Deloitte names five immediate steps governments can take to improve housing supply

Deloitte warns the plan to build 1.2 million houses will fail unless changes are made including a dedicated housing minister and not treating homes as assets.

Professional services firm Deloitte warns that the government’s National Housing Accord plan to deliver 1.2 million houses won’t be met unless structural changes are made including not treating homes as assets and the creation of a housing minister.

The firm has proposed that government takes five immediate, complementary actions to make an impact using a systems perspective, saying that the current housing market is a perfect example of significant market failure.

The “Solving Australia’s severe housing shortage: A bold new approach” report by Deloitte finds that reform is urgently needed with a myriad of systematic challenges unresolved and not enough homes being built to combat rapid population growth.

Deloitte global lead partner for infrastructure and capital projects Luke Houghton said that applying systems thinking provides the ability to design, link and co-ordinate initiatives across the country.

“A shift in perspective is critically needed and it must start with putting peoples’ needs at the centre and treating houses as homes, and not just assets,” he said.

Deloitte has identified that the Commonwealth, state and territory governments should create a single minister accountable for all housing policy to drive change and ensure targets are met, similar to health and education portfolios.

It also says government developers need to counteract the effects of the economic cycle to unlock housing developments and to allow the creation of new asset classes that attract long term investment.

“Commonwealth and state and territory governments should have a bold vision for the future roles of the community housing sector, government developers and the private sector to meet growing social, affordable, and market housing demand,” the report said.

Figures from the Australian Bureau of Statistics show that the total number of dwellings approved was down 23 per cent in the 12 months to August, and 34 per cent from the recent peak in February 2021. This is despite Australia’s population rising by 563,200 in the past year.

Deloitte Access Economics forecasts for 2023-24 show that new housing supply would barely keep pace with population growth and that Prime Minister Anthony Albanese’s prized National Housing Accord would require the construction of 60,000 dwellings per quarter over five years — a rate not seen this century.

Dwelling approvals are 23 per cent lower from a year ago.

It comes as the RBA’s latest financial stability review that one in three large residential builders are experiencing negative cash flow, it’s hard to see how we can possibly build homes at the required rate.

Mr Houghton said factoring in construction time and project delays, the firm had forecasted completions could reach 188,000 in 2024 and 184,000 in 2025.

“This level of supply is well short of the 240,000 dwellings per year envisaged in the National Housing Target,” he said.

Mr Houghton said that the target cannot be met unless there is a significant step change to the way housing is planned and delivered.

“Without a change in the way we approach the National Housing Target there is a risk of uncoordinated and piecemeal delivery which will impact housing quantity, quality, and outcomes for people most in need,” he said.

Other changes that Deloitte sees will help supply including existing incentives available in the housing industry to be bundled and expanded to provide efficient pathways to invest in affordable housing, plus see all levels of government implement comparable planning reforms.

Deloitte’s Luke Houghton says urgent reform is required to ensure housing targets are met. Picture: Deloitte.

“State and territory governments should produce publicly available, rolling 20-30-year housing supply programs that include the provision of social and affordable housing and are aligned to long term infrastructure plans.”

Planning reforms it notes should be standardised and public so that investors know the time it takes to deliver new housing anywhere in Australia. It also notes that policies were needed to reduce homelessness and allow for more people to own a property.

Australia’s housing crisis has made it difficult to secure rental properties, with PropTrack reporting that the national vacancy rate fell to a record low of 1.06 per cent in September, with the share of rentals vacant now 55 per cent lower than the start of the pandemic.

House prices have now regained all recent price falls to be at $754,000 nationally, with many parts of the country now at record highs.