Outlook gets worse for government promise of 1.2 million homes

Advice to the government has worsened the outlook for when a Commonwealth agreement to build 1.2 million homes will be met. John Gunn reported for ABC News.

In short:

Australia is now not expected to reach its target of 1.2 million new homes until the end of 2030, the government's expert panel has concluded.

It found success across states and territories was uneven, with NSW not expected to meet its share of the housing goal until March 2032.

What's next?

The federal government says housing price growth will return when interest‑rate pressure eases, and state planning reforms should speed construction further.

Federal advisers have pushed back the date for 1.2 million homes as developers, builders and investors wait to see if the market will settle or fall further after rate rises and a tax overhaul.

The National Housing Supply and Affordability Council first forecast the National Housing Accord would deliver 1.2 million homes by June 2029, then moved it to September 2030, and now expects the goal will not be met until the end of 2030.

The May budget rewrote tax benefits for housing investors, ending negative‑gearing on properties bought after budget night and tightening the capital‑gains discount on investment sales.

Since then the Reserve Bank has raised the cash rate for a third time this year to 4.35 %, and the Iran conflict continues to push up fuel and building costs.

The housing minister said interest rates are the main cause of the recent housing market slowdown.

NSW, Tasmania lag on housing targets

While the council lowered its outlook for the 1.2 million‑home target, it also found approvals rose 26 % since the Accord began and commencements rose 15 %.

Victoria has built about 32 % of its share, WA about 29 %, South Australia 28 %, Queensland 24 % and NSW 21 %.

Victoria is expected to meet its share just after the December 2029 deadline, but the council says NSW will not meet its share until March 2032.

The ACT has built 34 % of its share, the NT 28 % and Tasmania 16 %, with Tasmania not expected to meet its share until June 2034.

The federal government says approvals are up in every state and territory, and planning reforms that increase density, free land and fund infrastructure are strengthening the housing pipeline.

It argues this is despite construction impacts from the Iran war, especially higher fuel prices.

In an overnight update, Housing Minister Clare O’Neil and Environment Minister Murray Watt said construction price growth fell from 17 % in 2022 to 3.8 %, matching inflation.

Since the Accord began, 308,000 homes have been finished, 80,000 have been approved since the Albanese government took office, and building speed has improved partly due to last year’s environment‑law changes.

Our focus is simple – keep building, keep removing roadblocks and get more Australians into homes, O’Neil said.

Clare O’Neil says the federal government is turning around a housing system that wasn’t working for Australians, according to ABC’s Ian Cutmore.

The opposition says that at the current rate the government will fall about 200,000 homes short of the National Housing Accord promise.

Master Builders chief Denita Wawn said economic uncertainty makes it harder to turn demand into actual building work.

Demand for homes hasn’t disappeared; the problem is that many projects no longer make financial sense, Wawn said.

Builders need certainty that projects will stay viable, and the government must restore positive market conditions, a task made harder by the recent budget.

Our latest forecasts show Australia will fall 204,000 homes short of the Accord target. The next forecast, which will include Middle‑East conflict and budget impacts, is expected to show an even larger shortfall.

Australia’s biggest home lender, the Commonwealth Bank, has seen home‑loan applications drop 15 % since May.

The sector fears the housing downturn could further hurt supply if it lasts a long time.

The government sticks to its budget view that house‑price growth will only slow by 2 % in the medium term, even as the downturn deepens, property prices fall and loan applications plunge.

There are many factors, but interest rates are the main driver. Treasury, the Reserve Bank and major banks all say house prices will grow again in the medium term, O’Neil told ABC last week.

Senate launches housing inquiry

Yesterday Labor and the Greens agreed to start an inquiry into social housing. It will look at the National Housing Accord, the Housing Australia Future Fund and other policies.

Shadow Housing Minister Andrew Bragg said senators have not had enough time to study housing policy and the six‑month inquiry will finally get to the bottom of concerns.

Andrew Bragg said he will use the new Senate inquiry to examine the government’s tax changes, ABC’s Matt Roberts reported.

Confidence has shaken since the budget changed two‑decade‑old tax treatment of investment properties, which banks and builders say slowed new home‑loan applications and caused sharp price falls in some cities.

But recent Bureau of Statistics data shows that, while overall activity has slowed, new investor loans for building and buying new dwellings are at a record high.

The federal government kept new dwellings eligible for negative gearing to draw more investor money into new supply rather than old homes.

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