Townhome Approvals Are Holding Their Ground

Greater Melbourne saw 2,135 townhome dwellings approved in Q4 2025. That is slightly below the 2,344 recorded in Q3, but broadly in line with both the same period a year prior and the three year quarterly average.

The sentiment recovery visible in pricing and rental data appears to be flowing through to townhome development. Rate cuts have lifted buyer confidence, and developers are responding by commencing new projects. Townhome approvals look to have found a floor and may improve modestly if late 2025 conditions hold into the new year.

Apartment Approvals Are a Different Story

Only 2,339 apartments were approved in Q4 2025, down 20% on Q3 and 47% below the same quarter a year ago. Full year approvals of 11,066 apartments came in above the year to Q4 2024, but remain well below medium and long term averages.

The sector appears to be in the contraction phase of a cycle that has characterised it since 2020, with medium term approvals on a clear downward trajectory. In the near term, developers are likely to remain focused on launching and completing existing projects rather than initiating new ones. That approach should at least contribute to real net supply even as approvals stay soft.

The Mid-Rise Code Offers a Longer Term Reason for Optimism

Looking further ahead, there are genuine reasons for confidence. The Mid-Rise Code for 4 to 6 storey buildings significantly reduces planning risk through a streamlined, deemed to comply assessment framework. This framework prioritises speed over yield, and may produce slightly lower dwelling density than the previous performance based Clause 58 provisions.

The code represents a meaningful reform and should materially improve dwelling supply in well serviced middle ring locations over the medium term.

Want the Full Picture?

This article draws on findings from RPM Group’s VIC Apartments & Townhomes Market Report. Access the complete data and market forecasts in the full report.