The Albanese government is falling further behind its target of building 1.2 million new homes by the end of the decade just as the wealth of Australians from existing houses and units climbs to $12 trillion due to soaring prices.

Despite the government fast-tracking land for residential development in recent months that had been held up by environmental laws, new data from the Australian Bureau of Statistics revealed dwelling approvals fell by 6.4 per cent in October.

Approvals for units, which the property sector says will be vital to hitting the government’s target, dropped 13.1 per cent in October after a 25 per cent surge in September. Approvals of standalone homes edged down 2.1 per cent in October.

The government is now more than 70,000 homes behind its 1.2 million target by mid-2029.

Master Builders Australia chief economist Shane Garrett said 255,000 new homes a year needed to be produced over the next four years to meet the government’s target. In the 12 months to the end of October, just 192,000 were produced.

He said without more homes, affordability would become an even bigger problem for those people seeking to buy a property.

“Housing affordability has recently deteriorated to its worst on record. Our failure to build enough new homes will exacerbate this situation further,” Garrett said.

The extent of Australia’s affordability problem was highlighted by separate ABS figures that showed the value of residential properties climbed by $317 billion in the September quarter, or $3.4 billion a day. Over the past year, the value of the nation’s 11.4 million residential properties has climbed by $875 billion, reaching almost $12 trillion.

The median price of an established house in Sydney climbed to $1.46 million in the quarter, with both Brisbane ($1.01 million) and Canberra ($1.02 million) over the $1 million mark.

The median price for units in Brisbane ($738,000), Adelaide ($681,000) and Perth ($625,000) have all climbed by more than 10 per cent over the past 12 months.

But Melbourne’s median house price was $828,000, just $3000 up over the past year. The city’s median price for units also increased by $3000 to $620,000.

Victoria, however, continues to increase its supply of homes faster than any other part of the country. The total number of residential properties in the state has increased by 153,100 over the past three years, compared to 130,700 in NSW and 101,000 in Queensland.

Property Council senior official Matthew Kandelaars said that without the approval of large-scale apartment projects, the housing target would be tougher to hit while prices would continue to climb.

“Today’s data shows complex and rigid planning systems continue to hold us back. We need wholesale reform and an unfailing focus on structural improvements to approvals processes,” he said.

During its three-day economic roundtable, the government set a separate target of fast-tracking environmental approvals for 26,000 homes by July next year. This target looks to be on track, with land for 14,000 homes formally approved under federal environment law by last week.

A parcel of land on the NSW South Coast near Batemans Bay that developers plan to build 741 homes was approved last week after 62 business days of assessment.

Environment Minister Murray Watt said the nation’s housing outlook was improving.

“We are rocketing toward our goal of fast-tracking the assessment of the 26,000 housing projects in the pipeline by July next year,” he said.

But interest rate settings by the Reserve Bank could slow future approvals.

The nation’s fourth-largest bank, the ANZ, on Tuesday wound back its expectations of an interest rate cut in the first half of next year.

Adam Boyton, ANZ’s head of Australian economics, said recent inflation figures suggested the Reserve would hold interest rates steady well into 2026 with the chance of a rate hike or cut next year in the balance.

He said if underlying inflation remained persistently high and unemployment remained stable, the Reserve would have to lift interest rates.

“Alternatively, no further rate cuts and an easing in the labour market may result in softer real income growth, dampening consumer sentiment and household spending, with feedback loops into business conditions and GDP growth,” he said.

The September quarter national accounts, to be released on Wednesday, are expected to show a lift in GDP growth.

Government spending, particularly federal expenditure on defence and state spending on infrastructure projects, plus a rise in consumer activity, is expected to see growth in the quarter lift to around 0.7 per cent.

That would take annual growth to 2.2 per cent, the fastest pace in two years and ahead of the Reserve Bank’s forecasts.

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