Dwelling approvals fall as apartments drop and houses hit four-year high

The number of dwellings approved for construction fell 1.1 per cent in May to 17,019 in seasonally adjusted terms, the Australian Bureau of Statistics reported on Wednesday, as a sharp drop in apartments and units cancelled out a rise in detached houses.

Private sector house approvals rose 2.8 per cent to 10,537, the highest monthly figure since September 2021. Approvals for private dwellings excluding houses (apartments, units and townhouses) fell 10.4 per cent to 6,034, giving back more than April's 4.0 per cent gain.

'The fall in total dwellings approved was driven by a 10.4 per cent fall in private dwellings excluding houses, after a 4.0 per cent April rise,' ABS head of construction statistics Daniel Rossi said. He noted house approvals had reached their highest level in almost four years.

The split is the part that matters for supply. The government's National Housing Accord commits to 240,000 homes a year, or 1.2 million over the five years to June 2029, and approvals are running below that pace. The shortfall sits in exactly the higher-density housing that fell in May: the apartments and units that add homes where land is scarce and where the target is hardest to hit. A run of strong detached-house numbers does not close that gap.

The state figures for private houses were mixed: approvals rose 9.9 per cent in Western Australia, 7.8 per cent in New South Wales and 2.2 per cent in Victoria, and fell 3.6 per cent in Queensland and 1.0 per cent in South Australia.

By value, total residential building approved fell 5.7 per cent to $10.24 billion. Total building work approved rose 13.6 per cent to $21.07 billion, but that came from a 41.0 per cent jump in non-residential approvals, which move month to month on a handful of large projects.

Over the year, total dwelling approvals were up 5.3 per cent. The annual numbers show the same divide: house approvals up 13.2 per cent, other private dwellings down 8.6 per cent.

Approvals are the front of the pipeline, months ahead of a completed home. Until the apartment and higher-density numbers recover, the flow of new housing stays tilted toward detached houses on the fringe, and the Accord target stays out of reach.