National housing accord on track to be at least 300k homes short

The construction of 1.2 million homes by mid-2029 is looking unlikely.

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Last week Labor issued a campaign video on social media which said it would build 1.2 million homes by 2030.

The post was referring to the national housing accord, which has a target of that many homes between 1 July 2024 and 30 June 2029.

So the video made it sound like the government had quietly given itself a six to 18 month extension on that goal. “By 2030” could mean the end of 2030 after all.

When I sought clarification, a spokesman told me that the 2030 date was to simplify the messaging. A short, sharp video explainer is not as short and sharp if you have to say ‘Labor will build 1.2 million homes by the end of the 2028-2029 financial year’.

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The spokesman then reassured me that Labor would indeed be delivering the 1.2 million homes by mid-2029 as promised.

Prime Minister Anthony Albanese’s campaign slogan is about Building Australia’s Future. But more building needs to be done. Picture: Jason Edwards

Now, it’s a no-brainer to stick to a promise, when its deadline date is four years away and you are in the last week of an election campaign. Why risk losing the vote now on something that can be dealt with later?

But whether it’s 2029 or 2030, can the target really be achieved? Looking at the progress so far, it sounds nothing more than a pipedream.

In order to get there, we need to be building 240,000 homes a year, or 60,000 a quarter.

Let’s bear in mind, the record number of homes constructed in a single year in Australia was 220,000, back in 2015, according to the ABS.

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So, we would need five straight record years to hit the goal.

Meanwhile, inflation, staff shortages, poor borrowing power, lack of infrastructure and massive tax costs are all headwinds affecting the construction industry, making it harder than ever to build new homes.

In the first quarter from July last year, there were just under 45,000 homes completed. That’s 15,000 short. In the second quarter, there was just over 45,000 homes completed. Another 15,000 short. The third quarter data isn’t yet available, but there were under 42,000 homes commenced in the December quarter, meaning we have started out 25 per cent short of target and appear to be going backwards. At this rate, we are on track to complete at best 180,000 homes a year and end up 300,000 short by mid-2029.

SQM Research director Louis Christopher said Labor is ‘no chance’ of hitting its housing target.

I suggested to Louis Christopher of SQM Research that it may be impossible for the government to now achieve the goal.

“They have no chance of hitting the target. And they made their own bed,” he replied.

Perhaps Labor should just change the deadline to the end of 2030. Another 18 months at 180,000 homes a year equals 270,000 extra homes. That would make them 30,000 homes short, rather than 300,000, which would just about be a case of ‘near enough is good enough’ in the world of politics.

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Of course, assuming the shortfall will be 300,000 homes is generous. It doesn’t take into account that things could get worse, which is actually quite likely when you consider that 2024 saw the second fewest housing approvals in a year since 2012.

A Mandala Partners report, commissioned by the Property Council of Australia and released in March, predicted the shortfall to actually be a whopping 462,000. If we’re already tracking that far behind after two quarters, 2029 may see us reach ‘Jon Bon Jovi’ status … halfway there and livin’ on a prayer.

Jon Bon Jovi may have predicted the outcome of our housing accord …’halfway there and livin’ on a prayer’. Picture: Job Vermeulen

The winner of the election was never going to make much of a difference. The housing crisis will outlive the next government and the one after that.

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