Australia’s residential construction pipeline flows through five key stages: approval, waiting-to-start, commencement, construction, and completion. Looking and observing across these stages (stock and flow) reveals an important transition in how the housing market is functioning. Compared with the 2016–2018 construction boom, the post-COVID period has generated a large pipeline of projects, but that pipeline is moving more slowly through to completion. The issue is therefore becoming less about the number of projects entering the system. It is more about the capacity of the industry to deliver them.
Dwelling approvals: a lower and more uneven peak
Annual dwelling approvals increased steadily from around 145,000 in 2012 to a boom-era peak of almost 235,000 in 2016. This increase was driven strongly by other residential types, including apartments and townhouses. The post-COVID cycle has been different. Following the pandemic-year housing incentives, approvals rose to around 213,000 in 2021 before declining sharply and settling into a lower range of around 160,000–180,000 a year. House approvals reached their highest level of the period in 2021. As a result, total approvals remain well below the 2016 peak. This suggests that the current housing pipeline is not being driven by an exceptional surge in new approvals.
Figure 1: Dwelling approvals – a volatile cycle
Source: ABS, FWPA analysis
Approved but not yet commenced: the backlog is proving persistent
The stock of dwellings approved but not yet commenced provides a clearer indication of where the pipeline is slowing. During the 2016–2018 boom, this stock increased to around 150,000–160,000 dwellings before declining as projects moved into construction. The post-COVID period has produced a similar but more persistent backlog. The number of approved dwellings yet to commence has remained steady at around 120,000–135,000 for several consecutive years, rather than clearing as it did after the previous boom. This indicates that the transition from approval to construction is taking longer and is occurring less consistently than in the previous cycle.
Figure 2: Dwelling approved but not yet commence
Source: ABS, FWPA analysis
Dwelling Commencements: a smaller flow into construction
Annual dwelling commencements have broadly followed the approval cycle, rising to around 230,000 during the 2016 boom and reaching approximately 200,000 in 2021–2022 before easing to around 160,000–175,000. The similar movement between approvals and commencements suggests that the commencement stage is not the sole source of the current constraint. Rather, the overall flow of projects entering construction is lower than during the previous boom, while a much larger number of projects are subsequently remaining in the construction phase for longer.
Figure 3: Dwelling commencement
Source: ABS, FWPA analysis
Under construction: a much larger pipeline for much longer
The stock of dwellings under construction presents the strongest evidence of a structural change. It increased from around 450,000 in 2010 to approximately 900,000 during the 2017–2019 boom before declining during the pandemic. Since 2022, the stock has risen beyond its previous peak, reaching close to 950,000 dwellings. More importantly, it has remained exceptionally high, generally between around 850,000 and 950,000, for more than three years. The significance is not simply that more homes are under construction. It is that they are remaining in the construction pipeline for considerably longer. The industry is carrying a larger stock of unfinished projects without generating a corresponding increase in annual completions. This evidence highlights the longer dwelling completion period as one of the critical issues in the housing supply chain.
Figure 4: Under construction
Source: ABS, FWPA analysis
Completions: where the constraint becomes most visible
This divergence becomes clearest at the final stage of the pipeline. Annual completions reached around 218,000 dwellings in 2017 but have generally remained in the range of 165,000–180,000 in the post-COVID period. This is occurring despite the exceptionally large number of dwellings under construction. If the pipeline were moving through the system at the same pace as during the previous boom, the record stock of projects under construction would be expected to translate into significantly higher completion volumes. Instead, completions have remained relatively flat.
Figure 5: Dwelling completion
Source: ABS, FWPA analysis
Australia’s housing pipeline is full, but moving more slowly
Taken together, the five stages point to a housing construction system that has a substantial volume of projects in the pipeline but is converting those projects into completed homes more slowly than it did in 2016–2018. The key change is therefore not simply a shortage of approvals. It is a reduction in the speed at which approved projects progress through construction and become completed dwellings. The persistent stock of approved-but-not-commenced projects suggests delays before construction begins. The high stock of dwellings under construction and comparatively flat completions indicates that projects are also taking longer to finish once construction has started.
This pattern is consistent with a range of constraints, including labour and skills shortages, raising construction costs, financing pressures, builder capacity and greater complexity in some forms of residential development. These factors can extend construction timeframes without necessarily reducing the number of projects already in the pipeline. Increasing approvals alone will not necessarily translate into more housing supply if the construction system lacks the capacity to convert those approvals into completed dwellings.
