Labor’s 1.2m homes target not on track despite rebound

A surge in new home builds boosts hopes in Labor ranks that the Albanese government’s ambitious 1.2 million new homes pledge remains in play, amid industry warnings of a dramatic shortfall.

Anthony Albanese speaking with residents Sofia Terron and Lucie Browne as he opened a social and affordable housing development in Sydney’s Marrickville on Wednesday. Picture: Gaye Gerard/NewsWire

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A surge in new home builds has boosted hopes in Labor ranks that the Albanese government’s ambitious 1.2 million new homes pledge remains in play, amid industry warnings of a dramatic shortfall fuelled by flatlining apartment construction.

More than 43,240 new homes commenced construction in the first three months under Anthony Albanese’s National Housing Accord, which underpins Labor’s promise to build 1.2 well-located homes between mid-2024 and mid-2029.

Australian Bureau of Statistics building activity data on Wednesday revealed a 20.5 per cent lift in new detached house starts compared to the June quarter and a 5.3 per cent increase in the year to September. The ABS figures showed construction of new apartments remained flat, with higher density housing development running at its lowest levels in more than a decade.

Despite a rebound in building activity after a long slide following pandemic peaks, construction and housing groups warned Labor remains on track to fall short of its 1.2 million new homes target.

Master Builders Australia chief executive Denita Wawn said while the boost in new home builds was welcome, current trajectories indicate the housing target would fall short by about 350,000.

“Our performance in apartment construction will be the key to whether we meet the target. Apartment construction levels remain too low because the investment appetite is not there,” Ms Wawn said.

“Low productivity, labour shortages, costly and restrictive CFMEU pattern agreements, a lack of supporting infrastructure and a high inflationary environment all contribute to project costs not stacking up.”

Housing Minister Clare O’Neil said she was “pleased to see that we’re building more homes as a country than when we came to government, but we need to do more, more quickly”.

Housing Minister Clare O'Neil. Picture: Martin Ollman/NewsWire

“In complete contrast to the former Liberal government we are working closely with state, territory and local governments to deliver more homes and make housing more affordable, with the PM making some really big announcements already this year to unlock tens of thousands of new homes,” Ms O’Neil told The Australian.

Housing Industry Association senior economist Tom Devitt said based on current building trends, only 173,000 homes would be commenced during the first year of the federal government’s housing accord, which is 67,000 lower than the number required to meet annual targets.

“The September quarter result is less than three quarters of the required build rate. This is simply too slow out of the blocks,” Mr Devitt said.

Citing uncertain tax settings, skilled labour shortages and regulatory imposts as constraints for higher density housing investment, Mr Devitt said “a significant pick-up in multi-unit starts is urgently required to meet the housing demand of recently elevated net overseas migration”.

Urban Taskforce chief executive Tom Forrest said housing commencements were the “key leading indicator in terms of the health and efficiency of the housing supply pipeline, and (the data) presents the best forecast of housing supply in the coming years. What we have seen in recent times is a decline in numbers, leading to a massive crisis affecting rents, home prices as well as both the economy and the broader community,” Mr Forrest said.

“While the uptick in commencements is welcome, we remain a very long way away from delivering the 77,000 new homes each year required by the NSW Housing Accord target.

“But at least the data shows we are heading in the right direction.”