Heads of some of Australia’s top home builders demand urgent action to solve the housing crisis

Some of Australia’s most prominent home builders have issued a clarion call to the federal government over the housing crisis as the nation reaches a critical juncture.

CEOs from some of Australia’s best-known home builders and residential developers say housing affordability will be a major election issue.

The federal government should instigate a “wartime response” to Australia’s growing housing crisis, the chief executive of a top home builder says.

As a federal election approaches, Australia’s largest property companies say confidence must be restored to the market through a combination of regulatory reform, new infrastructure and improved planning.

They say Australia is at a critical juncture and the Albanese government’s National Housing Accord – which aims for 1.2 million new homes to be built over five years by the middle of 2029 – was not be achievable under current market conditions.

Brad Duggan, who is the CEO of Australia’s largest detached residential builder Metricon Homes, said the federal government’s response to the housing crisis was crucial for the nation’s future.

“The future of our country in terms of our economics is based upon whether we can house a growing population and we can’t,” he said.

“I think we need a wartime response. When we look back over the last three years of this government we’ve not had a wartime response.

“The customer needs to have confidence on their financing costs, confidence in the build journey and they need the tax environment that inspires them to invest and build rather than destroy that confidence.”

Metricon chief executive Brad Duggan.

Mr Duggan said it was important for the Reserve Bank to make a clear statement – rather than a nuanced one – to give people a clearer picture of where Australia was in the interest rate cycle.

He said it was also vital to address lending restrictions such as the Australian Prudential Regulation Authority’s financing buffer which would give people more buying power, end delays in building approvals and through the tax system “inspire” the building of homes instead increasing taxes.

According to the latest Australian Bureau of Statistics data, the government was well behind its annual target of 240,000 housing dwellings to reach 1.2 million.

Mr Duggan said on current form it would fall short by about 300,000.

“But what’s most important is that it has to be 1.2 million of the right type of homes, not just an announcement,” he said.

“Trying to solve the problem from the centre with big government is not the way to do it. We need mum-and-dad investors and new homeowners to go and build homes. They won’t do that unless they have confidence.”

Frasers Property Australia chief executive Cameron Leggatt said there was no “single lever” to fix the housing crisis.

“It demands a continuing, concerted and co-ordinated effort from all levels of government with the right policy settings in place,” he said.

“But if we are going to call it a crisis, we must treat it like one. This includes addressing the solutions which are immediately available, such as blockages in the planning process.

“It’s a long and expensive process to obtain a DA, and even then there’s often more red and green tape to work through before actually getting going on a site.”

Mr Leggatt said the federal government’s 1.2 million homes was an aspirational target and “perhaps a bit ambitious”.

“If we continue as we currently are, the target won’t be achieved, and this is why we must act now,” he said.

“We have got to boost supply. We need a diversity of housing on the ground soon, otherwise more social issues will be created 10 and 20 years down the track.

“Increasing supply means addressing deficits in market capacity, labour and planning systems – the red tape and green tape.”

Frasers Property Australia chief executive Cameron Leggatt.

Mirvac Group chief executive Campbell Hanan said housing affordability was a critical concern heading into the election.

“Proactive and courageous policy initiatives to enable the approval and delivery of a diverse range of new housing across the country are fundamental to addressing these concerns,” he said.

However, Mr Hanan said the national housing target demonstrates the federal government’s focus on prioritising the supply of more housing across Australia.

“Setting targets is critical, as is a focus on addressing labour shortages, productivity challenges and the investment in upfront infrastructure to support new communities,” he said.

Mirvac group chief executive Campbell Hanan.

Stockland managing director and chief executive Tarun Gupta said the focus needs to be on increasing the supply of housing with the right infrastructure in place, and improving the performance of planning systems, and regulatory reform.

“These are critical to an efficient housing system and the quickest way to deliver affordable homes,” he said.

Mr Gupta said although the recent interest rate cut by the RBA was a positive step towards addressing affordability pressures, the price of housing continued to be at record-high levels.

“There are several key factors in affordability – monetary easing, land supply and a first-home buyer’s ability to service their loan under the current regulatory settings. More monetary easing in the 50 to 100 basis point range is one part of improving relative affordability,” he said.

“What’s also required is the regulatory easing of mortgage serviceability ratios, bringing them back within sustainable levels for first-home buyers.

“Right now, based on a current discounted variable rate of 6 per cent to 7 per cent and the mandated 3 per cent buffer, the assumed mortgage rate for bank serviceability is around 9 per cent to 10 per cent, which is restrictive compared to long-term averages.

“Even with the anticipated monetary easing, the Sydney markets remain out of reach for first-home buyers.”

Mr Gupta said Stockland was ready to work with whichever party is elected to form government.

“We encourage all parties to prioritise policies that improve investor confidence in Australia, enable the development of a greater supply of homes and jobs – including appropriate reform – and create a sustainable future,” he said.