Australia’s building approvals fell again at the start of 2026, driven by a sharp pullback in higher‑density housing.
According to the latest seasonally adjusted data from the Australian Bureau of Statistics (ABS), total building approvals fell 7.2% in January 2026 to 14,564.
The result marks a second consecutive monthly decline, following a 14.9% fall in December 2025.
Total building approvals fell for the second consecutive month in January. Picture: Getty
The January drop was largely driven by a sharp fall in approvals for private dwellings excluding houses – a category that includes apartments, townhouses, terrace homes and semi‑detached dwellings. Approvals in this segment fell 24.5% for the month, after already declining 30.7% in December 2025.
REA Group senior economist Anne Flaherty said the numbers were not unexpected, given the trend typically seen over the holiday period.
“Comparing year‑on‑year, the number of approvals over the three months ending January has held steady, rising by just 1%,” Ms Flaherty said.
Apartments and townhouses recorded particularly large falls. Apartment approvals dropped to 1819 for the month, down 60.1% compared with a year earlier. Townhouse approvals fell 39.2% to 1684, which was also 11% lower than the same period last year.
Master Builders Australia said January’s total approval numbers were the lowest since June 2024, largely due to the slump in higher‑density housing.
“Australia is depending on higher density housing to reach not only National Housing Accord targets but to dramatically increase housing supply,” chief economist Shane Garrett said.
“The collapse in higher density approval numbers over recent months is particularly worrying when we are already 77,700 homes behind on the National Housing Accord’s target of 1.2 million homes before the end of the decade.”
In contrast, approvals for detached houses increased slightly, rising 1.1% to 9,753, with mixed results across the states.
“Western Australia recorded the largest rise in January, up 11.5%, to reach the highest level since May 2021,” ABS head of construction statistics Daniel Rossi said.
“In contrast, South Australia had the largest fall, down 8.9%.”
Ms Flaherty said approvals for new houses were up 6% compared with the same period 12 months ago, while approvals for dwellings other than houses were down 5%.
“Houses continue to dominate new building approvals, with feasibilities for units more challenged in the current development landscape,” she said.
According to analysis from the Housing Industry Association (HIA), this was the strongest monthly result for detached house approvals since September 2022.
“Housing demand in Australia remains robust, amid low levels of unemployment and strong levels of population growth,” chief economist Tim Reardon said.
“Established home prices continue to grow quickly compared to prices of other goods and services in the economy. This has helped some households opt to build a new home as an alternative.”
Mr Reardon said approvals for apartments and townhouses remained volatile on a month‑to‑month basis.
“The poor result in January 2026 does not significantly diminish the upwards trend in multi‑unit approvals over the past 12 months, which have increased by 21% to 79,130,” he said.
“The upwards trajectory in new dwelling approvals across Australia is notable, with a 9.2% increase over the past 12 months to 193,480.”
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