The building and construction industry suffered a 14.9 per cent drop in building approvals during December, the weakest performance in 4 months.
Master Builders Australia chief economist Shane Garrett’s analysis today shows approvals for higher density homes plummeted by 31.6 per cent during the month, while detached house approvals were largely unchanged (+0.3 per cent). The results mean that higher density approvals are now at their lowest in 8 months.
“Since the start of the National Housing Accord’s term in July 2024, 287,200 new homes have received approval across Australia, about 15,960 per month," said Garrett.
"This is in stark contrast to the 20,000 new homes per month that need to be delivered to hit the Accord’s 1.2 million target.
“For much of 2025, new home building approvals had been moving in the right direction making this reversal more disappointing.
“Higher density home building offers our best chance of meeting the Housing Accord target.
"When conditions are right, it can be rolled out quickly and on a large scale.
"However, doing so requires us to get conditions right around build times, supply chains, costs and importantly labour availability."
Garrett’s comments point to, among other challenges, the shrinking and leaking labour pipeline that continues to hold the industry back from getting more projects off the ground at a faster rate.
Master Builders Australia CEO Denita Wawn said we need to get the right people with the right skills in the right locations to improve build times and increase delivery.
“Significant reforms to the domestic apprenticeship track are needed to increase completion rates, retention and scale," Wawn said.
"This involves a redesign of the apprenticeship incentives, starting with a further extension of the current Key Apprentice Program, as well as a strong school to trade pathway, that breaks down the university bias, and trade-specific pilots as well as digital skills initiatives.
“At the same time, an essential stopgap, while domestic reforms are fast-tracked, is skilled migration.
"The Federal Government must recognise construction as a national priority sector, aligning migration intake with verified workforce demand, reducing cost and administrative barriers for SMEs and regional businesses.
“It is also commonsense reform policy to do everything possible to activate skilled migrants already in the country.
"Around 18,400 permanent migrants in Australia hold building and construction qualifications but are working below their skill level.
"We need evidence backed, common sense and practical solutions implemented this year to continue momentum to deliver the National Housing Accord and beyond."
