Australia’s housing supply tightened further in October as building approvals fell sharply, signalling deeper strain in a market already struggling to keep pace with demand.
The latest Australian Bureau of Statistics data showed approvals dropped 6.4% month-on-month to 15,832 in seasonally adjusted terms, while annual approvals slid 1.8% in the year to October.
Daniel Rossi, head of construction statistics at the ABS, said the latest downturn reflected a steep pullback in private dwellings excluding houses. “The October fall in dwellings was driven by a 13.1% drop in approvals for private dwellings excluding houses. This result follows a 25.0% rise in this series in September.
"Private sector houses also fell 2.1%, to 9,251 dwellings, after a 3.2% rise in September.”
The decline follows a brief rebound in September, when approvals rose 12% after earlier monthly falls.
October’s drop was broad-based: approvals for private-sector dwellings excluding houses fell 13.1% to 6,253, while private-sector house approvals eased 2.1% to 9,251, further erasing 2024’s momentum.
ANZ economists noted that the dip highlights weakening momentum in the construction pipeline:
“While this does follow an 11.1% month-on-month rise in dwelling approvals in September, there has been a stalling in the upward momentum in approvals,” they said.
“On a three-month moving average basis, dwelling approvals are down 1.7% quarter-on-quarter, and private units/townhouses have eased 3.1% quarter-on-quarter. Feasibility constraints remain a challenge for many builders and developers.”
Across the states, results were mixed in October. Victoria, New South Wales and Tasmania posted steep declines of 24.7%, 20.6% and 15%, respectively.
Western Australia and South Australia reported strong gains of 28.1% and 11.2%, while Queensland saw a modest rise of 2.4%.
For private-sector houses, approvals fell across Victoria, NSW, South Australia and Western Australia. Queensland was the only state to record an increase, up 2.7% for the month.
The continued decline underlines mounting pressure in Australia’s housing market. Approvals have now fallen back below the 10-year average, reversing gains made earlier in the year.
These figures also reflect approvals rather than completed builds, meaning many projects may never reach construction, further constraining future supply.
Meanwhile, the Reserve Bank of Australia has cut interest rates three times this year, bolstering borrowing capacity and encouraging more buyers into the market.
Yet builders face rising material costs, labour shortages, elevated rents and persistent inflation, limiting their ability to deliver new stock.
With fewer homes entering the pipeline, prices continue to climb, intensifying competition and sidelining buyers, particularly in capital cities and fast-growing regional areas.
Many are seeking affordability in smaller capitals outside Sydney and Melbourne, but even these markets are seeing prices rise faster than buyers can keep up.
