Forecasts by property and housing bodies suggest the National Housing Accord’s ambitious 1.2 million target is well wide of the mark.
Latest Australian Bureau of Statistics data showing a sharp decrease in completions – from 45,643 in the December quarter to 41,329 in the March quarter – prompted the Property Council of Australia (PCA) to warn of the huge shortfall.
The PCA says Australia needs to be averaging 60,000 homes every quarter over the next five years to hit the target.
Yet the 9.5 per cent seasonally adjusted drop is the second lowest quarter of housing completions in the last 10 years.
“If housing supply stays this low, we will only manage to build around 830,000 homes over the next five years, leaving us 370,000 short,” according to the Property Council’s Matthew Kandelaars.
“If we don’t start increasing the pace, we will miss what should be an achievable target by a country mile.
Another new report out this week – by Oxford Economics Australia – is predicting 940,000 new homes will be built by the 2029 due date.
Though that’s still a 260,000 shortfall.
Timothy Herbert, head of property and building at the thinktank, said new housing construction would reach record levels by the end of the decade but wouldn’t be enough to achieve the government goal.
“While industry capacity is showing signs of improvement in areas, labour shortages remain that will place a speed limit on the early to mid-stage of the recovery,” he said.
Some states are more likely to hit their targets than others, according to the report.
Particularly strong construction is expected to see WA and Queensland exceed their home building targets.
Earlier this month, the Housing Industry Association gave a year-by-year analysis of the shortfall.
The building industry body predicted a 64,000 homes shortfall in the 2024-25 financial year because of a combination of costs and labour shortages.
That shortfall is expected to shrink to 40,000 in the next financial year, then 25,000 in the subsequent two years and 33,000 in the final year.
Overall, it is estimating a 190,000 shortage.
To reach the June 2029 target, an average of 240,000 homes needs to be built each year.
With the prospect of higher for longer interest rates sapping heat from the property market, all eyes will be on the release of CPI data next week and the Reserve Bank’s rate call the following Tuesday.
