Australia's Building Crisis Is Getting Worse - What It Means for Property | Dr Andrew Wilson

Why It Matters

Supply shortages drive higher prices and rents, threatening affordability and limiting investment returns in Australia’s property sector.

Key Takeaways

• Building approvals fell 2% in April, extending a downward trend.
• Unit approvals down 3.6% month‑on‑month, housing supply weakening further.
• Land and construction costs rising, limiting conversion of approvals to projects.
• Restricting investors may tighten rentals, worsening affordability for first‑timers.
• Melbourne leads approvals, but national output still 24.5% below 2016 peak.

Summary

The episode of Property Insiders focuses on Australia’s worsening home‑building crisis, highlighting recent declines in building approvals and the broader supply‑demand imbalance. Dr. Andrew Wilson and host Michael dissect the latest data, showing a 2% drop in overall approvals and a 3.6% fall in unit approvals for April, after an earlier surge that now appears to be petering out.

Key insights reveal that while house approvals remain modestly positive year‑on‑year (+4.2%), unit approvals are slipping, and the volatility of large apartment projects skews monthly figures. Rising land prices and construction costs—exacerbated by higher fuel prices and labor shortages—mean only about 30% of approvals are likely to materialise in the short term. The discussion also critiques government policies that shift focus from supply creation to demand manipulation, such as restricting investor activity, which could further tighten an already strained rental market.

Notable quotes include Wilson’s warning that “shuffling the deck chairs on the Titanic” won’t solve the crisis, and the observation that Australia’s capital‑city dwelling approvals are still 24.5% below the 2016 peak, with units down 41.3% since their 2015 high. The data underscores regional disparities: Melbourne accounts for roughly 40% of capital‑city approvals, while Perth shows strong growth, and Brisbane’s approvals have risen despite a cooling unit market.

The implications are clear: without decisive action to unlock land, streamline planning, and curb construction cost inflation, property values will continue to rise, rents will stay high, and first‑time buyers will face increasing barriers. Investors should monitor approval‑to‑commencement conversion rates and consider the long‑term risk of a persistently undersupplied housing market.

Original Description

Everyone wants cheaper housing, but the latest building approval numbers show Australia is still failing at the one thing that would actually help - building more homes.

In other words, Australia's home building crisis is getting worse, not better.

As I see it, what's happening right now in building approvals is one of the most important stories unfolding for property investors.

Because when supply keeps falling while demand stays strong, there's really only one thing that happens to property values over time. And that’s a real problem, because while politicians talk about housing affordability, rental relief and population growth, the one thing we need most - more well-located housing - is still not coming through fast enough.

In this week's Property Insiders chat Dr. Andrew Wilson takes us through the latest ABS building approvals numbers, updated house building cost data, and the most recent weekend auction results from around the country.

The picture that emerges is one that long-term property investors should understand clearly, because while the current environment feels uncertain on the surface, the underlying supply dynamics continue to point firmly in one direction.

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You can also read the full article on Property Update: https://propertyupdate.com.au/property-news-headlines-forecasts

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About Property Insiders

Hosted by Michael Yardney and respected property economist Dr Andrew Wilson, Property Insiders delivers research-based analysis of Australia’s housing markets.

We unpack:

• National and capital city property price data

• Weekly auction results

• Housing supply and demand metrics

• Population growth impacts on property

• Market momentum indicators

• Regional vs capital city performance

• Property market turning points

• Short-term trends vs long-term fundamentals

If you want reliable Australian property market analysis grounded in data rather than speculation, Property Insiders delivers informed commentary to help investors stay ahead of the cycle.

Explore more property research at:

https://propertyupdate.com.au