Collingwood took in 1554 new residents between 2022 and 2025. Over the same stretch, just 40 dwellings were approved there. That is the sharpest local mismatch in a property-industry analysis of ABS data, which tallies a national gap of 88,809 approvals over three years.
It is a striking number. It is also easy to over-read.
What the building approvals shortfall measures, and what it doesn’t
The analysis compares estimated dwelling demand from population growth against approvals granted. In Collingwood, the estimated demand was 818 homes. Approvals covered 40 of them, leaving a gap of 778, or roughly 130 per 1000 estimated homes.
Claremont in Western Australia comes next, with 588 homes of estimated demand against 16 approvals. Hurstville-Central in NSW, Reid in the ACT and Mount Johns in the NT follow.
Three things this does not tell you:
- Approvals are not completions. Many approved projects stall before a shovel hits dirt, especially higher-density ones.
- Demand is modelled, not observed. Household size, overseas arrivals and students sharing dwellings all shift the real number.
- It is a pipeline snapshot. Existing stock, conversions and nearby suburbs can absorb some of the pressure.
Even the commissioning firm’s own spokesperson stops short of forecasting. The study does not predict a specific rise in prices or rents. It flags supply pressure that can make housing harder to access.
Why thin supply and soft demand can coexist
The assumption behind most supply-shortage headlines is simple: fewer homes means upward pressure on prices and rents. That holds when buyers and renters have the capacity to compete.
Right now many do not. Higher interest rates have cut borrowing power, so the same household can bid less than it could a few years ago. A shortage of approvals in a suburb does not lift prices if the people who would pay are already priced out by serviceability limits.
Rents behave differently. Renters cannot defer the need for a roof, so supply gaps tend to show up there first, through lower vacancy and more applicants per listing. But even rents have a ceiling set by what tenants can afford, and shared households and longer commutes are how that ceiling gets enforced.
So the honest reading is mixed:
- Rents: more direct support from tight supply.
- Prices: supported at the margin, but capped by lending conditions.
- Suburb-level outcomes: depend on whether nearby areas offer substitutes.
The cost side of the shortfall
The gap is not just a planning story. Builders say the economics of new projects are getting harder. A peak industry body has cut its five-year forecast to under 920,000 commencements to FY2030-31, an 8.4 per cent write-down from earlier this year. It points to labour shortages, weaker investment, lower productivity and regulation it says adds up to $320,000 per new house.
It also argues federal budget tax changes are hitting project viability, particularly in apartments. That is an industry position, and other analysts take a different view of how those tax settings affect supply. Our earlier piece on new build investment tax rules looks at why such changes may move prices rather than add homes.
The link between rates and supply matters here too. As covered in housing approvals sliding as higher rates squeeze project margins, tighter finance conditions hit developers as well as buyers. The same rates that dampen demand also make marginal projects harder to fund. That is the catch: supply and demand are being squeezed at once, so the gap can persist without prices running away.
Where the supply pressure is not showing
Tasmania recorded no suburb-level shortfall. Its population grew by fewer than 4000 people over three years while roughly 8000 dwellings were approved. That is useful as a control case: where approvals outrun population growth, the gap disappears.
Supporters of faster delivery argue the fix is upstream. Rezoning land is only a start. It still needs roads, water and sewerage before homes can be built, and commentary from the industry keeps returning to infrastructure coordination, clearer deadlines and faster approvals.
On the other side, some argue that approval volume is the wrong yardstick and that completed homes and time-to-delivery are what matter. Both positions have merit, and they are not mutually exclusive.
What this means if you’re buying, selling or renting
Use the shortfall data as a prompt, not a forecast.
- Buyers: check local approvals and nearby completions before assuming scarcity will lift a suburb. Then stress-test your own serviceability at a higher rate.
- Investors: rent resilience is more plausible than price resilience in thin-supply areas. Model both, and keep a cashflow buffer.
- Renters: expect continued competition in undersupplied pockets, and look at adjacent suburbs.
Key numbers
- 88,809: estimated national approvals gap over three years
- 778: Collingwood’s estimated approvals gap (40 approved against 818 demand)
- Under 920,000: forecast commencements to FY2030-31, down 8.4 per cent
The next step is to check your own suburb’s approvals against population growth, then test your numbers against a higher repayment. If you want the weekly signal in your inbox, subscribe to the Australian Property Review newsletter.
General info, not financial advice.
