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In short:
New data from the Australian Bureau of Statistics show building approvals have fallen by more than 6 per cent in June compared to the previous month.
The peak construction industry body has said annual building approvals are at their lowest levels in over a decade.
What's next?
Some housing experts are calling on Australia to adopt alternative methods of construction to improve housing supply.
Australia will fall short by more than 300,000 homes of the National Housing Accord target if building approval trends continue, a peak construction body says.
New data released by the Australian Bureau of Statistics shows the total number of dwellings approved in June fell by 6.5 per cent from the previous month.
Approvals were down in four states, with New South Wales seeing the largest decrease.
Australian Housing and Urban Research Institute's Michael Fotheringham said the number of housing approvals often depended on the number of applications.
"We continue to invest in new houses, and new units, the dollar doesn't stretch as far as it used to in purchasing them," he said.
"So we're getting less from the same equivalent amount of expenditure."
Dr Fotheringham explained there isn't a problem of demand or consumer confidence, but rather issues with the supply chains since the pandemic.
"There's an appetite there, but the costs have gone up. So really, you know, what we need to look at is how do we start to improve on the costs of material suppliers," he said.
"This is a global pattern that we're seeing, right across the developed world. So what we need to be looking at is how we can reduce those material costs … and increase the return on investment."
Master Builders Australia (MBA), the peak body for the construction industry, has said the decline in housing approvals for June could see Australia fail to meet its housing targets.
The federal government's National Housing Accord has set a target to build 1.2 million new homes across Australia by 2029.
"We saw a glimmer of hope during May, but this downturn in June means the industry is starting the Accords period on the wrong foot," MBA chief economist Shane Garrett said in a statement.
"Annual building approvals are now at their lowest levels in over a decade despite strong signals from government to increase housing supply.
"If approvals continue at this level, Australia will fall 385,000 homes short of the 1.2 million Housing Accord target."
The peak industry body also said there needed to be work outside of the housing portfolio to address bloated building costs and construction times.
"Addressing the housing crisis requires a holistic approach with input from multiple portfolios from industrial relations, infrastructure, procurement, immigration, to skills and training," CEO Denita Wawn said.
"Australian builders are willing and ready to get on with the job of building new homes, but they currently have one hand tied behind their back."
What are solutions to improve housing approvals?
Dr Fotheringham said there needed to be more work to find alternative ways to build homes. He explained the way homes are built in Australia hasn't dramatically changed in the last decade.
"If you look at other countries, the construction of housing is much more industrial in its scale. It's much more about building homes in factories and then moving them to location," he said.
"So that prefabricated or off-site construction is a key area where we've got more work to do."
Dr Fotheringham said that in Queensland and NSW, work had already started on state government-run off-site construction enterprises.
"There is certainly capacity to do more of that across the country. There is a small off-site construction sector in Australia, but it certainly could grow," he said.