Australia predicted to miss National Housing Accord annual targets until 2028: HIA

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Australia will miss its National Housing Accord annual targets until at least 2028 with major infrastructure projects predicted to stop it reaching its 1.2 million new homes goal.

The Housing Industry Association’s latest home building forecasts have calculated that just 975,970 new homes will be built in the next five years.

But even on the annual level, by 2028 the nation will be on its way to building just 218,730 new houses, townhouses and apartments — more than 20,000 short of the National Housing Accord goal of 240,000 homes.

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Their forecasts show every part of the country will underperform their individual goals, with NSW on track to be the worst performing state, and economists warning Commonwealth funded or subsidised infrastructure projects are sidelining the tradies needed to build new homes.

By 2028 Australia will be on its way to building just over 218,000 homes a year, still thousands short of the goal.

The latest HIA National Outlook shows there are just 165,510 new homes expected to be started this year.

Fewer than 63,000 of these will be units, the worst figures for that housing type since 2011.

And with fewer than 200,000 homes to commence construction in 2025 and 2026, the Institute’s five-year forecast puts the nation at just 975,970 new builds being started from 2024 to the end of 2028.

Senior Economist Matthew King said there was now no way for the nation to reach the 1.2 million homes target intended to ease the housing affordability crisis without governments across the country making efforts to boost the supply of tradies and significantly altering housing and investment taxes and policies.

“We don’t expect that we will build 240,000 homes at all in the next five years,” Mr King said.

Federal Treasurer Jim Chalmers has been tasked with helping the National Housing Accord reach their 1.2m homes goal. Picture: NewsWire / Martin Ollman

“Unfortunately the constraints are too excessive at this point in time.”

The economist added that nation-building infrastructure projects from railways to highways were also outcompeting the housing industry for certain workers.

HIA have previously projected a further 83,000 tradies are needed in order for the nation to build 1.2 million homes in the next five years.

“Unless we can accelerate our supply of workers into residential building, we are not going to be able to achieve 1.2 million homes,” Mr King said.

Real Estate Buyers Agent’s Association of Australia president Melinda Jennison said infrastructure was vital for connecting new homes with jobs, but that governments would have to find other ways to boost housing supply given the HIA figures.

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“I think there’s definitely going to be upward pressure on prices, and those that can afford to pay more will — while others will be pushed out of the market,” Ms Jennison said.

The upshot would be a shift to how Australians live, with growing household sizes as more people move into rental sharehouses and more houses become multigenerational family homes.

While there are signs new homebuyer confidence is rising in almost every state as increases to the cost of building moderate, homebuyer activity in NSW and particularly Sydney is lagging behind — with approval numbers expected to decline for some time.

“NSW is well below target at present, and that’s really the state that needs to see the most significant acceleration,” Mr King said.

Housing Industry Senior Economist Matthew King said there was no way for the nation to reach the 1.2 million homes target without governments making efforts to boost the supply of tradies.

Victoria’s housing market has turned a corner earlier than expected and one in three new houses being approved for construction nationwide are in the Education State.

The areas expected to do the best nationwide are Perth, Adelaide and South East Queensland.

However, Mr King noted that their forecasting showed no states were yet on track to reach their goals under the National Housing Accord.

The HIA figures, based on Australian Bureau of Statistics housing commencements data, show that while more than 100,000 detached houses will be started every year for the coming five years — the number of units to be built will only reach this benchmark in 2027.

But while the number of unit commencements are expected to continue to grow in 2028, the number of new houses to be built is expected to decline from 2027 to 2028.

It puts a question mark over whether the government will even be able to reach 240,000 homes in the 12 months to June 30, 2029.