The supply of housing could substantially miss the national target of 1.2 million new homes over five years by one third or even more as builders and developers grapple with high construction costs and a sluggish planning system, according to industry analyses.

Based on forecasts by industry lobby group the Urban Development Institute of Australia in a new report, the delivery of new homes will fall 393,000 dwellings short of the target for the combined capital cities alone by 2029.