Housing construction bottlenecks have seen 34,325 dwellings in Australia remain 'approved but not yet commenced' as of 30 June 2024, an 8.3% increase from the previous year.
While a lag between housing being approved and construction commencing is a normal part of the building process, current estimates show an above average number of dwellings sitting in this category - suggesting other market forces are impacting developers' pipelines.
Property markets of the Australian capital cities are feeling the effects differently, with the number of 'approved but not yet commenced' dwellings in Sydney increasing by 17.7% since June 2023; while Melbourne, Brisbane, and Adelaide have seen decreases.
Sydney and Perth the most challenged
The latest analysis from KPMG Australia shows that in Sydney 82% of the dwellings are townhouses and apartments, highlighting the financial challenges particularly facing higher-density developments.
“The development conditions in Sydney are very tough,” said KPMG Urban Economist Terry Rawnsley.
“The construction sector crunch in NSW has been more acute than any other state, driven largely by construction costs increases and rising interest rates,” he added.
Sydney is a high-density city, with 45% of dwellings being townhouses or apartments, compared to Melbourne at around 30%.
Another factor behind NSW’s housing lag is the number of construction companies entering insolvency, which has tripled in NSW between 2022 and 2024. This undoubtedly delayed many housing projects.
Sydney isn’t the only city with a pipeline of stalled builds. Perth has similarly experienced a significant jump in the number of 'approved but not yet commenced' dwellings.
“These numbers are less surprising given the rapid growth in the number of approvals in Perth,” explains Terry Rawnsley.
“As the pipeline starts rising, it is fairly normal that we would see this type of increase in 'approved but not yet commenced' dwellings, but we don’t want this number getting too high.”
Positive signs for Melbourne, Brisbane and Adelaide
Melbourne’s market looks to have bottomed out around the start of 2024, with the number of ‘approved but not yet commenced’ dwellings falling 21.3% from 2023.
The fall in Melbourne was driven by a decline in townhouses and apartments, with the 2,490 high density builds as of June 2024 being the lowest figure since March 2016.
“This shows that the pipeline of housing in Melbourne is drying up and more projects are being commenced by developers,” said Mr. Rawnsley.
Brisbane’s market also looks promising, with its approved no yet commenced dwellings falling by 13.9%, even as the number of approvals starts to trend upwards.
“Brisbane has moved away from the more complex high-density market and focused more on detached housing. A detached house is an easier product to finance and get started than an apartment block,” explained Mr Rawnsley.
Building approvals have been steady in Adelaide, so the decline in 'approved but not yet commenced' dwellings likely reflects the development sector taking advantage of strong housing price growth and getting homes to market as quickly as possible.
Table 1. Approved but not yet commenced homes as of 30 June 2024
| Region | Houses | Townhouses & Appartments | Total Dwellings | % Change from June 2023 |
| Sydney | 2,170 | 9,920 | 12,090 | 17.7% |
| Melbourne | 1,540 | 2,490 | 4,030 | -21.5% |
| Brisbane | 890 | 950 | 1,840 | -13.9% |
| Adelaide | 1,820 | 1,060 | 2,880 | -22.3% |
| Perth | 1,750 | 1,430 | 3,180 | 77.3% |
| Rest of Australia | 4,567 | 5,738 | 10.305 | 19.0% |
| Australia | 12,737 | 21,588 | 34,325 | 8.3% |
Challenges felt beyond major cities
The number of 'approved but not yet commenced' dwellings in the rest of Australia in June 2023 was almost 20% higher, driven by a record number of stalled dwellings in regional NSW (4,972).
The rest of NSW has been trending upwards since late 2021, and the ACT is 13% higher than the five-year average, highlighting that the challenges in the construction sector are not confined to the major capital cities.
Table 2. Approved but not yet commenced homes as of 30 June 2024
| Region | Total Dwellings | % Change from June 2023 |
| Rest of NSW | 4,972 | 43.7% |
| Rest of VIC | 858 | 7.1% |
| Rest of QLD | 1,760 | -5.1% |
| Rest of SA | 577 | -22.2% |
| Rest of WA | 430 | 60.9% |
| ACT | 1,071 | 4.7% |
| TAS | 620 | 33.0% |
| NT | 18 | -61.7% |
Despite the increasing number of stalled homes in capital cities, Terry Rawnsley is optimistic about the long-term outlook.
“While the supply of new homes is much lower than we would want, strong population growth, construction costs stabilising, and approvals starting to trend upwards mean developers could be gaining more confidence to start housing projects.”
For further information
Hayden Jewell
+61 423 868 454
hjewell@kpmg.com.au