On Tuesday, the Australian Bureau of Statistics (ABS) released dwelling approvals data for March, which recorded an 8.8% monthly fall to 15,220 approvals.
House approvals fell by 4.5% in March, while unit & apartment approvals fell by 15.1%.
Annual approvals rose to 180,740, up 10% on the June 2024 low of 164,254.
As illustrated below, house approvals have returned to pre-pandemic levels, whereas unit & apartment approvals are tracking well below pre-pandemic levels:
The following chart from CBA plots annual dwelling approvals against the federal government’s housing construction target, which requires 240,000 homes to be built annually.
Independent housing analyst Cameron Kusher also produced the following chart tracking cumulative approvals since 1 July 2024 against the government’s target:
“Over the first nine months of the Housing Accord period, 139,352 dwellings have been approved compared to a requirement of at least 180,000 (and in reality a lot more than that)”, noted Kusher.
“Just nine months into the period, the cumulative shortfall of dwelling approvals sits at 40,648 dwellings. This represents an average monthly shortfall of dwelling approvals of 4,516 dwellings”.
“While approval volumes are increasing, it is hard to imagine that the shortfall we’re experiencing over the first nine months of the target period will be able to recovered throughout the whole five years. This is due to how far behind the Housing Accord target we continue to sit”, Kusher wrote.
It is worth pointing out that just because a dwelling has been approved does not mean that it will be built.
In the past decade, 5% fewer dwellings were completed than were approved:
Actual dwelling completions are also tracking further below Labor’s housing target:
The supply side of Australia’s housing market will remain constrained for the foreseeable future due to:
- Increased lending rates;
- Higher construction costs;
- Labour shortages; and
- High builder insolvencies.
The only practical solution to the housing shortage is to bring demand back into balance with supply by reducing net overseas migration.
The March federal budget projected that Australia’s population will grow by 1.8 million people over the next five years, with 1.4 million of them forecast to settle in Victoria (544,000), New South Wales (486,000), and Queensland (412,000).
Source: March 2025 Federal Budget
Policymakers cannot expect to solve the housing crisis by importing hundreds of thousands of people into the market every year.
