Australia needs to build more homes. That is not a contested point. The federal government’s target of 1.2 million new dwellings over five years requires a pace of construction this country has never sustained. And meeting it depends heavily on one thing going right: density.

The March 2026 ABS building approvals data suggests density is still not going right.

Private sector dwellings excluding houses, the category that includes apartments, townhouses, semi-detached homes and other multi-dwelling types, fell 26 per cent in March to 6,632 approvals. The month before had recorded the highest level in that category since June 2018. Now it has given most of it back.

That kind of volatility is not a seasonal blip. It is a structural signal. And it has real consequences, not just for developers in the multi-dwelling space, but for builders across the industry who are waiting on the pipeline that density was supposed to deliver.

A 101 Per Cent Rise Followed by a 26 Per Cent Fall

To understand what is happening in the apartment sector, you need to look at two months together rather than one in isolation.

In February 2026, private other dwelling approvals surged 101.1 per cent. That extraordinary figure reflected a backlog of large-scale projects clearing through the system at once. Several significant apartment and build-to-rent developments received approvals in February that had been sitting in planning pipelines for months or longer.

March was the hangover. With that backlog cleared, the underlying flow of new approvals returned to lower levels. The result was a 26 per cent fall.

In original terms, apartment approvals specifically fell 30.2 per cent in March to 3,768 dwellings. To put that in context, the 12-month average for apartment approvals sits at 3,872. March came in below that average.

Semi-detached and townhouse approvals held better ground, rising 0.6 per cent in March to 3,051 dwellings and sitting 5.9 per cent above the 12-month average. That is a relatively stable sub-segment within an otherwise volatile category.

The core issue is that the apartment market approval data moves in large, lumpy increments because apartment approvals are tied to individual projects rather than individual dwellings. When a single development with 200 apartments receives approval, it appears as one project event in the data but creates hundreds of dwelling approvals. When those projects clear, the numbers spike. When they do not, the numbers fall sharply.

This is not the same as the detached housing market, where approvals move in smaller, more consistent increments. The volatility in the multi-dwelling numbers is partly a function of how that pipeline works.

Why This Matters for the Housing Target

The federal government’s 1.2 million homes target runs from 2024 to 2029. Meeting it requires approximately 240,000 new dwellings per year. The current annual run rate, based on the last 12 months of data, is considerably below that figure.

Detached housing is holding its ground and showing gradual improvement. House approvals have been trending upward since mid-2024 and the March figure of 10,194 represents a four-year high.

But detached housing alone cannot deliver the target. The numbers do not work. To hit 240,000 per year at the current rate of detached approvals, Australia would need a pace of construction that our land release and greenfield supply simply cannot support at that volume.

The target depends on density. Townhouses, semi-detached dwellings, and apartments in established suburbs, near transport corridors, and in mixed-use precincts. That is where the volume has to come from.

Right now, it is not coming.

The total value of residential building approved fell 15.8 per cent in March to 10.77 billion dollars. New residential building value dropped 17.7 per cent to 9.43 billion dollars. These are not the figures of a pipeline building toward a 240,000 per year target.

What Is Blocking Density

The barriers to apartment and medium-density construction in Australia are well understood by anyone working in the industry. They are less well understood by the policymakers setting the targets.

Construction cost inflation over the past four years has significantly eroded feasibility for multi-dwelling projects. Building an apartment today costs materially more than it did in 2020. Sales prices in many markets have not risen proportionally, which means the margin between construction cost and market value has compressed to the point where projects do not stack up.

Developers who ran feasibility models in 2022 or 2023 and found projects viable are now finding those same projects marginal or unviable. Finance committees at major banks are applying tighter stress tests to development lending. Pre-sales requirements have increased. Projects that cannot achieve sufficient pre-sales before construction commences do not get funded.

Planning timelines compound the problem. A medium-density development in most Australian capital cities takes years to move from concept to construction approval. That timeline carries holding costs, financing costs, and market risk. By the time a project clears planning, the economics may have shifted in ways the developer cannot absorb.

The result is a pipeline that looks healthier on paper than it is in reality. Approved does not mean commenced. Commenced does not mean completed. The gap between what has been approved and what actually gets built has been growing.

The Forward Planning Problem

For builders operating in the medium and high-density space, the approval volatility creates a specific and serious problem: forward planning becomes unreliable.

A builder tendering for apartment or townhouse work needs to understand what projects are coming through the pipeline over the next 12 to 24 months. When that pipeline is driven by lumpy, project-by-project approvals rather than a steady stream, it is genuinely difficult to make resourcing decisions, retain skilled crews, and maintain the trade relationships that keep projects viable.

Workforce allocation is the most acute version of this problem. Skilled concreters, formworkers, and finishing trades who work on multi-storey construction are not interchangeable with the trades who work on detached housing. If the apartment pipeline dries up for six months and then surges, the labour simply is not there to absorb the surge. The good crews have moved on.

This volatility also affects material suppliers and subcontractors who depend on density projects for revenue consistency. Inconsistent approval patterns flow through to inconsistent procurement, which makes long-term pricing and capacity commitments harder for everyone in the supply chain.

What Needs to Change

The conversation about density and housing targets tends to focus on planning reform. And planning reform is important. But it is not sufficient on its own.

Feasibility is the more immediate barrier. If projects do not stack up financially, planning approval does not get them built. Governments that are serious about increasing density need to look hard at the gap between construction costs and achievable end values, and consider what tools are available to close it.

Build-to-rent has emerged as one mechanism. Projects developed for long-term rental rather than individual sale have different feasibility dynamics and different financing structures. The federal government’s tax treatment of build-to-rent has improved in recent years, though the industry has consistently argued that more reform is needed to make the economics work at scale.

Streamlining planning processes for medium-density projects in established suburbs is another lever. Dual occupancies, townhouses and low-rise apartments on existing residential land do not carry the same development risk as high-rise apartment towers. Creating clearer, faster pathways for this type of infill development could generate a more consistent and less volatile approval stream.

For builders, the practical reality is that the apartment market will remain lumpy and difficult to read for some time. Those who can navigate that uncertainty, maintain flexible capacity, and hold strong trade relationships will be better positioned when projects do flow. Those who have scaled up on the assumption that the February spike represented a new normal may find March’s figures a rude correction.

The data is clear. The density pipeline is not delivering what the housing target requires. That is a problem that extends well beyond developers and their project economics. It is a constraint on the whole industry and on Australia’s ability to house the people who need housing.

Watching the monthly approval figures is useful. But the bigger question is whether the structural conditions for density are improving. Right now, the honest answer is: not fast enough.

General Information Disclaimer

This article is intended for general informational purposes only. It does not constitute financial, legal, or professional advice. Readers should seek independent advice before making business or investment decisions based on information contained in this article. Figures cited are sourced from the Australian Bureau of Statistics Building Approvals release for March 2026, published 4 May 2026.

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Author: TGB Editorial