Important
Australia is aiming for 1.2 million new homes over five years. Even with recent improvements, approvals remain more than 50,000 homes short of what is required each year. This structural supply gap has real consequences.
For a while, the headlines were all about a “construction slowdown”.
That is not quite the story anymore.
Approvals fell sharply in 2024. They have improved in 2025. But the real issue is this:
We are still not building enough homes to meet Australia’s own housing target.
And that gap has real consequences.
The Target vs The Reality
Under the National Housing Accord, Australia is aiming for:
- 1.2 million new homes over 5 years
- That means 240,000 approvals per year
Now compare that with the actual numbers.
| Fiscal Year | Dwellings Approved | Notes |
|---|---|---|
| FY 2023–24 | ~163k | Lowest level since FY 2011–12 |
| FY 2024–25 | ~187k | Up 13.9% from the prior year |
That bounce is welcome.
But even at 187,000 approvals, we are still more than 50,000 homes short of what is required each year.
We were already well behind schedule early in the five-year plan. Some analysts suggest the total shortfall could reach 200,000 to 460,000 homes by 2029 (an estimate, not a certainty).
Approvals are improving — but they are not sufficient.
Why This Matters: This is not just a statistic.
It affects:
- Rents
- Property prices
- First home buyers
- Builders and tradies
- Broader economic confidence
Housing under-supply compounds over time. One weak year rolls into the next.
What Is Holding Construction Back?
The challenges are structural.
Planning Delays and Red Tape
Developers often wait months — sometimes years — for approvals.
Even compliant projects can stall in slow council systems. Time delays increase risk and reduce margin.
Council Contributions and Upfront Costs
Before building even starts, projects face:
- Infrastructure levies
- Council contributions
- Compliance and consultant costs
For many developments, the feasibility simply does not stack up.
Interest Rates
Higher borrowing costs mean holding land or half-approved projects is expensive.
Each month of delay adds pressure.
Owner-Occupier Caution
Homeowners are also hesitating on:
- Knock-down rebuilds
- Renovations
- House & Land
Economic uncertainty and rate pressure are dampening activity at the smaller end of the market.
Supply vs Demand
Demand remains strong:
- Migration is high
- Population growth continues
- Capital city demand remains elevated
The issue is not demand.
It is the gap between ambition and delivery.
Until federal, state and local governments streamline approvals and support infrastructure properly, the shortfall is likely to persist.
So What Does This Mean?
For Policymakers
Targets mean little without faster approvals and practical reform.
For Developers and Investors
Constrained future supply may support values — particularly in well-located areas.
For Renters and Buyers
Ongoing supply pressure is unlikely to ease quickly.
Final Thought
This is not simply a slowdown.
It is a structural supply gap.
Approvals have bounced. That is encouraging.
But until we consistently approach 240,000 dwellings per year, housing pressure in Australia is unlikely to disappear.
If you are involved in property in any capacity, this gap is worth watching. It will shape the next decade.
As always, if you have a view on this, feel free to reach out. I welcome the discussion.
Disclaimer: This article provides general information only and does not take into account your personal circumstances. It is not financial or tax advice. You should seek independent advice from a qualified professional before making decisions about tax, legal or financial planning matters, along with loan structures or entity structure.
