‘Stop-start’ housing approvals jeopardize Australia’s ability to build – realestate.com.au

After hitting a nearly three-year high in November, construction approvals fell in December 2025 as apartment projects fell.

According to seasonally adjusted data from the Australian Bureau of Statistics (ABS), the total number of approved homes fell 14.9% to 15,542 in December 2025.

The latest figures follow November’s result, which recorded the highest level of building approvals since February 2022.

According to the data, the decline in December was largely driven by a 29.8% decline in approvals for non-residential private residential properties – a category that includes townhouses, apartments, semi-detached houses, terraced houses and terraced houses.

This segment continues to deliver volatile results. In November, it led the overall increase in approvals, largely due to a 63.7% increase in apartment approvals alone.

But in December the number of apartments approved fell by 37.6% to 3,470 homes – also 14% lower than the average of the previous twelve months.

Angus Moore, executive manager of economics at REA Group, said higher density approvals fluctuate widely from month to month.

“Higher density approvals are volatile from month to month because apartment projects can be large and approved at a similar time. This means we could see a large number of approvals in a given month based on the timing of one large project’s approval,” Moore said.

“This makes it important to look beyond month-to-month and instead look at the longer trend. The longer trend is positive as approvals have been on an upward trend in recent years. Yet we are still well behind the pace we need to meet the national government’s target of 1.2 million homes over five years.”

Approvals for detached houses rose slightly by 0.4% to 9,487 homes, following a 0.8% increase in November, although results varied considerably between states, according to ABS head of construction statistics Daniel Rossi.

“South Australia recorded the biggest increase, at 13.1%, to its highest level since April 2023. Western Australia rose 0.4% to its highest level since July 2021,” Rossi said.

“By contrast, New South Wales saw the biggest decline in December, with a decline of 5.5%.”

Consistency remains the challenge

While December saw a decline, annual approvals showed an improvement overall.

According to an analysis by the Property Council of Australia, the total number of residential property approvals for 2025 was 195,731 – an increase of 12.8% on the 172,457 approvals in 2024.

However, the industry body said December’s figures reinforce the “stop-start reality” facing apartment building, with more consistent approvals needed at scale.

Apartment approvals alone fell by 37.6% to 3,470 units by December 2025. Photo: Getty

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“November showed what is possible, but December shows how quickly the numbers can decline,” said Matthew Kandelaars, the Property Council’s group director for policy and advocacy.

“The annual picture is improving, but we are not going to meet national targets with monthly increases – we need a consistent pipeline of viable projects that can move from approval to site.”

Mr Kandelaars said the overall trend for apartments remains key to improving housing supply.

“Across the calendar year, apartment approvals are up, which is critical as multi-unit housing in well-located areas allows us to add supply at scale,” he said.

The Housing Industry Association (HIA) said that despite the increase in approvals by 2025, the total was still well below the estimated 240,000 new homes needed.

“Households cannot live with an approval, and these projects can only become a reality if there is sufficient investment, infrastructure and incentives to bring them to market,” said HIA chief economist Tim Reardon.

“Governments must remove the extra costs for land development and new home construction if we want to achieve sufficient housing.”

Master Builders Australia also said higher density construction would be essential to increase housing supply.

“Building higher density homes offers our best chance of meeting the Housing Agreement target,” said Shane Garrett, chief economist at Master Builders Australia.

“If the conditions are right, it can be rolled out quickly and on a large scale. However, for this we need to create the right conditions around construction times, supply chains, costs and, most importantly, the availability of labor.”

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