Hurdle for Albo housing pledge

Target of 1.2m new builds won’t happen, says report

Labor’s ambitious target to build 1.2 million new homes over the next five years “will not be achieved”, according to a new government report that lays bare the reality of Australia’s housing crisis.

The National Housing Supply and Affordability Council has handed its inaugural annual report to Housing Minister Julie Collins.

It suggests reforms to current tax settings to improve housing supply, affordability outcomes and equity amid ongoing debate about the future of negative gearing and capital gains tax concessions.

The report found housing affordability had worsened in 2023, with a 20 per cent deposit now taking 10 years to attain – but even then, only 13 per cent of the homes sold in 2022-23 were affordable for median income household. Crucially, the report found housing stock and social housing had not kept pace with demand.

Council chair Susan LloydHurwitz said the heart of the crisis was “insufficient supply”, made more acute by the resumption of migration at pace, rising interest rates, skill shortages, elevated construction company insolvencies, weak consumer confidence and cost inflation.

“These all combine to create an environment in which prices and rents are growing faster than wages, rental vacancies are near all-time lows, 169,000 households are on public housing waiting lists, 122,000 people are experiencing homelessness and projected housing supply is very low,” she said.

The report projects housing affordability could worsen further in the near term, with significant shortfall of new supply relative to new demand anticipated until the 2025-26 financial year, and even then, only a “small proportion of this new supply would be affordable”.

By 2028-29, new supply will still be 39,000 dwellings short of new demand.

Federal, state and territory governments last year agreed to a national target to build 1.2 million “well located” homes over the next five years, but Ms Lloyd-Hurwitz said that would not be achieved.

“The Australian government’s 1.2 million national housing supply target agreed to in the National Housing Accord is suitably ambitious and clearly focuses attention on improving supply,” she said.

“However, the council’s forecasts indicate the 1.2 million target will not be achieved. “Implementation of announced housing policy measures to increase the supply of new housing is required.”

But Ms Collins says the government is prepared to meet the challenges.

“Our government has committed more than $25bn in new housing initiatives over the next decade to help build the homes Australia needs,” she will say in a speech on Friday.

“Getting to 1.2 million homes will be a challenge as the report highlights, but it’s a challenge we are up for.”