The Albanese government is expected to fall short of its target to build 1.2 million homes over the next five years amid poor planning and a shortage of skilled workers.
According to forecasts from Master Builders Australia, the national voice of the building and construction industry, only 1.09 million new homes are projected to be built from July 1, 2024, to June 30, 2029, leaving a shortfall of over 112,000 homes compared to the National Housing Accord’s target.
These projects do not factor in the full impact of the Closing Loopholes Bills and union pattern bargaining negotiations underway in several states into the forecast.
The shortfall comes despite provisions such as the $3.5 billion ($US2.3 billion) in payments to state, territory, and local governments and a one-off $2 billion payment to increase social housing stock.
Additionally, the Commonwealth has committed over five years beginning 2024-25, to support the delivery of 10,000 affordable homes. State and territory governments agreed to support the delivery of up to 10,000 affordable homes, totalling 20,000.
“We’re seeing inflation starting to near its target range and expect a fall in interest rates which will lead to a more favourable investment market,” Master Builders Australia CEO Denita Wawn said.
“However, constraints on the supply side like workforce shortages, industrial relations changes, and a poor planning system counter the full effectiveness of these measures.”
Ms. Wawn noted that the industry’s productivity declined 18 percent over the last 10 years, making it clear that the government needs to speed up the implementation of planning reforms to lower the cost and time requirements to build.
She said the government also needs to address the shortage of labourers in the building and construction workforce.
Buildskills Australia reports that the workforce requires 90,000 more people within the next 90 days if the country aspires to build 60,000 homes quarterly.
“Domestically, we cannot fill this gap. We need to think outside of the box with better apprenticeship incentives, reskilling migrants already in Australia, and a targeted international campaign to bring in skilled migrants,” Ms. Wawn said.
“Investment and support in the whole built environment is important. While the commercial and civil construction sectors have helped shield the economy from periods of negative economic growth, this is coming to an end.”
Your Property, Your Wealth echoed these sentiments, warning that Australia is set for a prolonged period of skyrocketing property prices due to annual building approvals being only about a quarter of population growth.
Director Daniel Walsh emphasised the expected annual shortfall of roughly 90,000 in dwellings, given the average household size of 2.5 persons in Australia.
“In the meantime, we are going to witness ever-increasing property prices because we simply do not have enough dwellings to house our current population, let alone the hundreds of thousands of new residents set to make our country home in the years ahead,” Mr. Walsh said.
New Bill to Support Build-to-Rent Sector
Meanwhile, Treasurer Jim Chalmers and Housing Minister Julie Collins said the government will release a draft legislation today introducing tax incentives to encourage investments and construction in the build-to-rent sector.The build-to-rent sector refers to the construction of residential properties specifically intended for renting out to tenants rather than selling them to individual buyers.
In a joint statement, the ministers said that this move would significantly contribute to achieving the national target by adding 150,000 rental homes over the next decade.
The tax incentives will apply to build-to-rent projects, consisting of 50 or more dwellings, which the general public may rent.
Important provisions in this draft legislation include that the dwellings must be kept under sole ownership for a minimum of 15 years and at least 10 per cent of dwellings in a development need to be made available as affordable rental places.
The new legislation will be implemented independently from state and territory initiatives to support the build-to-rent industry.
“For a long time, we haven’t been building the homes that Australia needs and the former government wasted nearly a decade in office while these problems only got worse,” the ministers said.
“This is all about more homes for home buyers, more homes for renters, and more homes for Australians who are doing it tough.”
The Department of the Prime Minister and Cabinet was reached for comment but did not respond in time for publication.
