Home building to gather steam but undershoot 1.2m goal

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Home building to gather steam but undershoot 1.2m goal

Not enough homes are being built to house Australia’s growing population and while construction activity is expected to pick up, affordability gains are unlikely to be felt until later in the decade.

An assertive series of interest rate hikes and expensive materials, labour and other costs have kept new home building in the doldrums, contributing to shortages and affordability challenges.

Yet as the economic landscape stabilises after the inflation crisis and efforts by governments to boost housing supply kick in, home-building is expected to gather pace, according to Oxford Economics Australia forecasts.

By 2029, the analysts see residential construction reaching a new high of 241,900 dwellings, likely eclipsing the existing record set in 2016.

The group’s forecasts still put home building falling short of the 1.2 million dwellings targeted under the national housing accord, as already predicted by the National Housing Supply and Affordability Council and industry groups.

Oxford Economics was forecasting a total of 940,000 new homes would be built over the five years until 2029, with some states more likely to hit their targets than others.

Particularly strong construction was expected in Western Australia and Queensland.

Housing shortfalls would continue, entrenching affordability as a chronic issue, Oxford Economics head of property and building forecasting Timothy Hibbert said.

Yet strong demand for housing would also incentivise more building.

“Activity will inevitably recover in the residential sector,” Mr Hibbert said.

“All build forms will contribute, driving total dwelling commencements to a new record level by the end of the decade,” he said.

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