Australia’s housing market continues to wrestle with the twin pressures of affordability and supply. New experimental data from the Australian Bureau of Statistics sheds light on the role of knock-down rebuilds, a process where existing homes are demolished and replaced, often with multiple new dwellings on the same site.
Between 2019 and 2025, nearly one in five new residential dwellings approved across the country came through knock-down rebuild projects. In total, 214,483 dwellings—19.2% of national approvals—were tied to demolitions within the previous three years. While more than half were simple one-for-one replacements, on average 2.1 dwellings were approved for every home knocked down, creating an annual net gain of about 19,161 dwellings.
The trend has been most pronounced near city centres, where land values make redeveloping existing sites more attractive than buying in greenfield areas. The data shows the average approval value for detached houses in knock-down rebuilds reached $729,121, more than double the $355,478 average for other detached houses. The lag between demolition and new approval has also shortened, dropping to just over five months in 2021–22.
Despite this steady flow of redevelopments, the broader supply challenge remains. The government has committed to building 1.2 million well-located dwellings between mid-2024 and mid-2029, but monthly dwelling price growth continues to show volatility across the five major capital cities. After sharp swings during the pandemic, recent figures show prices rising again through 2025, highlighting the tension between policy ambition and market dynamics.
Prime Minister Anthony Albanese has linked the government’s housing target to affordability, writing this week: “Labor’s working to bring homeownership back into reach and build more homes, faster.”
Yet critics argue that the strategy remains incomplete without a clearer stance on house prices themselves. Independent analyst Tarric Brooker questioned whether the government can reconcile supply targets with its broader economic stance: “Yet at the same time committing to growing housing prices and refusing to clarify what level of growth is your goal. Your office and Clare O’Neil’s still have my email and you have my word I will publish your response in full for all the public.”
Brooker also pointed to the structure of the market, noting: “Just a little reminder that 78% of Australian property market activity is driven by people with existing equity and property investors selling houses to each other.”
Knock-down rebuilds are adding thousands of new dwellings each year, but the overall pipeline of residential approvals has been declining since the 2021/22 peak. Approvals fell from more than 220,000 that year to around 160,000 in 2023/24, before rebounding modestly in 2024/25. Within that, approvals tied to knock-down rebuilds dropped from nearly 45,000 at their height to just under 30,000 last financial year.
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