Housing crisis has “no easy solution” as Australia will miss 160,000 home target, report predicts

Australia will miss its target of building 1.2 million new homes by 2029, with the federal government’s housing advisory body predicting a shortfall of 160,000.

A new report from the National Housing Supply and Affordability Council forecasts Australia will build just 1.04 million new homes before the mid-2029 housing deal deadline.

“The problems in our housing market are deep-rooted and there is no easy solution,” said Council President Susan Lloyd-Hurwitz.

“At its core, this crisis is due to insufficient supply, but many contributing factors are exacerbating it: the resumption of migration at an accelerated pace, rising interest rates, skills shortages, the high number of insolvencies of construction companies, weak consumer confidence and cost inflation, to name just a few. some.

“All of this combines to create an environment in which prices and rents are growing faster than wages, rental vacancies are near historic lows, 169,000 households are on public housing waiting lists, 122,000 people are are homeless and the projected housing supply is very low. ”

The report showed that housing affordability worsened in 2023 from already challenging levels and would worsen further in the near term.

Australia will miss its 2029 homebuilding target by around 160,000 new homes. Photo: Getty

It said new demand significantly exceeded new supply in the 2023-24 financial year, with new deficits expected in the 2024-25 and 2025-26 financial years.

How to build more houses

PropTrack senior economist Eleanor Creagh said Australia would need to almost double current levels of construction activity to reach the 1.2 million target.

Creagh said the country was completing just under 170,000 new homes a year and starting even fewer, which was below the average of the previous decade.

At the same time, the decline in construction approvals has indicated that the situation is only going to get worse, he said.

“Using recent estimated attrition between approval and completion, that annual completion figure could trend towards 140,000 unless something changes,” Ms Creagh said.

“That would be just over half of the 240,000 homes a year that must be built to meet the target of 1.2 million new homes by 2029, a figure that is further exceeded by the number of new homes needed for newcomers. if the average household size remains the same. same.”

PropTrack senior economist Eleanor Creagh says Australia needs to almost double current levels of construction activity to reach the target of 1.2 million new homes. Photo: Exterior

Governments must act faster

Creagh said a combination of measures was needed to support new housing construction, including planning, zoning and workforce reforms.

Federal, state and territory governments agreed last year on a series of housing reforms to meet the new housing target, including changes to planning and rental systems.

However, the real estate industry has been calling on lawmakers to make bigger changes and move faster on their reforms.

Property Council chief executive Mike Zorbas said the government’s property targets were Australia’s best chance to reduce the property deficit.

“The golden levers here are planning efficiency, land release and last mile infrastructure and governments are finally starting to understand this,” he said.

Australia will need almost 1.08 million new homes due to increased demand by mid-2029. Photo: Getty

The federal government has allocated $25 billion to improve housing, including the $10 billion Housing Australia Future fund; the $3 billion new housing bonus to incentivize state governments; and the $2 billion social housing accelerator.

Federal Treasurer Jim Chalmers said building 1.2 million homes was an ambitious target.

“We have already committed more than $25 billion over the next decade to build more homes for Australians, so there are more homes for buyers, more homes for renters and more homes for those who need them most,” he said.

It comes as the government’s Shared Help to Buy plan remains stalled in the Senate due to opposition from the Coalition and the Greens.