The Albanese government had hoped to build the nation out of a housing crisis, now experts say he’ll have to cut taxes to do it. Picture: NewsWire / Martin Ollman.
Australia is already 77,500 homes behind Albanese government targets for new housing construction, just 18 months after a five-year plan was put into action.
It comes despite the nation spending a record $110.5bn to build new homes in the past year.
Latest Australian Bureau of Statistics data shows that since the July 1,2024, start date of the National Housing Accord’s five-year, 1.2 million homes goal, the country has started work on just 282,500 new residences.
The Accord target calls for 360,000 in that time.
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The nation will now have to build an unprecedented 262,000 homes every 12 months for the next 3.5 years to hit the goal, well above the initial target of 240,000.
In a silver lining for the housing crisis-busting Accord, the nation’s new home commencement numbers in 2025 topped 196,000 — the highest 12 month figure since the 2022 financial year when builders started work on almost 206,000.
The highest number ever commenced was a little under 234,500, in the 2016 financial year.
The ABS data shows there were another 12,391 homes approved, but not yet under construction, around the nation at the end of December.
NSW had the highest share of that figure, with 3477 residences waiting for work to start on them, followed by Queensland at 1852 and Victoria, 1737.
At the state level, NSW’s 16,272 new home commencements in the final three months of 2025 topped Victoria, 13,489, for the first time since 2023.
Aussie housing construction is struggling to build momentum, despite record spending.
Queensland builders had the next biggest workload, starting construction on 11,460, followed by those in Western Australia, 6307, and South Australia, 3930.
The Housing Industry Association has warned the past year’s uptick came off the back of three interest rate reductions across 2025.
But there is a strong prospect the nation will get its third interest rate increase since February when the Reserve Bank meets early next month, which is expected to slow new housing activity.
HIA senior economist Tom Devitt said getting the numbers up would now fall to the government.
“With interest rates on the way back up, the task of increasing supply will depend on governments reducing the cost of delivering new homes to market in other ways,” Mr Devitt said.
The economist said taxes on housing and home construction were among the highest in the country, rivalling even the sin taxes for alcohol and tobacco.
Aussie housing construction completions broken down by quarter shows a goal for Australia to build its way out of a housing crisis is still struggling to gain momentum. Source: ABS.
Construction commencement stats are healthier, but the industry is worried these numbers were buoyed by lower interest rates that have since risen. Source: ABS.
He also warned changes to negative gearing and capital gains taxes could lead to investors backing away from building new homes.
In the past year they accounted for 40 per cent of new home builds across the country.
“Attempts to tax them out of the housing market will reduce the supply of new homes without affecting housing demand,” concluded Mr Devitt.
“This will worsen affordability, reinforcing the inequity in housing whereby the wealthiest Australians with pre-existing assets and borrowing power are increasingly the only ones able to access the market.”
With Victoria being outpaced by NSW for the first time in years, Property Council of Australia Victorian executive director Cath Evans said the state with the highest property taxation in the nation needed urgent structural changes.
“Right now, the system is too slow, too complex and too costly. We need to deliver more homes more quickly and efficiently,” Ms Evans said.
“A crucial step in supporting housing delivery is the removal of harsh taxes that are holding back Victoria’s property sector.”
Heavy taxes on the housing industry and property market are believed to be slowing investment demand, particularly in Victoria.
She has called for the government to abandon its Absentee Owner Surcharge and Windfall Gains Tax, which are “deterring international investors from choosing Victoria for urgently needed housing and infrastructure projects”.
Without the changes, Ms Evans warned Victorian homebuyers and renters would continue to face housing affordability issues.
Master Builders chief executive Denita Wawn said next month’s federal budget needed policy tweaks to help achieve the nation’s housing goals.
“The policy measures in the budget must be holistic and must stimulate an increase in all construction including new housing supply through a range of programs, tax settings and workforce growth,” Ms Wawn said.
Master Builders are advocating for increased investment in housing infrastructure, a more streamlined National Construction Code to help builders spend less time dealing with red tape and more support for apprentices and skilled migration for the construction sector.
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