Australia’s housing crisis continues to get worse with a recent report revealing that the country will fall short of the 2029 national housing target of 1.2 million new homes by 22% or 260,000 homes.
In August last year, the Albanese government had revised the National Housing Accord target to 1.2 million new well‑located homes over 5 years from mid‑2024 until mid-2029. To achieve this ambitious target, 240,000 new homes would need to be built every year until 2029, or 60,000 homes every quarter.
However, recent housing completions data released by the Australian Bureau of Statistics (BAS) for the March quarter of 2024 reveals that 41,329 homes were completed across Australia, a significant drop from the 45,643 homes achieved in the December 2023 quarter.
In a new report ‘Building in Australia’, Oxford Economics Australia, a leading provider of economic research, analysis and forecasting services, expects residential construction to ramp up to record highs by the end of the decade on the back of government efforts to boost housing supply including lower interest rates, and multi-billion allocations and apprenticeship programs as part of its housing policy.
But the current high interest rates, rapidly escalating construction costs and labour shortages are already impacting housing supply with lower building commencements in all states and territories except Western Australia and ACT. Total dwelling commencements at the end of the 2023-24 financial year were around 155,700, a 10% drop from the previous year, and the lowest since 2013.
According to the Oxford Economics report, there is a current shortfall of 146,000 homes, which will shoot up to 164,000 homes by mid-2027. While the federal government has allocated $32 billion towards its Homes for Australia plan, which includes $3 billion in performance-based funding to states and territories, along with an extra billion for states to fast-track infrastructure such as sewers and roads, $9.3 billion for social housing and a $10 billion Housing Australia Future Fund, the think-tank warns that recovery will be slow with only a marginal growth of 2% predicted in new housing starts for 2024-25 at 158,300.
The significant dwelling stock deficiency is “entrenching affordability as a chronic issue”, the report says.
National total building activity is expected to rise from the next financial year, hitting a new high of 241,900 new dwelling commencements in 2028-29, beating the previous 2016 record. However, at the current pace of activity, only 940,000 new homes will be completed by June 2029, indicating a deficit of 260,000 homes.
Timothy Hibbert, Oxford Economics’ head of property & building forecasting, who authored the report, says, “While we will continue to experience a dwelling stock deficiency, activity will inevitably recover in the residential sector. All build forms will contribute, driving total dwelling commencements to a new record level by the end of the decade.”
“All told, from a weakened base, national total building construction is forecast to climb 39% over the four years to FY2029.”
About the ABS data on housing completions, Property Council Group executive policy and advocacy Matthew Kandelaars observes that the figures “reveal the extent of the challenge and just how much we need to lift our game to hit our targets”.
“If housing supply stays this low, we will only manage to build around 830,000 homes over the next five years, leaving us a whopping 370,000 short,” Kandelaars says. “If we don’t start increasing the pace, we will miss what should be an achievable target by a country mile.”
“We will only achieve our target of 1.2 million homes by applying increasing amounts of federal funding, state resources and a ‘yes’ mindset to reach that goal.”
Image: https://www.sharecafe.com.au/2023/11/02/australian-building-approvals-drop-in-september-but-house-prices-continue-to-rise/
