirations to build 80,000 new homes a year as part of an 800,000 new homes in a decade strategy announced by the state government in 2023, intended to help address housing affordability.
Victoria’s slide was part of a national reduction in approvals across March, when the number of new homes being added to the nation’s pipeline tumbled by 10.5 per cent to 17,300 — largely led by a 26 per cent reduction in the number of units, apartments and townhouses being passed by town planners.
Jacinta Allan is facing a challenging scenario where home approvals are slumping backwards despite multiple initiatives intended to increase them. Picture: NewsWire / David Geraghty.
Housing Industry Association senior economist Maurice Tapang said the Victorian figures were “not great” and reflected an issue with confidence in the state, and potentially buyers pulling back waiting to see how this November’s election played out.
While Melbourne and Sydney activity normally move somewhat similarly for multi-unit approvals, he said at the moment they were diverging — with Melbourne struggling to maintain trends.
Mr Tapang said the key differences between the states were that relatively affordable established home prices were making new builds less appealing for buyers in Victoria, while the state’s policies around land tax as well as vacancy taxes for homes other than those serving as the owner’s primary residence could also be deterring investors.
The economist added that NSW had also benefited significantly from a policy where the government there had volunteered to underwrite certain sales to get apartment tower projects moving — which provided a more rapid market intervention than policy moves made in Victoria in the same timeline.
“It’s hard to pinpoint one thing, but you can put it all under the one title of confidence,” Mr Tapang said.
Building industry economists fear it will be next year before Victoria’s approval numbers begin to increase more substantially.
While he said the state should still end 2026 with more than 50,000 new builds, the economist warned the numbers weren’t likely to rise significantly until next year.
“I think Victoria will be left behind for the rest of this year,” Mr Tapang said.
Oxford Economics Australia lead economist Maree Kilroy said while new house builds numbers were fairly stable for the past year, the pricing dynamic in Victoria was making it challenging to build demand for new homes.
“The comparison to the established marker makes new builds arguably less attractive relative to established, which are incredibly affordable (in Melbourne) compared to other capitals,” Ms Kilroy said.
She added that the state’s building approvals in the months ahead would be facing headwinds, with multiple increases to the nation’s interest rates as well as the impacts on build costs caused by the conflict in the Middle East both yet to reach the nation’s building approvals data.
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: McDonald’s boss lists lavish $8.5m Abbotsford man cave
Melbourne landlord reveals horror tenant battle
Labor auction laws could make Melbourne buyers pay more
Help us improve your reading experience
Got a minute? Your feedback will help us build a better experience for you.
Help us improve this page
English (US) · 