The federal government's signature deal with the states to solve the housing crisis appears in tatters, with fresh construction approval numbers providing a bleak outlook.
Dwelling approvals dropped by 6.1 per cent in August, further endangering the nationally-agreed goal of building 1.2 million extra homes by July 2029.
The monthly decline reversed a bullish 11 per cent increase in July, although approvals were up 3.6 per cent when compared to August 2023.
In September, Master Builders Australia (MBA) forecast just 1.03 million of the target homes would be built, finding every state was behind their individual targets.
The peak building and construction body said if the pace experienced over the past year continued, Australia would fall 365,000 homes short.
According to Australian Bureau of Statistics data released on Tuesday, approvals for detached houses rose by a slim 0.5 per cent nationally, but other dwellings - including apartments - pulled down the overall tally with a 16.5 per cent fall.
MBA chief executive Denita Wawn said a "strong and consistent" supply of high-density housing was key to solving the housing crisis.
"With higher density building approvals lower now than a year ago, the data reinforces the need for serious action on inflation to encourage new home ownership and more private investors into the market to generate urgently needed new homes," she said.
NSW and South Australia recorded the biggest declines, both reporting an 11.5 per cent fall in approvals.
All states experienced a decrease of at least three per cent, month-on-month.
Sluggish planning systems - which NSW Premier Chris Minns has routinely blamed for lacklustre progress in his state - along with "apartment-killer taxes" were driving the decline, according to the Property Council of Australia.
Only 1200 apartments in blocks with nine or more storeys were approved in August, compared with 2500 in July.
"We need to increase the number of homes approved and ensure a strong pipeline of apartment supply to drive towards our housing targets at scale," the council's Matthew Kandelaars said.
"But the reality is it has never been more difficult and costly to get apartments out of the ground."
Oxford Economics Australia senior economist Maree Kilroy said the data suggested the worst was over for detached housing approvals, but apartments were another story altogether.
Housing starts were forecast to jump six per cent this financial year, she said.
"Mortgage rate cuts will aid the release of pent-up housing demand, while traction on the housing policy front will become increasingly obvious … however industry capacity will act to limit the velocity of the recovery," Ms Kilroy said.
Detached housing approvals rose in NSW by 3.9 per cent, in WA by 1.9 per cent and in Victoria by 1.4 per cent.
But they fell in South Australia by four per cent and in Queensland by 3.9 per cent.
