Approvals for Victorian apartments rise as new home dream retreats – realestate.com.au

The great Australian dream of a home with a backyard took a step backwards in Victoria last year, with the state lighting up almost 1000 fewer new homes than in 2024.

Although Australian Bureau of Statistics data released yesterday showed the total number of new homes approved by planners rose from 53,604 to 54,250 in the 12 months to the end of December, the growth was the result of an increase of almost 1,300 homes in the number of apartments and units approved.

As for the decline in housing approvals, it comes at a time when they are below 2018 levels and far behind what is needed to achieve state and federal goals designed to substantially increase the availability of new housing.

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The Allan government is targeting a target of 80,000 homes per year for the state and the Albanian camp is aiming for a target of 240,000 per year across Australia.

New home permit data remains well below necessary levels for both targets, with forecasts from the Property Council of Australia, the Housing Industry Association and Oxford Economics all showing the federal targets, which have a five-year timeline, will not be met.

But the latest ABS data also coincides with a drop of around 50 per cent in appeals to the Victorian Civil and Administrative Tribunal for apartment projects since May last year.

Jonathan O’Brien, lead organizer of Yes In My Backyard (YIMBY), said the combination of the data could be an early sign that efforts to provide a “clearer path to building more homes” and make Melbourne a denser city with more suburban townhouses and apartments were succeeding.

While he said there were some approvals taking place in large towers in areas such as Docklands, much of the activity last year was for suburban projects.

Approvals for skyscrapers in Melbourne’s CBD are less common, with suburban projects believed to be a key factor in the rising numbers over the past year.

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“It’s great to see more and more homes being built in the places where people most want to live,” O’Brien said.

“It’s a year’s worth of data, and I don’t want to get ahead of myself, but I would say it’s exciting to see the first positive signs that reforms appear to be impacting Victorians’ ability to live in the places they most want to live.”

He described it as a “systemic change” and said the result would be an option for those who would rather not have a backyard in Brunswick than have to go to Melton to find a home.

Mr O’Brien added that as many reforms announced last year were still having a material impact on approval numbers, it was likely they would continue to trend upward in 2026.

There are signs that housing permits will improve in 2026.

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Maree Kilroy, chief economist at Oxford Economics, said housing approvals were relatively flat and still well below pre-pandemic levels, but the rise in the number of units with the green light suggested the government’s efforts to encourage more activity in the space could be working.

Ms Kilroy said that given the recent increase in land sales and exploration, there could soon be a rise in the number of approvals for new homes this year.

“The Victorian Government is targeting higher density and apartments, and that is reflected in their policy announcements,” she said.

The economist noted that there was also an improvement in apartment activity in NSW, where government efforts had been made to improve unit policies.

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