Home Construction Slows Amid Rising Demand

Australia’s home building slowdown is putting more pressure on a market already struggling with limited supply, as government efforts to improve housing access risk fuelling demand without unlocking enough new stock.

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Pick & Scroll News
April 16, 2025

Australia’s home building slowdown is putting more pressure on a market already struggling with limited supply, as government efforts to improve housing access risk fuelling demand without unlocking enough new stock. In the final months of 2024, construction starts dropped sharply, raising concerns about future affordability and housing availability.


By the December quarter, housing commencements fell to 41,911 - down 4.4% in just 3 months. Detached home builds declined by 6%, the steepest drop in over a year, while multi-unit dwellings like apartments and townhouses saw a 1.5% slide. This decline is notable because, despite new household formation surging to around 200,000 annually, only 168,049 homes were started last year, a shortfall of about 20%.


Digging into the numbers reveals that high-density housing is lagging hardest. New tall apartment projects collapsed by 7.6%, the worst result since 2023. These types of developments, crucial for easing pressure in the rental market, have been stuck in a slump. Construction materials, worker shortages and planning delays continue to disrupt the system, slowing projects before they start.


Government efforts are ramping up but face criticism. Labor pledged $10 billion to build 100,000 homes, while the Coalition is proposing a $5 billion infrastructure fund to unlock land for 500,000 homes. However, neither proposal gives clear modelling, and both face scrutiny for encouraging buyer demand without matching supply. Community housing providers are preparing to deliver over 8,000 homes backed by public funding - but that progress remains fragile due to sky-high construction and borrowing costs.


There are signs of momentum, with plans to speed up stuck housing approvals - especially those delayed for over a year. The Coalition's proposed fast-track system could ease supply shortfalls, provided it balances environmental regulations with development needs. But until interest rates ease and approval barriers are lifted, the pace of building looks likely to stay below what’s needed.