Labor’s housing targets falling short

Labor’s 1.2 million new homes target within the next five years is expected to fall short by 285,000 dwellings.

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Labor’s 1.2 million new homes target in the next five years will fall short by 285,000 dwellings, despite official figures showing approvals are 6.5 per cent higher over the past year and Housing Minister Clare O’Neil standing by the ambitious goal.

On the first anniversary of Labor’s commitment, councils across Australia had approved 182,894 new homes in the year to May – the biggest number for any 12-month period since early 2023, according to the Australian Bureau of Statistics.

But economists, including Master Builders Australia chief economist Shane Garrett, said even with the current rate of growth, Labor’s target would not be met. “If home building were to remain at this pace, it would deliver just 915,000 new homes in five years – representing a 285,000-home shortfall relative to the National Housing Accord’s target,” Mr Garrett said.

Oliver Hume chief economist Matt Bell is expecting the housing target to be missed by at least 25 per cent.

Labor’s National Housing Accord Target is 240,000 new dwellings a year and as at the end of 2024, dwelling completions sat at 177,000.

“Even if completions rose to the same level that the current approvals imply, we are going to miss the five-year target of 1.2 million homes by at least 25 per cent,” Mr Bell said. “The recent downward trend and the dependence on unit approvals, which are currently struggling to convert into commencements, is concerning.”

Commonwealth Bank chief economist Luke Yeaman said while housing investment would grow, it would not be enough to hit the targets. “We think that cyclically you will see a pick-up in dwelling investment over the next 12 to 18 months with lower interest rates, but not enough to sustain those very high rates of home building that are built into those targets,” he said.

Property Council Group’s Matthew Kandelaars said the latest numbers were a step in the right direction, but were not enough to meet the scale of the housing challenge, which had a productivity problem.

“To hit the accord’s 1.2 million homes target by mid-2029, we need to be approving at least 20,000 new homes every month and we’re still falling short of that mark,” he said. “The only way we’ll close the gap is to urgently address our productivity crisis.”

Mr Kandelaars said this had to be addressed by faster and smarter planning and environmental approvals, a cut in related taxes that cost up to $4 in every $10 in the cost of a new home, and more skilled workers.

Ms O’Neil said the latest figures were signs of a housing recovery and targets could still be met. “These green shoots in the housing data are a great sign – dwelling approvals are up, private sector confidence is returning, and we’re building momentum towards reaching our target of 1.2 million new homes,” she said.

Prime Minister Anthony Albanese during the election campaign at the Prospect Corner housing development in Adelaide Picture: Jason Edwards / NewsWire

“This is what happens when you have a commonwealth government who doesn’t shy away from the challenges of housing Australians. We know there’s a lot more work to do to fix the housing crisis we inherited.”

Some targets were still on track to be met. On Wednesday, Ms O’Neil announced that contracts for 5001 new social homes had been signed in the latest round of the government’s Housing Australia Future Fund, which as of March 31 had used $233m in funds.

“It will see delivery of 5001 social homes across every state and territory, bringing the total homes supported by the first two rounds of the HAFF to more than 18,000 – well on the way to our target of 55,000 social and affordable homes over the period of the accord,” Ms O’Neil said.

“Despite the obstruction, opposition and carping from the ­Coalition and Greens during the last parliament, the HAFF is delivering on its promise to provide a steady stream of funding for social and affordable homes to add to supply.”

HIA managing director Jocelyn Martin said internal forecasting of dwelling commencements, showed 986,000 homes would be delivered to market in five years.

Opposition housing spokesman Andrew Bragg said Wednesday’s figures confirmed Labor’s National Housing Accord was “still a dead duck”.

“Under the Coalition, Australia was averaging 190,000 new dwelling commencements a year. Under Labor, it’s barely reaching 170,000,” he said.