Property News, Insights & Education

    Ambitious Housing Targets to Break Construction Records if Achieved

    Australia’s housing shortage was the main agenda of yesterday’s national cabinet meeting, and resulted in the Albanese government committing to some ambitious new housing targets.

     

    National cabinet agreed to build 1.2 million new, well-located homes from the five years beginning 1 July 2024, exceeding the previous national housing accord commitments by 200,000 dwellings.

     

    Additionally, the government announced a further $3 billion in funding for states that achieve and exceed their housing targets.

     

    “The Commonwealth has committed to $3 billion for performance-based funding, the New Home Bonus, for states and territories that achieve more than their share of the one million well-located home target under the National Housing Accord,” said the Prime Minister in a press release.

     

    “This will incentivise states and territories to undertake the reforms necessary to boost housing supply and increase housing affordability, making a positive and practical difference for Australians planning to buy a home.”

     

    National cabinet also announced the support of a $500 million funding program, to ease the burden of construction by contributing to some of the associated costs.

     

    “This ambitious target will be supported by the Housing Support Program, a $500 million competitive funding program for local and state governments to kick-start housing supply in well-located areas through targeted activation payments for things like connecting essential services, amenities to support new housing development, or building planning capability,” said Mr Albanese.

     

    Ambitious housing target to break records if achieved

     

    The announcement comes in response to the dire state of Australia’s housing, with affordability deteriorating at unprecedented rates in both rental and purchasing markets.

     

    But as CoreLogic’s research director, Tim Lawless, pointed out – the ambitious new figure is in excess of previous housing construction records, and we’re not quite on track to reach them.

     

    “Considering, as a nation, we have never built more than 1.1 million homes in a five year period, this is an ambitious target – made harder from a virtual standing start as commencements are expected to drop to an eleven year low in 2024,” said Mr Lawless in a LinkedIn post.

     

    The Housing Industry Association (HIA) has recently warned that action must be taken, as numbers of new builds have continued to deteriorate amidst a worsening shortage.

     

    But they too described the new targets as extremely ambitious, given the low numbers of new builds expected to take place in 2024.

     

    “HIA’s Economic and Industry Outlook report released on Tuesday shows detached housing starts are expected to fall from a peak of 149,300 in June 2021 to just 95,370 in 2024, the lowest number since 2012,” said deputy managing director of Industry and Policy at HIA, Jocelyn Martin. 

     

    “Multi-unit commencements in 2022 were at a decade low at 63,510 and experienced only a modest increase in 2023 at 69,680.”

     

    Target slammed as ‘unrealistic’

     

    While ambitious plans have been welcomed by many industry professionals, the opposition and a handful of independent MPs have slammed the numbers as unrealistic. 

     

    Independent MP Dei Li appeared on SkyNews this morning, questioning whether the homes will ever be built, and wondering whether the figures had just been “plucked from the sky”.

     

    “When I heard the figures: $3.5 billion and 1.2 million homes, I wondered if it’s a figure they’ve plucked out from the sky,” Ms Li told Sky News.

     

    Opposition leader Peter Dutton also voiced his scepticism on the ambitious targets.

     

    “I’ve got concerns about the viability of what they’re talking about and the credibility.

     

    “The prime minister promised in October of last year that they had an aspiration for a million homes. They’ve now increased that after yesterday’s discussion to 1.2 million, but he might as well say it’s 1.5 million or 10 million, because they’re not going to achieve the 1 million, they’re certainly not going to achieve the 1.2 million.

     

    “I think they’re just offering up a lot of false hope and promise at the moment,” said Mr Dutton.

     

    Numbers are needed

     

    Despite whether the targets are realistic or not, one thing remains true – Australians need more homes and any efforts to bolster supply will require a multi-organisational and collaborative approach.

     

    Local councils will need to completely overhaul their approval processes, and as HIA puts it, come to the table with increased affordability.

     

    “These plans are ambitious. Local councils will need to be prepared to deliver shovel ready land at an affordable price. This is not something that has been easy to achieve in the past,” said Ms Martin.

     

    Unrealistic or not, the numbers are needed and ambition might be the only way to get us there.

     

    The National Housing and Finance Investment Corporation forecasts that over the next ten years, 1.8 new households will form. So even a 1.2 million building target won’t cut it.