Victorian Executive Director of the Property Council Cath Evans said the results highlight a housing pipeline that is struggling to keep pace with Victoria's population growth.
"We need to be delivering more homes, and that won't happen if approvals are slipping," she said.
"The approvals data reinforces what industry has been saying for some time: Victoria cannot meet its housing targets unless we dramatically increase the supply of development-ready land and remove barriers to getting projects off the ground.
"That's why the Property Council recently put forward a series of practical recommendations to accelerate housing delivery in growth areas and get more homes into the pipeline.
"Unlocking land in Victoria has become too complex and too costly, particularly across Melbourne's growth corridors where thousands of future homes could be delivered.
"Accelerating the delivery of growth corridors will be essential for keeping new homes affordable, creating high-value jobs and preserving Melbourne's hard-won liveability.
Ms Evans said the challenges facing housing delivery extend beyond planning and land supply, with Victoria's tax settings also deterring investment.
"We are calling for significant tax reform, with a particular focus on removing the Absentee Owner Surcharge and Windfall Gains Tax," she said.
"As we approach the election, there is a real opportunity to reset Victoria's investment settings. Removing these barriers would send a strong signal that Victoria is open for business and serious about solving its housing shortage."
