Australia’s big goal of building 1.2 million new homes by 2029 is looking more and more like a long shot as falling housing approvals put builders even further behind schedule.
Fresh data from the Australian Bureau of Statistics (ABS) shows that in the first year of the National Housing Accord, Australia missed the mark by 68,606 homes. To stay on track, we need to be approving 240,000 new homes a year—but in 2024, we only managed 171,394.
December did bring some good news, with 15,174 new homes approved, bouncing back from a 3.4 per cent drop in November. Apartment, townhouse, and terrace house approvals shot up by 15.2 per cent to 6,209 after a rough 10.4 per cent decline the month before.
But Housing Industry Association (HIA) economist Maurice Tapang explained that these swings happen when big apartment projects get the green light, so it’s not necessarily a sign of a long-term trend.
“Residential building approvals in 2024 increased from the decade low seen in 2023 but were nowhere near the levels needed to meet underlying demand for housing,” he explained.
“There were 15,170 residential dwellings approved in the month of December 2024, which was relatively unchanged compared to the previous month. Detached house approvals fell by 2.8 per cent in the month of December to 8,860, while multi-units increased by 6.0 per cent to 6,310.
“This brought the volume of approvals in the 2024 calendar year to 170,720, up by 3.9 per cent compared to the decade-low levels of 2023 but well below anything seen in the preceding ten years.”
Why are we still struggling?
Even with some growth in approvals, housing supply is still failing to keep up with demand. Tapang pointed out that while both homebuyers and investors are slowly coming back, the recovery is all over the place, with different regions and housing types are seeing very different trends.
“It remains a challenging environment given the higher cost of borrowing, land and building a new home,” he said.
“The cost of delivering new land to market also remains high, with land prices continuing to increase.”
Another major hurdle? The second quarter of the National Housing Accord only saw 45,850 homes approved—when we really need to be hitting 60,000 per quarter to stay on track.
“In order to build more homes, meet underlying demand and addressing the housing crisis, governments should help remove the barriers to increasing housing supply,” he added.
“This includes helping lower the cost of delivering shovel-ready land to market, reducing the tax imposts on new homes and investors and addressing constraints with labour supply.”
Master Builders Australia’s (MBA) chief economist, Shane Garrett, pointed to another issue: higher-density housing, like apartments, just isn’t getting built at the pace we need.
“In 2024, higher density approvals dropped back by 1.3 per cent, meaning 2024 was the worst year for higher density approvals since 2011,” he said. “The insufficient flow of new home building on the higher density side of the market is one of the main sources of rental price inflation.”
And the numbers back it up. Rents have jumped 6.2 per cent in the year to December 2024, adding even more financial stress to those left off the property ladder.
MBA CEO Denita Wawn also highlighted that while detached housing approvals rose by 7 per cent, we’re still nowhere near solving the supply crisis.
“Australia desperately needs to boost housing supply, and this will only be achieved when the cost of new home building starts to moderate, and project costs stack up,” she said.
“It’s more than just a number – the lack of housing supply is leading to rising rents, homelessness, and higher mortgages, which impacts the well-being of individuals, families, and communities.”
Government steps in with apprentice incentives
With the construction industry struggling to keep up, the Albanese government is trying to attract more people into the sector.
Under a new policy, apprentices in residential construction will get a $10,000 cash bonus. Prime Minister Anthony Albanese announced the plan in January, saying it’s designed to boost the workforce and support the “next generation of tradies.”
He pointed out that right now, many first-year apprentices are barely making two-thirds of the minimum wage—some even less.
“Right now, a first-year carpentry apprentice earns about two-thirds of the minimum wage. Some apprentices earn even less. That’s before you buy tools, safety gear, clothing and boots,” he said.
“As a number of apprentices have said, they could earn a lot more stacking shelves in their local supermarket. Too many leave training because they can’t afford to stay.”
The incentive is based on the New Energy Apprenticeships Program, which offers similar support to apprentices in clean energy, automotive, and advanced manufacturing fields.
While this move could help bring more workers into construction, experts warn that it’s just one piece of the puzzle. Without cutting costs, fast-tracking approvals, and making land more affordable, Australia’s dream of 1.2 million new homes could stay just that—a dream.
