First published 27 Oct 2026, 10:09am
Australia’s apartment pipeline has stalled and one industry leader is warning the numbers simply “don’t work”, while the answer could lie instead in factory production.
Apartment approvals plunged almost 25 per cent in August with just 3,268 approved nationally in the month, 19.8 per cent below the 12-month average, according to the ABS data.
Meanwhile, Australia is around 124,000 homes behind its Housing Accord target after two years, according to UDIA National.
Apartments.com.au CEO Mike Bird said modular construction could be what finally gets the country’s stalled apartment projects off the ground.
“A lot of people assume that if a project has planning approval, the homes are on their way. That’s rarely the case at the moment,” he said.
“We track thousands of developments, and there’s a significant pipeline of approved apartment projects across the country that simply haven’t moved.
“They’re not stalled because the developer has lost interest. They’re stalled because the numbers don’t work.”
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Just 3,268 apartments were approved nationally in August.
Since the pandemic, prices received by building construction businesses have increased 31.1 per cent from September quarter 2020 to June quarter 2024, driven by house construction prices rose 40.8 per cent over this period according to ABS data.
This year, the Reserve Bank has also lifted the cash rate four times to 4.6 per cent, its highest level since 2011.
National rental vacancies were also sitting at just 1.4 per cent in September, according to SQM Research, with the tight market spotlighting supply lagging behind demand, that enhances the importance to find faster ways to build new homes.
Mr Bird said banks had also pulled back from development lending, leaving more projects reliant on private credit.
According to Mr Bird, modular homes could hold the key to increasing housing supply. The biggest advantage of modular construction is not only what it saves on cost, but what it saves on time, he said.
“If you can build the modules in a factory while the foundations and site works are happening at the same time, you take months out of a program,” he said.
“That’s months less interest, months less exposure to weather and trade shortages, and buyers getting the keys sooner.”
The Commonwealth Productivity Commission has estimated that MMC, such as modular and prefabricated homes, can reduce overall costs by up to 20 per cent and are up to 50 per cent faster to build in comparison to traditional homes.
Mr Bird said any savings in construction could also flow through to buyers.
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The CPC says modular and prefabricated homes, can reduce overall costs by up to 20 per cent and are up to 50 per cent faster to build in comparison to traditional homes
“If building can be cheaper, then prices can be cheaper,” he said.
According to Mr Bird, factory construction could also give buyers more confidence as many are wary of whether off-the-plan projects will be delivered.
“A factory is a controlled environment. You know your costs, you know your time frames, and quality is easier to manage,” he said.
“Buyers today are far more conscious of delivery than they were a few years ago. They want to know their apartment is actually going to be built and finished properly.”
While Mr Bird acknowledged modular construction would not solve the supply crisis on its own, he noted it needs scale and a steady pipeline of projects to make the factories work.
“We’re now seeing serious investment from government and from major corporates, and the regulatory frameworks are starting to catch up,” he said.
“That’s how an industry goes from niche to mainstream. Australia needs more homes, and we need to be open to every method that helps deliver them.”
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