Falling house prices might suggest the housing crisis is easing. Look at what’s being built, though, and the picture is very different. New figures show the number of homes approved for construction fell again in August, with approvals for apartments and townhouses down sharply. Fewer approvals today means fewer homes in two or three years, regardless of what prices do in the meantime. Here’s the plain-language guide.
What the Numbers Show
The Australian Bureau of Statistics reported that total dwelling approvals fell 6.1 per cent in August 2026, to 16,953 in seasonally adjusted terms. Approvals for private houses rose 3.7 per cent to 10,885. But approvals for private apartments, townhouses and other non-house dwellings fell 21.2 per cent, to 5,674.
That split matters. Apartments and townhouses are where much of the new supply in established, well-located areas has to come from, and they’re the type of housing falling fastest.
How Far Behind the Target We Are
Under the National Housing Accord, governments have committed to building 1.2 million new well-located homes over five years to mid-2029. That works out to roughly 20,000 homes a month.
August’s approvals came in well below that pace. And approvals are only the first step: not every approved home gets built, and construction takes time. As Cotality has noted, even if approvals improve, lengthy construction timelines mean it could take years before additional supply reaches the market.
Why Building Has Slowed
Several pressures are hitting at once. Construction costs remain high, with new dwelling prices up 5.4 per cent over the year to August as builders pass on higher costs for materials and labour. Four interest rate rises this year have made finance more expensive for developers and buyers alike. And with home values falling, apartment projects that rely on off-the-plan sales are harder to get started, because fewer buyers are willing to commit to a purchase years in advance in a falling market.
Why It Matters for You
For renters, this is the most important number in the housing story. Rents are driven by how many homes are available relative to demand, and slowing construction means that pressure is likely to persist, even as purchase prices fall.
For buyers, falling prices are giving negotiating power now, but a shortage of new supply is one reason many economists expect prices to recover once interest rates eventually fall.
For first home buyers looking at apartments or townhouses, fewer new projects may mean less choice in new stock over the next few years, though established units continue to be more resilient than houses in this downturn.
The Bottom Line
Dwelling approvals fell 6.1 per cent in August, with apartment and townhouse approvals down 21.2 per cent, leaving the country well short of the roughly 20,000 homes a month needed to meet the Housing Accord. High costs, higher rates and falling values are all weighing on new projects. Prices may be falling, but the housing shortage behind high rents isn’t going away. This is general information, not financial advice.
Epik Wire covers the property market in plain language for buyers, renters and owners. Subscribe to our newsletter to stay informed.
