Labor’s hopes of building 1.2 million new homes in five years are fading, with the construction industry warning that the target put in place to address Australia’s chronic housing shortage has fallen further out of reach in the past six months.

Master Builders Australia has cut 53,000 homes from its pipeline forecast, warning long-standing problems such as slow planning and approval processes, rising materials costs and labour shortages have been exacerbated by persistently high interest rates that are stopping people from buying homes.