Australia is set to fall short of its National Housing Accord target by over 166,000 homes, according to new forecasts from the industry.
Master Builders Australia projects 1,034,000 new home starts from July 2024 to June 2029, will fall 13.8 per cent below the Accord target of 1.2 million new homes.
This represents a significant increase from the previously forecast shortfall of 112,000 homes.
Master Builders CEO Denita Wawn said persistent inflation, high interest rates, and supply-side constraints in the residential building market as key factors behind the downgrade.
“New home building started the Accord period from its weakest position in a decade,” Ms Wawn said.
“We are expecting the market to gradually recover over the next few years as the macroeconomic conditions improve, but more work is needed to address the housing shortfall.”
She said the industry faces several challenges, including an 18 per cent decline in productivity over the last decade, the need for expedited planning reforms at the state level, and significant workforce shortages across all sectors.
Additionally, there has been a 20 per cent increase in build times for higher-density projects since the pandemic, along with a 40 per cent rise in construction costs.
Ms Wawn called for a multi-faceted approach to address these issues, including a mix of domestic and skilled migration workers, improved apprenticeship incentives, and a targeted international campaign to attract skilled tradespeople.
Despite the challenges in residential construction, the non-residential and civil sectors continue to expand.
Non-residential building activity is forecast to grow by 7.3 per cent over the next five years, while the civil construction sector is expected to increase by 8.5 per cent.
Ms Wawn said it was important to continue investing in the entire built environment, including critical infrastructure such as utilities, to support housing construction.
“Builders are up to the challenge to reach these targets but the barriers on the road need to be cleared to get the job done,” Ms Wawn said.
