Australia’s ambitious target of building 1.2 million new homes by mid 2029 (a cornerstone of the National Housing Accord) now looks like a high stakes cliffhanger with the nation falling behind and the future uncertain.
The current state of play
According to the latest Housing Industry Association (HIA) and National Housing Supply and Affordability Council reports, Australia is falling short by over 40,000 dwelling approvals so far.
The forecast now predicts just under 940,000 new homes will be constructed by 2029, about 260,000 less than the target.
Annual building caps are expected to peak around 213,000 dwellings in 2028 before tapering off again, a far cry from the consistent 240,000 dwellings needed per year.
Why the shortfall?
Several headwinds are to blame:
- High construction costs driven by labour shortages, supply chain delays, rising materials prices, squeezing builder margins and slowing starts.
- Planning and regulatory hurdles, particularly around higher density developments such as apartments, limiting feasible projects despite soaring demand.
- Labour shortages in the construction sector persist despite government efforts to boost skills and migration.
- Shift to higher density dwellings is lagging, even though apartments will need to make up a larger share of supply post 2030.
- Population growth remains strong, especially in cities such as Melbourne, exacerbating demand pressures.
The government response
The federal government has pledged billions in funds to accelerate infrastructure, streamline planning and support social and affordable housing projects.
Programs, such as the Housing Australia Future Fund and the Social Housing Accelerator, aim to add tens of thousands of affordable homes to the mix, while initiatives targeting modern construction methods seek to speed delivery.
While these investments and reforms show promise, the sheer scale of supply needed means significant challenges remain to fully reach the 1.2 million target.
What’s next?
Experts warn that missing the target means the housing affordability crisis will deepen, pushing home prices up further and forcing many Australians to reconsider the ‘Great Australian Dream’ of home ownership. Cities with more resilient economies and lower housing costs, such as Adelaide, could see population and demand surge as buyers look for affordable alternatives.
The coming years will be critical with Australia now at a crossroads. Ongoing slow development and regulatory choke points could force households into more expensive or less desirable housing options, while bold policy implementation and industry innovation have the potential to bend the curve back towards sufficient supply.
Is Australia on track to hit its house building targets?
Not quite yet — it’s a cliffhanger filled with tough economic realities, regulatory complexities and societal pressures.
Whether the country can accelerate new home delivery at the scale and pace needed will define the property market, affordability and social fabric well into the next decade.
With interest rates at their lowest since November 2023 combined with strong property demand and greater borrowing power, it may be worth reviewing your options to see if buying is suitable for your circumstances.
Reach out for a chat at any time.