Why apartment supply is still missing Australia's housing target

Approvals are recovering

ABS reported 8,922 private dwellings excluding houses approved (seasonally adjusted) in February 2026, with the trend series at 7,422 and up 22.4% year over year.^[1] That is a real lift, especially compared with the apartment slump of 2023.

It is also still well below historical peaks, and the recovery is uneven by city. NSW's planning reforms and Victoria's new code-based pathway have started to feed through, but Queensland and parts of NSW saw trend approvals fall slightly in February.^[1]

Completions still aren't

The output side has not moved with the pipeline. NHSAC estimated only 65,000 higher-density dwellings were completed in 2024 — well under the 2017 peak of about 106,000 — and the forward forecast doesn't bend the line back: only 938,000 dwellings are projected over the 2024–25 to 2028–29 Housing Accord period against a target of 1.2 million, with no state or territory expected to meet its population-implied share.^[2]

Approvals lead. Commencements and completions follow at a slower rate, and over the Accord period that gap accumulates rather than closes.

Feasibility is the bottleneck

The driver of the lag is feasibility, not demand. NHSAC found higher-density construction costs rose 5.1% in 2024, compared with 2.8% for detached houses, partly because apartments compete with infrastructure and non-residential work for the same labour pool.^[2] Add interest-rate sensitivity, longer construction durations and longer planning timelines, and many projects pencil only marginally — or not at all.

Apartment development is also more exposed to single-point feasibility shocks: a presales miss, a debt cost increase, or a tender re-pricing can push a project past its viability threshold mid-cycle.

State divergence is widening

Source: NHSAC.^[2]

Victoria comes closest to its share. NSW's gap in absolute terms is the largest in the country.

Planning reforms are doing some of the work

State governments are clearly trying to close the gap on the supply side. The most material recent changes:

• NSW Low and Mid-Rise Housing Policy commenced 28 February 2025, broadening permissibility and introducing non-discretionary standards in selected areas.^[3]
• NSW Transport Oriented Development Program amends planning controls within 400 metres of 37 metro and rail stations.^[3]
• Victoria's Townhouse and Low-Rise Code introduced a deemed-to-comply pathway from 6 March 2025, speeding permits for one- to three-storey residential development.^[4]

These reforms make sites that previously didn't pencil more buildable. They do not fix construction cost, debt cost, or labour competition.

Outlook for the next 12–24 months

Approvals should keep improving, especially in Sydney, Melbourne, Perth and Brisbane. Completions will lag — financing, build duration and margin compression all sit between an approval and a finished apartment, and none of them are loosening quickly.

The practical consequence for multi-unit developers and builders is that projects in the 2026 pipeline will run longer than their pre-2020 equivalents, with more cost movement across the build period and more single-point feasibility risk along the way. That tends to push the appropriate sizing of contract works values, latent defects exposure and design liability cover upward, and to extend how long after practical completion those covers need to respond. Programs set up under earlier assumptions are usually worth a fresh look.