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Australia’s housing supply is set to deepen if the country continues to fall behind its housing target, while making the target could save renters and future buyers thousands of dollars.
A new study from the Property Council of Australia (PCA) has warned the affordability crisis could deepen further due to an anticipated shortfall in housing supply.
According to the PCA-Mandala Partners report, Australia is predicted to fall 462,000 homes behind the national housing target, which aims to build 1.2 million new dwellings by 2029.
NSW is predicted to have the biggest shortfall of 185,000 homes, followed by Queensland with 96,000 homes, and Western Australia with 56,000 homes.
To provide support in meeting housing targets, the PCA has urged the federal government to improve the New Homes Bonus, a $3 billion reward program.
The New Homes Bonus is designed as a performance-based incentive for states and territories to encourage them to exceed their accord housing targets and handle reforms to increase housing supply and affordability.
Introduced by the federal government in August 2023 alongside the help-to-buy scheme, the New Homes Bonus is currently expected to be available only in the ACT.
The PCA is calling for several key changes to the New Homes Bonus, which is intended to address the housing shortage and increase the program’s effectiveness.
Property Council chief executive officer Mike Zorbas said more needs to be done to meet the national housing target.
“2025 is the year for Australia to redouble our housing supply efforts with the urgency and commitment this crisis demands,” Zorbas said.
The proposal recommends extending the New Homes Bonus scheme from its current duration to seven years, allowing for upfront payments to support long-term reforms across various states and territories.
Additionally, Zorbas said the PCA advocates to increase the total value of the scheme to $6 billion.
“Its value should increase to $6 billion, with unspent funds reserved for future housing initiatives,” he said.
“That increase would be just 0.1 per cent of the Australian government’s 2024–25 budget.”
Additionally, Zorbas said more transparency within the scheme is needed.
“We also need to improve the scheme’s transparency through public reporting and highlighting best practices to ensure accountability,” Zorbas said.
The Property Council’s research showed that constructing 462,000 new homes is expected to contribute $128 billion in economic activity and support 368,000 jobs.
If the national housing target is met, the report showed renters could save on average $90 a week, with over 7 million renters collectively saving $253 million every week.
The report also found that overcoming the 462,000 shortfall in homes by 2029 could lead to a modest slowdown in house price growth with a projected annual decline of 0.2 per cent.
In NSW, overcoming the anticipated deficit of 185,00 homes could result in 1 per cent annual price decrease, returning them to February 2024 levels.
Meanwhile, if the 71,000-home shortfall is resolved in Victoria, house prices are projected to grow at a slower rate of 1 per cent annually, down from an expected decrease of 1.5 per cent.
Zorbas said that falling behind at 462,000 new homes by July 2029 would further deepen the affordability crisis and necessitate government action to prevent this outcome.
“Boosting housing supply is the only long-term, sustainable way in which we can boost affordability of homes to buy and to rent,” Zorbas concluded.
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