Australia falls further behind national housing target, report finds

New industry forecasts show Australia is moving further away from meeting its National Housing Accord target of 1.2 million new homes, according to Master Builders Australia.

The latest projections indicate Australia will fall short of the five-year target by over 166,000 homes, an increase from the 112,000 shortfall predicted five months ago.

Master Builders Australia CEO Denita Wawn said new home building has started the Accord period from its weakest position in a decade.

“The downgrade in our April forecasts is off the back of a prolonged battle to curb inflation, persistently high interest rates and continued constraints on the supply side of the residential building market,” Ms Wawn said.

From July 2024 to June 2029, Master Builders forecasts 1,034,000 new home starts, 13.8% lower than the Accord target.

Ms Wawn identified several key challenges facing the industry:

Productivity decline: The industry has seen an 18% drop in productivity over the last decade.
Planning delays: State governments need to expedite planning reforms to reduce costs and construction times.
Workforce shortages: This remains the biggest challenge across all sectors.
Higher density building issues: Build times for these projects have increased by 20% and costs by 40% since the pandemic.

Ms Wawn called for urgent action from both federal and state governments to address these issues.

“At the Federal level, the Government’s priority should be growing the building and construction workforce. This must include a mix of domestic and skilled migration workers,” she said.

Despite the challenges in residential construction, the non-residential and civil sectors are showing growth. Non-residential building activity is forecast to increase by 7.3% over the five years to June 2024, while the civil construction sector is expected to expand by 8.5%.

Ms Wawn emphasized the importance of continued investment in the whole built environment.

“We can’t build the homes we need without the appropriate commercial and civil infrastructure to support it. This includes critical infrastructure such as utilities,” she said.

She concluded by stating that builders are ready to meet the targets, but barriers need to be removed to achieve this goal.