Why it's unlikely that 1.2 million new homes will be built in the next five years

Karen Dellow
Karen Dellow

Australia is facing a prolonged housing crisis, with projections indicating a shortfall of more than 110,000 homes from the country's target of building 1.2 million new homes by mid-2029.

New Master Builders Australia analysis predicts there will be 1,087,325 new home starts from 1 July 2024 until 30 June 2029, falling short of the National Housing Accord's 1.2 million new home target.

To meet the staggering demand, an average of 240,000 approvals per year is required for the next five years, equating to 20,000 approvals per month.

However, current figures paint a less optimistic picture.

Despite a five-year average of 15,000 monthly approvals, recent trends reveal a concerning drop, with only 13,000 approvals per month over the past year. This downward trajectory underscores the pressing need for action to bolster the construction sector and expedite approvals processes.

Compounding the challenge is the insufficient workforce available to meet these ambitious targets.

New building approvals are currently too low to meet the National Housing Accord target. Image: Getty

Major state and national projects such as defence building initiatives, the Western Sydney Airport, and Melbourne’s suburban rail loop are absorbing skilled tradespeople, exacerbating labour shortages in residential construction.

BuildSkills Australia has highlighted the need for an additional 90,000 tradespeople within the next three months alone. Their projections indicate a nationwide shortfall of workers, necessitating an increase in the construction workforce from 590,000 to 680,000 individuals.

While net overseas migration has contributed to population growth, it has not been sufficient to alleviate housing pressures.

The Australian Bureau of Statistics reports that net overseas migration added 548,800 people to the population in the year to September, underscoring the need for a more significant influx of skilled migrants capable of contributing to the construction sector.

Tradespeople are in short supply but are desperately needed to meet construction targets. Image: Getty

Despite calls for action, political hurdles remain. Home affairs minister Clare O’Neil's rejection of including tradespeople in the top-earning stream of skilled migrants under Labor’s new strategy reflects ongoing challenges in aligning policy with industry needs.

This resistance further underscores the need for concerted efforts to streamline immigration pathways for skilled workers essential to the construction industry.

As the National Housing Accord kicks off in mid-2024, stakeholders must collaborate to overcome barriers and expedite the approvals processes while addressing workforce shortages.

Failure to do so risks exacerbating the housing crisis even further.

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