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The Guardian
a day ago
- Business
- The Guardian
Labor has promised 1.2m new homes in its second term. Is it possible?
Anthony Albanese has conceded it is 'too hard' to build housing in Australia and promised the government will tackle regulation to fulfil its target of 1.2m new homes by June 2029. At the national press club on Wednesday, the prime minister said his government would go further to bring down the cost of building by targeting red tape and pushing the states to build more. Experts say state planning laws and red tape are two of the biggest barriers to building more housing, but if Labor pulls out 'all the stops' and addresses them, they say the government could get close to its housing targets. Sign up for Guardian Australia's breaking news email The opposition remains unconvinced, saying the Albanese government's approach of paying states to build more housing 'has not been a success' so far. So how achievable is the goal, and what needs to happen? Labor has promised to support the build of 1.2m homes, and 55,000 social and affordable homes, by June 2029. Alongside the housing targets, the government has promised $10bn to help fund 100,000 new homes for first home buyers, including through concessional loans for states. It has also committed $2bn to states to provide new or refurbished social housing, legislated fee-free Tafe to respond to construction skill shortages and introduced incentive payments for apprentices in construction. But whether or not Labor can deliver is unclear. The latest figures from the 2025 state of housing report by the National Housing Supply and Affordability Council (NHSAC) forecast 938,000 dwellings being completed during the period to June 2029; factoring in demolitions, the net new supply will be 825,000. Even so, the target of 1.2m homes will bring Australia closer to building 'equilibrium' by June 2029, the target deadline, according to NHSAC chair and former Mirvac boss, Susan Lloyd-Hurwitz – even if NHSAC's modelling predicts a shortfall. That's because, 'new supply and new demand will be roughly in line at around 175,000 new homes for 175,000 new households.' Labor should focus on two policy areas, Lloyd-Hurwitz says: planning reforms and building more social housing. Reducing approval times would make a 'real difference', pointing out that government was able to effectively fast-track other areas of regulation during the Covid-era without 'cutting corners'. Since the election, the housing minister, Clare O'Neil, has been handed responsibility over the building and construction code and will now lead the planning ministers' council, to help streamline planning and development processes under the one minister. (The planning ministers' council used to be under the purview of the infrastructure minister.) She says the new responsibilities give her 'more levers to improve the broader problem of construction productivity'. The NHSAC chair also called for 'continued investment' in housing for those who most need it: 'roughly four times the amount of social and affordable housing than is currently planned'. O'Neil is 'confident' 55,000 social and affordable homes would be delivered by June 2029, pointing out 28,000 of those homes were already in the planning or construction phase. O'Neil, has also promised to slash red tape, though she hasn't said how. 'We've created a regulatory environment that says we don't want builders building the type of new homes we need most,' O'Neil told Guardian Australia. 'We've got so much red tape, and this is a real barrier … builders face a thicket of rules and regulations.' Denita Wawn, CEO of Master Builders' Australia said in October there was 'no chance' Labor would achieve its target, but has since changed her tone, with the most recent policy changes, now saying it is 'not insurmountable'. 'There is the capacity to get to those targets. The only reason why you won't get to those targets … is an unwillingness at government level and industry level to collaborate to remove some of those impediments,' she said. Wawn added fee-free Tafe would help ease critical skills shortages, and said she was also pushing the government to bring in more overseas construction workers on skilled visas. Brendan Coates, Grattan Institute's housing program director, said the government also should push the states to change more zoning laws and update the national construction code saying it is 'illegal' to build higher density housing in some parts of inner Sydney and Melbourne where it's needed most. 'It's things like state land use planning controls that have the biggest impact on construction,' Coates said. 'It's not economic, for example, for a developer to knock down a free-standing home to just build three townhouses. Because you've got to buy the house, [and land] and that house is worth a million dollars before you knock it down, so the economics don't always stack up.' Lloyd-Hurwitz says states including NSW and Victoria had started changing zoning regulations to get more medium and high-density housing near transport nodes, but added that the cost pressures for developers in recent years have been 'too great'. 'We have this perfect storm of high interest rates, low pre-sales, high costs, which makes feasibilities very difficult to stack up for developers,' she says. '[It's] why we see, particularly in the high-rise space, we're at a historic low in terms of the number of completions of apartments, and they've got a very long lead time.' Federal incentives for states to build more housing also need to change, Coates says. 'The government is rightly trying to pay the states to get more housing built … They [the commonwealth] need to bring forward when the payments are made to pay them each year, rather than at the end of the five-year period of the national housing accord.' The opposition's new housing spokesperson, Andrew Bragg, told Guardian Australia the current incentives for states are not working and that Labor should rethink its policies, for example, tying payments for states to certain conditions around housing targets. 'There are large financial transfers from the commonwealth to the states … and there are significant payments made for transport and infrastructure projects and the like that are made without conditions,' he says. The Productivity Commission's damning report in February found productivity in the construction sector had dropped 12% over three decades, with the average time to complete a home increasing from 6.4 months to 10.4 months over the last 10 years. It said the construction code contributed to poor productivity and imposed unnecessarily high costs on building construction, and needed to be changed. Wawn says the complex code, which has more than 2,000 pages, has been hampering construction, and that additional varying state regulations make it more difficult for builders working across state borders to operate. 'When you have to read [the code] in conjunction with 120-odd regulated standards, of which people still have to pay for access, they're very hard to read, and there's inconsistencies,' she said. She also warns the code is hampering investment into more modern building practices, like modular housing, and says the cost is too high for businesses. O'Neil says Australia is lagging behind in modern construction techniques – the government has promised $54m for states and territories to invest in local programs developing prefabricated and modular housing. Lloyd-Hurwitz says that investment is a good start, but a 'very small amount of money', and suggested the government should lean into procurement to support the modular supply chain and increase investor confidence. 'Construction innovation and modular construction, something that Scandinavian countries do very well and we do very poorly, would make a difference to cost and speed as well as sustainability.' Bragg says the opposition, which will reconsider all its housing policies, will look at reforming the code. 'We need to look at how we can make it easier for people to build houses, all forms of housing.'
News.com.au
22-05-2025
- Business
- News.com.au
Australia's housing crisis ‘decades in the making'
The deterioration of housing affordability and continued low levels of new housing supply in 2024 were 'stark reminders that Australia is still very much in a housing crisis that has been decades in the making'. However, there are signs of slight improvement in parts of the housing system, according to Susan Lloyd-Hurwitz, chair of National Housing Supply and Affordability Council. In an annual update to federal Housing Minister Claire O'Neil, the council acknowledges the national supply of new housing is near its lowest level in a decade, with about 177,000 dwellings completed in 2024, significantly short of underlying demand of 223,000. The supply of higher-density apartments was particularly weak, with only 65,000 new higher-density dwellings built in 2024, well below the peak of 106,000 in the year to September 2017. By contrast, detached housing supply has shown more resilience, with about 111,000 detached houses completed in 2024, which is similar to pre-Covid average demand – which reflects demographic factors such as population growth and the age structure of the population – is expected to slow to 175,000 households per year from 2025-26. The report acknowledges 938,000 dwellings are forecast to be completed during the Housing Accord period, which falls short of the 1.2 million target. The net new supply is expected to total 825,000 over the Housing Accord period, which is 79,000 dwellings fewer than expected after accounting for the expected demolition of around 113,000 dwellings. Detached housing is tipped to be about two-thirds of new supply over the period, with medium-and higher-density dwellings set to remain low relative to the previous decade. This supply of detached houses is expected to reach a three-decade high by the end of the five-years, with a stabilisation of construction costs and an easing of financing constraints as interest rates decline. The council expects new supply of higher-density housing will remain low relative to the previous decade, as poor project feasibility weighs on new supply and the low levels of approvals currently in the system interact with long lead times. Structural constraints include an inadequate pipeline of skilled workers; scarce, fragmented and costly land suitable for development; and low rates of productivity and innovation in construction. Supply is also being affected by elevated material costs, labour shortages and high financing costs, which are easing but remain a headwind. Significant systemic reform, government support measures and industry innovation are needed to improve housing supply and affordability outcomes. All states and territories are projected to fall short of their share of the Housing Accord target. NSW is at only 65 per cent of its target, despite the state government measures to boost supply.
News.com.au
21-05-2025
- Business
- News.com.au
‘10.6 years': Dire reality for Aussies revealed in State of Housing System report
The Australian dream of homeownership is looking more hopeless than ever. A median-income household now needs to save for 10.6 years just to afford a deposit and start a whole new challenge of servicing a new mortgage, the National Housing Supply and Affordability Council's annual State of the Housing System 2025 report shows. It notes that mortgage repayments continue to increase faster than incomes, and affordability continues to deteriorate though at a slower pace compared with 2023. About 50 per cent of median household income was needed to meet repayments for new mortgages in 2024, according to the report. It does not look good for renters either, as 33 per cent of median wages are needed to meet rental costs in new leases. Rental stress has affected more than 50 per cent of lower-income renter households in 2023. Sixty per cent of these households also experienced stress the year before, showing how persistent the issue is. Only 14 per cent of new homes sold in 2023-2024 were affordable for the median-income household, the lowest on record. NSW residents have drawn the short straw, as new mortgages and home deposits remain the least affordable in Australia, whereas the Northern Territory has the most affordable mortgages and home deposits. Rents in regional Queensland were the least affordable, but rents in Canberra were the most affordable. New housing supply is the lowest in a decade, and the 1.2 million target for new houses to be completed during the Housing Accord period will not be met – even under optimistic economic estimates, the report says. No state or territory will meet their target, and supply is insufficient to meet underlying demand. The report has called for systemic reform, government support measures and industry innovation to address the issues, but the NSW government says it is heading in the right direction. 'The Minns Labor government inherited a system that was working against achieving the Housing Accord targets. It was also never assumed that, given macroeconomic conditions and the costs of construction, it would be a straight line between now and mid-2029,' Minister for Planning and Public Spaces Paul Scully said. 'We are turning around the system. Planning approvals are 15 per cent faster today than they were in March 2023, the number of applications lodged is up 28 per cent on the same time last year, and NSW has the most homes under construction in the country. 'There are thousands more homes and DAs being finalised that are embracing our planning reforms such as the Housing Delivery Authority and the low and mid-rise policy. We're building a pipeline that will actually deliver homes. 'The State of the Housing System report shows us that we have our work cut out for us, but as a government we've got our priorities right.' Weak supply has been attributed to a lack of commercial feasibility – it costs more for developers to build than what they would earn selling it. Elevated costs, labour shortages, high financing are all constraining supply but should be easing, the report says. Property Council chief executive Mike Zorbas said the report showed the need to increase productivity in the construction sector, simplify planning systems and encourage investment. 'The alarm bell continues to sound on national housing supply,' Mr Zorbas said. 'The sad fact is that many Australians feel that homeownership is out of reach. 'We have seen the federal and state governments co-ordinate their efforts on boosting supply, but more must be done. 'Our skills and planning systems are not yet match fit for this century. 'More than 30 per cent of the cost of a new home is government taxes and charges. 'East coast states have daft foreign investment taxes that are barbed wire to overseas institutions that want to send their money to help Australian companies build the assets our cities need. 'The least cost answer for indebted states is to modernise our planning systems and put measures in place to boost the proportion of skilled workers coming into the country. 'We need to bring forward federal environmental approvals and force power and water providers to stop delaying the delivery of new homes, industrial and commercial assets that our communities need as they grow.'
