Geelong dwelling approvals fell in 2025. Picture: Alan Barber

Steep housing targets designed to ease affordability for homebuyers in Geelong have been dealt a blow with new figures showing building approvals fell in 2025.

The Australian Bureau of Statistics figures show 2975 dwelling approvals in the region in 2025, nearly 800 fewer than 2024.

The bulk of the shortfall came in Geelong’s growth areas, where 660 fewer homes were approved than the previous year, as leading development figures warn significant costs and red tape risked the region falling further behind building targets amid claims land prices could hit $500,000.

Only the Grovedale-Mount Duneed area saw an increase (rising from 253 to 418 in 2025), with 359 fewer homes approved in Armstrong Creek, with falling by 40 at Lara.

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Urban Development Institute of Australia Geelong chapter chair Nick Clements said interest rate cuts had stimulated buying activity this year.

“We were seeing one purchase a week to seeing a lot more activity in terms of people coming through the door,” Mr Clements said.

“A lot of the parcels of land that people defaulted on over the last 24 months have now gone through the system and been resold again – that’s another positive outcome to occur.”

Ben Stewart, a project director at Core Projects said the Armstrong Creek land market was “firmly in recovery mode”.

The city’s largest housing development Warralily clocked more than 80 land sales this spring as the property sector rebound from a huge sales slump.

Warralily is the largest housing project in the Armstrong Creek growth area.

Mr Clements said the industry was grappling with high development and red tape costs and meeting the market on affordability.

“It is still very much a reality there is a certain point at which the market cuts out in Lara or Armstrong Creek or the Bellarine and developers are still substantially struggling with making things stack up to meet that market,” he said.

September quarter median land price data from Oliver Hume shows a 400sq m block costs $363,000 in Lara and $415,000 in Armstrong Creek.

Mr Clements said while the state government was pulling the right levers to speed up approvals, costs and red tape was still stifling the release of land.

Town planner and UDIA Geelong chapter chair Nick Clements said developers are grappling with meeting the market in the face of rising costs. Picture: Brad Fleet

High proposed development levies was impacting the viability of future greenfields projects.

The predominant developer in Geelong’s western growth corridor is arguing the development levy needs to be about $650,000 per hectare, whereas the proposed rate is presently $830,000.

“There is a big difference,” said Mr Clements, who said project viability was on a knife edge.

Villawood Properties executive director Rory Costelloe said the median price for a block of land could hit $500,000 if the proposed levy structure and developable area remains unchanged.

“We don’t want to do that – we want affordable housing,” he said.

“We just won an award for affordable housing and the proof is in the pudding in what we delivered in Armstrong – people love it. It’s a really happy community and all the levels of government have had a look a it.”

Rory Costelloe from Villawood Properties wants lower development levies to keep a lid on land prices.

The developer is also grappling with steep interest payments as statutory planning runs at least 12 months behind schedule, Mr Costelloe said.

Villawood began buying land in the area understanding it would be going to market by mid-2025, he said.

Mr Costelloe said the development levy includes the state government passing on the full cost of Midland Highway and Geelong-Ballan Rd highway intersection upgrades despite a panel recommending the contribution should be 11 per cent of the cost, would also adding to the cost of the project.

“That adds $110,000 per hectare,” he said.

Stacking up infill development projects and CBD apartments is also a problem.

“Credit to the state government, because it is approaching all the developers in the CBD with active permits and trying to find ways to get those projects off the ground,” Mr Clements said.

Most approved apartment developments remain stalled in central Geelong. Picture: Brad Fleet

“But in the vast majority of circumstances, it’s very consistent messaging that is going back to the state, which is you need to consider approaches similar to what New South Wales or South Australia has done, where the government actually underwrites a certain quantum of dwellings that will give confidence for developers to pull the trigger,” Mr Clements said

“A lot of the concern in the CBD is there sufficient demand to initiate the 12 to 15-odd permits that are sitting there. It’s a lot of stock to come up to the market.”

Melbourne developer Gurner is the only major permit-holder indicating it’s first major Geelong CBD project is set to be launched in 2026.

Planning Minister Sonya Kilkenny recently lauded the fast-tracked approval for a 16-storey Up Property development in Malop St, Geelong, providing 250 apartments.

Gurner has indicated its Brougham St development is set to be launched in 2026.

While Up Property immediately launched sales of its 56-apartment Geelong West project, Hope & Autumn – also a fast-tracked approval – managing director Marcus Jankie earlier told the Advertiser it would be several years before the Malop St project would come to market.

Recent ABS figures revealed Australia had already fallen more than 60,000 homes behind after the first year of the federal government’s national housing accord.

The state government also set a target of 128,600 new homes for Greater Geelong by 2050.

Metricon chief executive Brad Duggan said the biggest handbrakes on building is land supply, slow planning systems and infrastructure not keeping pace.

“You can’t deliver homes at scale without a pipeline of fully serviced, shovel-ready land, and right now that pipeline is too thin,” Mr Duggan said.

“The nation doesn’t have a construction capacity problem. Builders can deliver homes quickly, in our case, 60 days for a single storey home and 100 days for a double storey. What we need is the land and approvals pipeline to match that pace.”