HIA: Australia forecast to miss 1.2 million new homes construction target

Australia forecast to miss 1.2 million new homes construction target

Australia is forecast to miss its housing-crisis busting 1.2 million new homes construction target by almost a year, and will not hit annual goals any time in the next decade.

The country is also tipped to be building the same number of units as houses each year from 2030 onwards, as housing shortages and population growth force prices up, likely ushering in rising interest rates again within the next five years and forcing a downsize to the great Australian dream for many.

New figures from the Housing Industry Association show the nation’s lacklustre home building numbers are likely to have bottomed out last year with growth ahead in 2025.

RELATED: $1bn tower surpasses Australia’s tallest project

Big Aussie bank’s shock RBA double rate cut call

ABS housing commencements show nation needs to build 260k homes a year to meet target

But annual totals will top out at almost 213,000 in 2028, and begin to fall again a year later.

In 2030 the nation is expected to build 210,000 homes, and about the same number all the way through to 2035.

The National Housing Accord has set a target of 240,000 homes to be built each year by 2029 in order to add 1.2 million new residences to Australia’s housing supply and address the country’s housing affordability crisis.

The latest figures from HIA show just 986,000 will have commenced before the deadline, and only 945,000 are expected to be completed.

It is just above the 936,000 forecast from the National Housing Supply and Affordability Council earlier this week.

It will take six years for Australia to commence construction on 1.2 million homes, according to HIA analysis.

Housing construction will be the main driver of new homes in Australia until 2030.

HIA chief economist Tim Reardon said consistently missing the 240,000 a year target would force more unit and apartment builds, but it was also feasible Aussies would start gravitating to relatively affordable cities — especially those with downturn-resilient employment industries, like Adelaide, which is becoming a unicorn capital.

Mr Reardon said this would be at the expense of more mature capitals including Brisbane, Melbourne and Sydney.

The economist said that after 2030 their data had a number of assumptions built into it, including thousands of apartments they have manually added to Queensland’s projections to reflect a home boom expected in the lead up to the 2032 Olympics.

However, the key forecast of a post-2029 decline was centred on the price of homes rising alongside population, which was also likely to cause future interest rate hikes.

HIA Chief Economist Tim Reardon says unit and house construction will hit parity by 2030. Picture: Tertius Pickard.

Housing construction is currently falling short of levels needed to build 1.2 million homes.

To give a sense of the scale of the building crisis ahead, the economist pointed to population projections released by the Victorian government in their state budget this week, which showed Melbourne would have to build enough homes to house the population of Adelaide, about 1.5 million people, over the next five years.

“And the housing shortage becomes more acute until we exceed that rate of home building at 240,000 homes a year in a sustained way,” Mr Reardon said.

Key solutions for governments to get more homes built centred on reviewing the tax regime around housing construction and purchases, he said.

HIA are also forecasting “robust” numbers of renovations as Australians who already have a home opt to avoid paying additional stamp duty costs by extending their homes and updating them to fit changing needs, rather than relocating.

A growing share of new homebuyers are considering townhouses like Metricon’s Capri design.

The Amira house design by Metricon is one of its most popular house offerings today.

Metricon chief executive Brad Duggan said houses would lead the initial recovery from recently weak figures.

“But we are seeing appetite for townhouses increasing with our customers and that aligns with how developers are cutting up blocks,” Mr Duggan said.

“In South Australia we are seeing significant demand for townhouses in the market.”

However, he said the big driver for how development progressed from here would be on land release.

In areas like Victoria where governments are pushing for more high-density housing, the boss of the nation’s biggest home builder said it was probable stand alone houses would have a cap on their construction that could limit overall success in reaching construction goals.

“But customer confidence has moved in the past two months and there’s been a lot more activity going into deposits to build homes,” Mr Duggan said.

South Australia and regional Victoria had recorded the biggest moves, with the boost reflecting interet rate reductions.

Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.

MORE: State budget: Kick in the guts to first-home buyers

Ex-AFL boss Andrew Demetriou lists luxe $16.5m Toorak mansion

Jaggad owner Bec Judd and AFL great Chris Judd sell Arthurs Seat holiday home

The post HIA: Australia forecast to miss 1.2 million new homes construction target appeared first on realestate.com.au.