New ABS Building Activity data for the March quarter has laid bare the scale of Australia's housing delivery problem, with NSW recording the sharpest falls of any state and the national figures showing a comparable, if less dramatic, shortfall.
NSW commencements dropped 29% in the March quarter to 11,841, while completions fell 15% to 10,227. Over the year to March, the state delivered 44,700 completions and 51,829 commencements, both well short of the 88,386 homes needed annually to hit NSW's National Housing Accord target of 377,000 new homes by July 2029.
Nationally, the picture is softer but points the same way: seasonally adjusted dwelling completions slipped 0.4% to 43,816 in the March quarter, with private house completions down 0.6%, even as higher-density completions rose 10.5% year-on-year.
Property Council NSW Executive Director Katie Stevenson said the state's numbers confirm a persistent problem.
"These figures show the housing challenge facing NSW remains significant with a substantial gap between housing targets and housing delivery," Stevenson said in a media release.
Both Property Council releases point to the same underlying cause: projects are struggling to move from approval to completion, not because of planning delays, but because of cost and finance constraints.
Property Council Group Executive Policy and Advocacy Matthew Kandelaars, in a separate national release, said the shortfall reflects a deeper capacity problem.
"Australia produces around 400 dwellings for every 1,000 people, well below the OECD average of 500," Kandelaars said.
He added that taxes and charges "can account for close to 40% of the cost of a new home."
Stevenson made a similar point on financing, noting industry sentiment "has fallen below neutral, as cost pressures and financing constraints continue to weigh on delivery."
For brokers, the sharper concern is what a stretched construction sector means for rates.
In a Westpac commentary, senior economist Pat Bustamante notes activity is "rebalancing rather than retreating," with residential pipelines still elevated even as a boom in non-residential and data-centre construction, concentrated in NSW and Victoria, keeps the sector operating at high utilisation.
That tightness matters because it risks "renewed upward pressure on construction costs and prices," reinforcing Westpac's view that "the RBA may not be finished with its tightening cycle."
With supply lagging demand on both fronts, first-home buyers and property investors alike may face a longer wait for meaningful price relief, and brokers should factor continued construction-cost and rate pressure into servicing conversations over the coming months.
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