Housing Industry Association urges government to rethink housing policy in upcoming budget

The Housing Industry Association (HIA) has issued a strong call to the Federal Government to use the 2026–27 Budget as an opportunity to overhaul housing policy, highlighting that Australia’s housing shortage has evolved into a significant structural economic challenge.

In its 2026–27 Pre-Budget Submission, the HIA has outlined a comprehensive plan aimed at addressing the supply-side issues plaguing the housing market. These reforms span across taxation, finance, infrastructure, planning, skills, and regulation, all in a bid to support the government’s ambitious target of delivering 1.2 million homes by 2029.

Jocelyn Martin, Managing Director of HIA, emphasised the urgency of the situation, stating, “Importantly, it highlights that persistent housing undersupply is contributing to inflation pressures, worsening rental conditions and constraining economic growth.”

The HIA has made it clear that housing supply is no longer a mere cyclical issue but has transformed into a macroeconomic problem. Ms Martin stressed, “If we want to ease inflation, improve productivity and restore affordability, we must remove the barriers preventing new homes from being built.”

One of the key points raised by the HIA is the heavy taxation burden already shouldered by the housing sector. Ms Martin warned against further tax changes, noting, “Housing is already one of the most heavily taxed sectors in the economy. Further tax changes, including to negative gearing or capital gains tax, would undermine investment, reduce feasibility and worsen affordability.”

In addition to taxation concerns, the HIA has also called for a review of cumulative macroprudential settings, arguing that current restrictions on lending are making it increasingly difficult for first home buyers to enter the market, thereby exacerbating rental pressures without tackling the underlying issue of supply.

To address the bottleneck in apartment projects, the HIA has proposed a national program to expand state-based pre-sale finance guarantee schemes. Ms Martin elaborated, “Across the country there are projects ready to go but stuck because of financing constraints. This is a solvable problem if housing supply is treated as a national priority.”

The submission also advocates for a substantial boost in funding for ‘last-mile’ enabling infrastructure, estimating a need for as much as $5 billion to expedite the readiness of new homes.

A critical component of the HIA’s proposal is addressing the construction workforce shortages that are hindering supply. Ms Martin highlighted the need for long-term solutions, saying, “Addressing construction workforce shortages is also central to lifting supply. HIA has called for the long-term continuation of employer apprentice incentives, funding for pre-apprenticeship programs, targeted trade migration pathways and improved skills recognition processes for migrants.”

The HIA argues that without a larger workforce, the housing targets will remain out of reach. “Housing targets will not be met without a larger workforce. Business as usual will not deliver the trades numbers Australia needs,” Ms Martin asserted.

To further streamline the process, the HIA has urged the government to reduce regulatory burdens. This includes moving the National Construction Code to a five-year amendment cycle, providing free access to Australian Standards, and cutting through the cumulative red, white, and green tape that adds unnecessary costs to new homes.

Ms Martin concluded with a poignant reminder of the stakes involved, stating, “The 2026–27 Budget will be a test of whether housing supply is taken seriously. The focus must be on stability, coordination and reforms that increase supply, not measures suppressing it.”

As the government prepares for the upcoming budget, the HIA’s submission stands as a clarion call for decisive action to address the housing crisis, highlighting the critical need for reforms that prioritise housing supply as a national economic priority.