Australia's housing supply woes continue to mount.
The latest data from the Australian Bureau of Statistics (ABS) revealed a continued drop in building approvals for April 2025. The number of total dwelling approvals dropped by 5.7% to 14,633. That's on top of an 8.8% decline the month before.
"It's not good," Nerida Conisbee, chief economist at Ray White, told Australian Broker. "It's not really good news for affordability.
"The problem too is that those numbers are approvals; so it's not even completions," Conisbee said. "So many projects, even if they have been approved, aren't getting started or completed, because of what's happening with construction costs and labor availability."
The recent downturn was driven by a 19% decline in approvals for private sector dwellings – such as apartments and townhouses, but excluding houses – which dropped to 4,999. The lower rate of approvals is particularly troubling for urban and regional centers, many of which are already struggling with a severe undersupply of affordable housing.
But a few bright spots existed: approvals for private houses edged up 3.1% to 9,349, while the total value of non-residential building approvals rose 14.7% to $7.91 billion.
Still, this might not be enough to offset the larger trend. The total value of residential building approvals fell 1.3% in April. Some market players have warned that this could drag Australia deeper into a full-blown housing crisis, as the supply shortage shows no signs of easing. With too few workers and not enough projects in the pipeline, pressure is mounting on both prices and rents – and the squeeze isn’t letting up anytime soon.
"This is a problem we have at the moment, because we are still seeing a lot of developers put in for approval, but when they try to get things up and running, because construction costs are still so variable, and availability of of builders is still so tight, it's just really hard for people to get get the project started," Conisbee said.
The drop in building approvals comes as Australia’s property market wrestles with conflicting market pressures. The Reserve Bank of Australia's (RBA) recent rate cut – its second in 2025 – boosted borrowing capacities, lifted consumer confidence and added fuel to the market's upward market momentum.
"Since the RBA dropped rates, there's definitely been confidence starting to grow again in the marketplace," said Chris Hall, founder and managing director of Blue Crane Capital.
The data backs this up: the Westpac–Melbourne Institute Consumer Sentiment Index rose 2.2% to 92.1 in May, while the ANZ-Roy Morgan Consumer Confidence Index was up 0.8 points to 88.3 the same month. The NAB Business Confidence Index moved to -1 in April, up from -3 in March.
But rising construction supply costs, a lack of workers, rental increases and pricing pressures persist, underscored by a thin pipeline of new housing. With fewer homes hitting the market, prices continue to climb amid intense competition, pushing some buyers out altogether, particularly in capital cities and fast-growing regional hubs. Adding to the uncertainty is a still shaky global outlook, with US President Donald Trump's tariffs clouding the economic horizon.
In 2023, Prime Minister Anthony Albanese – who was re-elected to the Labor Party last month – laid out an ambitious plan to build 1.2 million new homes across the nation by 2029 by way of the National Housing Accord. The latest ABS stats suggest Australia is falling short. Other initiatives developed by the Albanese camp, such as the $10 Billion Housing Fund and the Social Accelerator, also promised to create new homes.
For mortgage brokers, this evolving dynamic presents both challenges and opportunities. As market conditions tighten and competition for existing stock intensifies, brokers will need to provide strategic, data-informed advice to clients. Understanding how local supply constraints and rate movements interact will be essential in helping buyers and investors make informed decisions.
In particular, brokers should be proactive in helping clients navigate changes to borrowing conditions, including shifting loan-to-value ratios and interest rate expectations. They may also need to guide clients through more competitive property markets, where pre-approvals and swift financing can be critical advantages.
