Labor conference: Housing target poses a massive challenge, say builders

Property developers have warned that the Labor government’s target to build 1.2 million new homes will present a ‘massive challenge’ for the embattled construction sector.

Property developers say the target to build 1.2 million new homes will present a ‘massive challenge’ for the embattled construction sector. Picture: NCA NewsWire / John Gass

Property developers say the Labor government’s target to build 1.2 million new homes will present a “massive challenge” for the embattled construction sector and they question where builders will find the additional capacity to meet demand.

Urban Taskforce Australia chief executive Tom Forrest said the $3bn scheme unveiled by Anthony Albanese after Wednesday’s national cabinet meeting would require a “quantum leap” from the planning system to meet the target, which was increased by 200,000 from the national housing accord.

The Prime Minister also announced a ban on landlords increasing rents more than once a year, a limit on break-lease fees and protection for tenants from no-fault evictions, which has been criticised by landlord groups as “hostile legislation”.

Mr Forrest said local and state government planning approvals processes needed to be reformed to meet the increased target, with 1.2 million homes equating to 375,000 properties over five years in NSW alone, or 75,000 a year, based on estimates that the state makes up 31.5 per cent of the population.

“The target is a massive challenge … The current performance of the NSW planning system and building construction system delivered 47,000 homes in the last 12 months,” he said. “We’ve got to go from 45,000 to 75,000 every year for five years.

“It’s a massive increase, and it requires a step change or a quantum leap in the way the planning system deals with housing development applications; increased height and density around public transport systems is the minimum we need to do.”

Queensland property developer Don O’Rorke welcomed the recognition that supply was the root cause of the housing crisis but questioned why the government was increasing its housing targets when builders were already struggling under current demand. “Who’s actually going to build these apartments?” he said.

“There is no mention in any of the reports about how we are going to address the capacity issue that the industry is facing … There’s very limited surplus capacity in the system to satisfy construction requirements for the private sector.”

Hutchinson Builders company director Jack Hutchinson Jr said the shortage of subcontractors was critical for the industry’s ability to deliver the housing target. “We can only build as much as our subcontractor workforce is capable,” he said.

Billbergia Group development director Rick Graf said the industry could meet the demand but the planning approvals system needed fundamental changes “to make it faster and easier to deliver more housing at affordable cost.”

Australian Landlords Association national president Andrew Kent said increased regulations on landlords marked a national rolling out of “hostile legislation” already active in Victoria. “The issue with the hostile legislation is that it is creating a much higher risk profile for landlords, meaning they are more reluctant to go into some of these leases where they’re losing control of their own property,” he said.

Centre for Independent Studies chief economist Peter Tulip said the 1.2 million home target could be reached but the root causes including a reluctance among local councils towards high density developments and flawed ownership structures would need to be addressed.