Labor’s ambitious target to build 1.2 million new homes over the next five years “will not be achieved”, according to a new government report that lays bare the reality of Australia’s housing crisis.
The National Housing Supply and Affordability Council has handed its inaugural annual report to Housing Minister Julie Collins, suggesting reforms to current tax settings to improve housing supply, affordability outcomes and equity amid an ongoing political debate about the future of negative gearing and capital gains tax concessions.
The report found housing affordability had worsened in 2023, with a 20 per cent deposit now taking 10 years to attain – but even then, only 13 per cent of the homes sold in 2022-23 were affordable for median income household.
Crucially, the report found housing stock and social housing had not kept pace with demand, requiring a “focused co-ordinated and consistent effort over the long run across all jurisdictions”. It proposed 10 focus areas for improving the housing system.
Council chair Susan Lloyd-Hurwitz said the heart of the crisis was “insufficient supply”, made more acute by the resumption of migration at pace, rising interest rates, skills shortages, elevated construction company insolvencies, weak consumer confidence and cost inflation.
“These all combine to create an environment in which prices and rents are growing faster than wages, rental vacancies are near all-time lows, 169,000 households are on public housing waiting lists, 122,000 people are experiencing homelessness and projected housing supply is very low,” she said.
The report projects housing affordability could worsen further in the near term, with significant shortfall of new supply relative to new demand anticipated until the 2025-26 financial year, and even then, only a “small proportion of this new supply would be affordable”.
By 2028-29, new supply will still be 39,000 dwellings short of new demand.
The federal, state and territory governments last year agreed to an ambitious new national target to build 1.2 million “well located” homes over the next five years.
Ms Lloyd-Hurwitz said the council forecasted that would not be achieved.
“The Australian government’s 1.2 million national housing supply target agreed to in the National Housing Accord is suitably ambitious and clearly focuses attention on improving supply,” Ms Lloyd-Hurwit said.
“However, the council’s forecasts indicate the 1.2 million target will not be achieved.
“Implementation of announced housing policy measures to increase the supply of new housing is required.”
Housing Minister Julie Collins said the government was prepared to meet the challenges of the housing crisis.
“Our government has committed more than $25bn in new housing initiatives over the next decade to help build the homes Australia needs,” she will say in a speech on Friday.
“At the centre of this new investment is an ambitious target to build 1.2 million well-located homes across the country from 1 July this year.
“Getting to 1.2 million homes will be a challenge as the report highlights, but it’s a challenge we are up for.
“Our national target is ambitious because it has to be. We need to be ambitious.”
Treasurer Jim Chalmers said housing would be a “big part” of the upcoming budget.
“We know building 1.2 million homes is a big, ambitious target – that’s why we’re not wasting a day fixing the problems in the housing pipeline that our predecessors left behind,” he said.
“We’ve already committed more than $25bn over the next decade to build more homes for Australians, so there’s more homes for home buyers, more homes for home renters, and more homes for those who need them most.”
The report also suggested reforming the current tax settings, which “may improve housing supply and affordability outcomes”.
It found Australia’s tax systems “favours home ownership over other forms of housing tenure, widening inequality between homeowners and renters”.
“Council supports the goal or home ownership, it also supports the development of alternative tenures that assist lower-income households to access some of the tax benefits of home ownership,” the report said.
The call comes ahead of the federal budget and amid an ongoing political debate about the future of home ownership tax concessions.
The Greens are refusing to support Labor’s latest housing policy – the Help to Buy shared equity scheme – unless the government commits to grandfather negative gearing and abolish capital gains tax.
Prime Minister Anthony Albanese has ruled out negotiations.