The housing crisis deepens Down Under
Total building approvals fell 6% in August, in seasonally-adjusted terms, to 14,744, according to the latest data from the Australian Bureau of Statistics (ABS). That's on top of a 8.2% decline in July, though approvals remain 3% higher, compared with the same period last year.
Private sector dwellings, excluding houses, fell 8.1% to 5,408, after falling more than 22% in July. Still, the figures are up 16.3%, year-over-year. Daniel Rossi, head of construction statistics at ABS, said approvals for apartments and townhouses was the main driver for the decline – with apartment approvals down 33.4% to 2,704, the lowest levels in 12 months. Approvals for townhouses, meanwhile, fell 19.1% to 2,424. Private sector houses also fell, down 2.6% to 9,027 in August, after a slight rise in July. Annually, private sector houses are down 3.5%.
Adelaide Timbrell, senior economist at ANZ, said this marks a reversal from early 2024 when building approvals were on the rise.
"[The numbers] are still below the decade average," Timbrell told Australian Broker. "So this data would just be a continuation of the story: housing approvals are not necessarily catching up with the amount of population growth that we've had in recent years."
The one bright spot was in the value of non-residential buildings – up 26.1% in August, to $7.92 billion – after a 14.9% July fall, signalling Australia's commercial market may be making a comeback. The value of total residential buildings declined 3.1% to $9.17 billion.
By state, approvals for total dwellings were down in Victoria, New South Wales, South Australia and Western Australia, 11.8%, 11.4%, 10% and 7.3% respectively. Approvals rose in Tasmania and Queensland, up 14.4% and 3.7%, respectively.
Additionally, these figures reflect the number of new building approvals, not actual completions. Many approved projects may never reach completion. A decline in approvals signals fewer homes will be built, further exacerbating Australia’s housing crisis.
The drop in building approvals also comes as Australia’s property market wrestles with conflicting market pressures. The Reserve Bank of Australia's (RBA) has cut rates three times thus far in 2025, boosting borrowing capabilities and lifting consumer confidence.
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 and competition intensifies, pushing some buyers out altogether, particularly in capital cities and fast-growing regional hubs.
In 2023, Prime Minister Anthony Albanese – who was re-elected to the Labor Party in May – 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.
A plunge in building approvals signals fewer new homes entering the market, which tightens supply and keeps property prices high or rising. For mortgage brokers, this means increased competition among buyers, potentially higher loan amounts and greater demand for financing solutions. It also impacts the types of clients brokers serve, such as more buyers competing for limited stock and possibly more investors looking for alternative opportunities.
