Fresh tumble in apartments threatens lofty housing goal

The monthly decline reversed a bullish 11 per cent increase in July, while approvals were up 3.6 per cent when compared to August 2023.

Weak apartment approvals fuelled the overall drop in the figures. (Dean Lewins/AAP PHOTOS)

NSW and South Australia recorded the biggest declines with an 11.5 per cent monthly fall in approvals in both states, according to Australian Bureau of Statistics data released on Tuesday.

All states experienced a decrease of at least three per cent in dwelling approvals month-on-month.

Approvals for detached houses rose by a slim 0.5 per cent nationally, but other private-sector dwellings pulled down the overall tally with a 16.5 per cent fall.

In September, Master Builders Australia forecast just 1.03 million of the target homes would be built, finding every state was behind on meeting their individual targets.

ABS construction statistics head Daniel Rossi said weak apartment approvals had fuelled the overall drop in the figures.

"The movements in dwellings excluding houses continue to be the result of volatility in apartment approvals, with the broad environment around apartments remaining subdued," he said.

Sluggish planning systems - which NSW Premier Chris Minns has routinely blamed for lacklustre progress in his state - along with "apartment-killer taxes" was driving the decline, according to the Property Council of Australia.

Only 1200 apartments in blocks with nine or more storeys were approved in August, compared with 2500 in July.

Housing industry experts say it's never been more difficult and expensive to get apartments built. (Darren England/AAP PHOTOS)

"We need to increase the number of homes approved and ensure a strong pipeline of apartment supply to drive towards our housing targets at scale," the industry lobby's group executive, Matthew Kandelaars, said.

"But the reality is it has never been more difficult and costly to get apartments out of the ground."

Oxford Economics Australia senior economist Maree Kilroy said the data suggested the worst was over for detached housing approvals, but apartments were another story altogether.

Housing commencements were forecast to jump six per cent this financial year, she said.

"Apartment feasibilities will remain challenged near term … delays, higher debt costs and rebased build tender prices will continue to cause headaches for developers," Ms Kilroy said.

"Mortgage rate cuts will aid the release of pent-up housing demand, while traction on the housing policy front will become increasingly obvious … however industry capacity will act to limit the velocity of the recovery."

Detached housing approvals rose in NSW (3.9 per cent), WA (1.9) and Victoria (1.4), but South Australia (-4 per cent) and Queensland (-3.9) experienced drops.