Every month, when the Australian Bureau of Statistics releases its building approvals data, the reaction is predictable: headlines pronounce the latest drop in housing approvals and planning systems are thrust back into the spotlight, either as a sign of progress or as a source of frustration.

That response, while understandable, misses the bigger picture.

Housing is one of Australia’s most pressing challenges, affecting affordability, productivity and everyday living costs. Governments, industry and the community are all looking for signals that things are moving in the right direction, or explanations for why they are not. But when these monthly figures land, it is crucial to understand what they really tell us – and what they don’t.

Building approvals are often treated as shorthand for housing supply and, increasingly, as an indicator of how planning systems are performing. In reality, they sit much later in the housing delivery process. They come well after planning approval has already been granted, and they tell us far more about construction readiness and market conditions than about planning itself.

Planning approvals and building approvals are often talked about as if they are interchangeable. They are not.

A planning approval comes first. It establishes whether development is acceptable in principle, what can be built, where it can be built, and under what conditions. Planning approvals are granted by local or state planning authorities, are made in the public interest, and are typically valid for several years. They give permission to proceed, but they do not compel construction to start.

Building approval comes later, much closer to the decision to build. Rather than focusing on land use or planning outcomes, it confirms that detailed designs meet technical, engineering and safety requirements under building codes. Construction cannot legally begin without one. In simple terms, one permits development, the other signals readiness to construct.

This distinction becomes clearer when housing delivery is viewed as a system rather than a single step.

The National Housing Supply and Affordability Council’s State of the Housing System 2025 report identifies 12 stages in the housing production process, ranging from strategic land-use planning and statutory settings, through site assembly, planning approvals and infrastructure provision, to finance, building approvals, construction and finally sales and settlement.

Each stage plays a role, and delays or constraints at any point can slow or stop delivery. Planning approvals are only one part of this chain. Building approvals sit further along it. Treating building approvals as a proxy for planning performance ignores the many steps in between, and the factors that influence them.

That matters, because right now the gap between approval and delivery is widening.

Analysis in the Planning Institute of Australia’s Planning for Productivity[1] report found that tens of thousands of homes across the country already have planning approval but have not progressed to construction. This is not a short-term anomaly. It reflects sustained pressure in later stages of the housing production process.

High construction costs, labour shortages, infrastructure servicing delays, financing constraints and broader market risk all weigh heavily on whether approved projects proceed. Even developments that are fully approved and technically compliant can stall if the economics no longer stack up or key inputs are unavailable.

The data illustrates the scale of this disconnect. As of September 2025, 31,967 dwellings nationally had received building approval but had not yet commenced construction.[2] For planning approvals, the numbers are higher again. In Queensland alone, more than 99,000 residential lots hold active planning approval yet remain undeveloped, a figure that has barely moved in more than 15 years.[3] In Greater Sydney, approximately 75,000 homes with planning approval had not commenced construction as of 2024.[4] In Victoria, construction had not yet started on more than 119,000 dwellings with planning approval in 2023. [5]

These figures do not point to a planning system that is failing to grant approvals. They point to pressure points elsewhere in the housing delivery pipeline, particularly in the transition from approval to construction.

They also highlight a deeper challenge. Planning systems cannot be meaningfully improved if they are not being properly measured.

Australia has timely national data on building approvals, thanks to the ABS. What we lack is a consistent national picture of planning approvals, decision timeframes and development-ready land. There is no dataset that shows, across jurisdictions, how many homes already have planning approval, how long decisions take, or where delays occur along the full housing production process.

In the absence of that information, building approvals are often asked to carry more weight than they should, becoming a stand-in for planning performance even though they are shaped by factors far beyond planning decisions. That makes it easy to draw neat conclusions from the wrong numbers.

And when that happens, there is a real risk of fixing the wrong problems.

The Planning Institute of Australia advocates for planning systems that are efficient, transparent and well resourced. Our Planning for Productivity report sets out practical reforms to strengthen strategic planning, improve coordination across agencies, digitise systems and build workforce capability. But reform only works when it is grounded in data that reflects what planning actually does, not what happens downstream in construction and finance markets.

This is why the recent announcement by Federal and State Treasurers “to develop data dashboards on planning, land use and housing supply” is significant. If designed well, it can provide a nationally consistent view of planning approvals, decision timeframes and delivery outcomes, clearly distinguished from construction activity and market conditions.

Clear national housing targets, including those under the National Housing Accord, also matter. They focus attention and align effort across governments. Achieving them, however, will require coordinated action across the full housing production process. Planning, infrastructure provision, construction capacity, financing settings and sustained investment in social and affordable housing all need to move together.

Building approvals will always be an important part of the housing story. They are a useful indicator of construction readiness and market conditions. They just should not be asked to explain how planning systems are performing.

If we want better housing outcomes, we need to start by reading the data carefully.

Good policy starts with measuring the right thing.

[1] PIA, July 2025, NAT I Planning for Productivity

[2] ABS, Sept 2025, Building Activity, Australia, September 2025 | Australian Bureau of Statistics

[3] QGSO, 2025, Residential land supply and development: Residential development | Queensland Government Statistician’s Office

[4] SMH, Dec 2024, Housing crisis in NSW: 75,000 homes have DAs but still await construction

[5] The Age, Sep 2023, Melbourne housing crisis: The 120,000 homes that are ready to be built – but work hasn’t started

Written by Emma Riley RPIA (Fellow), PIA National President