According to recent data from the Australian Bureau of Statistics, new house starts rose in the September 2024 quarter. However, the figure was far below what is required to meet the annual target of 240,000 homes.
The September quarter saw 43,247 new housing starts, a 4.6 per cent increase from the June quarter. This figure was mainly driven by new detached houses, contributing a 20.5 per cent surge from June 2024. However, total housing starts for the year to September 2024 only reached 165,048. At the current rate, projections suggest only 825,000 homes will be built by mid-2029. This figure falls 375,000 short of the government’s target.
High-density housing construction has emerged as a critical bottleneck. Experts point to factors like tax uncertainties, skilled labour shortages, regulatory hurdles, and rising project costs as major obstacles.
The Housing Industry Association highlighted the need for a significant increase in multi-unit developments to accommodate surging demand. Many consider it essential to at least double the number of new multi-unit projects to meet the government’s targets.
Master Builders Australia also emphasised the importance of revitalising the apartment construction market. Without greater investment and incentives to attract developers, the industry risks adding to the housing crisis. Symptoms of the crisis include high rental inflation and a decrease in first-time buyers.
Despite some positive developments, the latest housing starts remain 35 per cent below the June 2021 peak of 66,485. While completions for private houses held steady in the September quarter at 28,677, the apartment sector faced further setbacks and experience a 5.5 per cent decline in other residential completions.
The federal government has introduced initiatives to boost the number of available houses. These initiatives include the $2 billion Social Housing Accelerator payment and the $3.5 billion National Housing Accord.
However, ongoing improvement are required to achieving the ambitious housing targets and addressing Australia’s growing housing needs. Such improvements include infrastructure investment and regulatory reforms. The importance of the apartment building market has also been endorsed by Master Builders Australia, because there is currently very little incentive for developers to invest in this area.
Current housing starts are still 35% below the high watermark in June 2021 despite some promising signs. Property completions for private houses remained constant in the September quarter at 28,677, but the apartment market suffered further declines, with another drop of 5.5%.
Provisions promised by the federal government, including the National Housing Accord fund and the Social Housing Accelerator payment have helped boost new home constructions. However, without consistent improvements in productivity, regulatory reforms, and infrastructural investments, it is unlikely targets can be met. As such, Australia’s ongoing housing crisis is unlikely to be solved in the foreseeable future.
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