Housing approvals are showing signs of life, offering a welcome boost amid Australia's ongoing housing shortage.
In June, total dwelling approvals rose 7.2% to 18,328, on a seasonally-adjusted basis. The latest figures from the Australian Bureau of Statistics (ABS) follow three months of declines.
Private sector house approvals increased 0.4% to 10,631, while private sector dwellings excluding houses — such as apartments and units — surged 17.8% to 7,138. Meanwhile, the total value of residential buildings rose by 15.1% to $11.75 billion, while the value of non-residential buildings fell 24.7% to $8.26 billion.
By state, total dwelling approvals were mixed. Queensland, New South Wales and Western Australia shot up with double-digit gains: up 33.4%, 13.2% and 10.7%, respectively. Meanwhile, Tasmania, Victoria and South Australia all posted declines, down -22.5%, -13.9% and -11.5%, respectively.
Approvals for private sector houses also varied by state. Queensland, South Australia and Victoria increased at 2.9%, 2.8% and 2.2%, respectively. Western Australia and New South Wales had declines of -5.4% and -0.3%, respectively.
During the 2025 to 2026 financial year, 204,649 dwellings were approved, up from 187,944 the prior year. That's an increase of 15.8%.
But even with the increased numbers, the latest figures underscore the scale of Australia's housing challenge. Building approvals are just the first step in the construction process, and not every approved dwelling ultimately gets built. As a result, the most recent approval numbers are merely an estimate to the number of new homes that will eventually be delivered.
In addition, economists have long cautioned that non-house approvals are a volatile measure, often skewed by the timing of a single large apartment development in any given month.
"It's a really jumpy series [of data]," Madeline Dunk, an economist at ANZ, told Australian Broker. "Let's say a big apartment block gets approved. That adds a significant amount of building approvals that month. And if an apartment block doesn't [get approved] and it gets delayed to the next month or whatever, it might have bigger flow and effects later. Because of the number of apartments in a huge block."
The figures come as Australia continues to grapple with a chronic housing shortage. In 2023, Prime Minister Anthony Albanese pledged to deliver 1.2 million new homes by 2029 under the National Housing Accord. But with fewer projects entering the construction pipeline, that target is looking increasingly difficult to achieve.
Headwinds include higher interest rates and inflationary pressures, both of which have increased construction and labour costs.
The Labor Party has responded with a flurry of housing reforms designed to boost access for owner-occupiers. Recent measures have sought to curb investor activity — including new restrictions on negative gearing and changes to tax breaks for holiday homes — in an effort to free up more housing stock for owner-occupiers. At the same time, the government has expanded support for first-time homebuyers through a range of schemes meant to help aspiring homeowners overcome affordability barriers.
Lucinda Jerogin, an associate economist at Commonwealth Bank of Australia (CBA) added that the approval series is "notoriously volatile."
Looking ahead, she wrote in a note, "higher interest rates remain a constraint on construction activity, while supply‑chain disruptions associated with the Middle East conflict and broader capacity constraints in the sector pose upside risks to construction costs. Although pass through has been limited to date, the recent escalation in hostilities increases the risk of renewed cost pressure."
