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The Albanese government launched its Housing Accord as of 1 July 2024 in a determined effort to build 1.2 million homes over the next five years to address the nation’s ongoing housing supply crisis.
And while there have been concerted efforts to bring this ambitious goal into fruition, such as state governments committing funds and constructing tens of thousands of new homes over the next half decade, persistent challenges threaten a shortfall in the federal government’s target.
PropTrack’s senior audience analyst Karen Dellow recently outlined such hurdles that are currently working to stymie this achievement.
“Despite these plans, the number of new developments approved monthly over the past year falls short of what’s needed to meet the Housing Accord target,” Dellow said.
“Over the past 12 months to May 2024, there were 164,000 total dwelling approvals, far below the 240,000 required annually. At this rate, only 820,000 new dwellings would be built by 2029.
“There was a 16.3 per cent increase in apartment approvals during the month, which is crucial for boosting housing stock nationwide. New house approvals also rose but only by 2.1 per cent.”
Additionally, one of the major factors slowing down the construction of new homes is the shortage of skilled labour among other factors such as industrial relations laws, a lack of crucial infrastructure, and high developer taxes and charges, according to Dellow.
Further, Dellow noted an estimation by Build Skills Australia that said that there is an immediate need for 90,000 new tradespeople and an additional 500,000 required until 2029 in order to meet the government’s target.
“Jobs and Skills Australia highlights a shortage of tradespeople in all occupations. This skilled labour shortage, along with soaring construction material prices, hampers new home construction,” Dellow said.
“Construction has already slowed due to huge infrastructure projects employing large numbers of skilled workers.
“Even with streamlined approval processes, the release of unused government land, and improvements to industrial relations laws, there aren’t enough workers to initiate projects.”
Over the last three years, the Australian Bureau of Statistics (ABS) has found that new dwelling commencements have been steadily decreasing, further highlighting the dire need for housing construction to accelerate.
The most recent dwelling commencements data found that total dwelling commencements had increased by 0.5 per cent to 39,175 over the March quarter; however, HIA economist Maurice Tapang said despite the completion of over 40,000 dwellings, it was still 9.5 per cent lower than the previous quarter and 8.1 per cent lower compared to the same period last year.
The construction sector has also taken a major blow, with approximately 3,000 fewer construction companies operating this financial year due to a record number of insolvencies, according to the Australian Securities & Investments Commission (ASIC), thus leaving many projects unfinished.
Dellow said: “Whether new dwelling approvals will quickly translate into building commencements to meet the government’s target remains a challenge.
“Currently, the construction industry cannot meet the demand for new dwellings necessary to achieve the Housing Accord’s goal.
“The ongoing skilled labour shortage, high material costs, and industry insolvencies pose significant challenges.
“It remains to be seen if the target is realistic given the difficult conditions the industry has faced in recent years.”
[RELATED: June quarter sees 15.7% increase in new home sales]
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