Victorian apartment approvals rise as new house dream pulls back

The number of new houses being approved in Victoria declined over 2025, despite government policies intended to boost supply.

---

The great Australian dream of a home with a back yard took a backward step in Victoria last year, with the state green lighting almost 1000 fewer new houses than it did in 2024.

While Australian Bureau of Statistics data released yesterday shows the total number of new residences being approved by planners rose from 53,604 to 54,250 in the 12 months to the end of December, the growth was a result of an almost 1300-home increase in apartment and unit approvals.

Concerningly the reduction in house approvals comes at a time when they are sitting below 2018 levels, and well short of what is needed to reach state and federal government goals intended to substantively increase new housing availability.

RELATED: Rate hike survival guide: How to escape RBA pain

Melb home prices’ shock stall day before rate call

Insurance crisis: millions consider risking no cover

The Allan government working towards a target of 80,000 homes a year for the state and the Albanese camp seeking a 240,000 construction goal annually Australia wide.

The new housing approvals data remains well short of necessary levels for both targets, with projections from the Property Council of Australia, the Housing Industry Association and Oxford Economics all showing that the federal targets which have a five-year timeline will not be met.

But the latest ABS data also coincides with an about 50 per cent reduction in Victorian Civil and Administrative Tribunal appeals for apartment projects since May last year.

Yes In My Backyard (YIMBY) lead organiser Jonathan O’Brien said combined the data could be an early sign that efforts to provide a “clearer pathway to building more homes” and making Melbourne a denser city with more suburban townhouses and apartments was working.

While he said there were some approvals happening in major towers in areas like Docklands, much of the activity in the past year had been for more suburban projects.

Skyscraper approvals in Melbourne’s CBD have been less common, with suburban projects understood to be a key factor in rising numbers over the past year.

---

“It’s great to see an increase in homes being built in the places where people most want to live,” Mr O’Brien said.

“It’s one year of data, and I don’t want to get ahead of the skies, but I would say that it’s exciting to see early positive signs that reform seems to be impacting the ability for Victorians to live in the places where they most want to live.”

Describing it as a “systemic shift”, he said the result would be an option for those who would rather no back yard in Brunswick than having to go to Melton to get a home.

Mr O’Brien added that with many reforms announced last year yet to have a material impact on numbers of approvals, it was likely they would continue to trend upwards in 2026.

There are signs housing approvals will improve in 2026.

---

Oxford Economics lead economist Maree Kilroy said house approvals were relatively flat and still well below levels seen before the pandemic, but the rise in units being green lit suggested early signs government efforts to drive more activity in the space could be working.

Ms Kilroy said with a recent uptick in land sales and inquiry, there could soon be an increase in approvals for new houses this year.

“The Victorian government is angling towards higher density and apartments and its reflected in their policy announcements,” she said.

The economist noted that improving apartment activity was also being seen in NSW where there had been government efforts to improve policy settings for units.

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: Melb family reveals sad true cost of a rate hike

Aussie expert’s $3500 rate hike survival hacks

What Vic really thinks of govt’s underquoting fix