Australia could fall short of 1.2m new build target
Reforms are required if the government wants to reach its housing target of 1.2 million new homes over the next five years, according to a senior economist.
The Housing Industry Association (HIA) has published an economic and industry outlook report which details forecasts for new home building and renovations activity, both nationally and for states and territories.
Currently, Australia is set to commence construction on a little over 1 million new homes over the next five years – almost 200,000 short of the Australian government’s target, according to HIA senior economist, Tom Devitt.
He said that while it is possible to build the 1.2 million new homes over five years, it will require significant policy reforms, including lowering taxes on home building, easing pressures on construction costs, and decreasing land costs.
While Mr Devitt does expect recovery from recent decade lows across both detached housing and multiunit markets, he does note that there are some headwinds, including the uncertainty around cash rate cuts and “increasingly sticky” inflation.
And though the recovery in home building isn’t reliant on a cut to the cash rate, he did warn that expectations around recovery will “nonetheless, be insufficient to meet government housing targets as long as home building continues to be constrained by punitive taxes and regulations”.
Mr Devitt said the punitive tax surcharges on foreign investors are squeezing out precisely the investment needed to help meet government housing targets.
On top of this, he stated that the recent changes to building codes are likely to add tens of thousands of dollars to the cost of building new homes.
The economist also argued that more effort is needed to “increase the capacity of the industry”.
This includes access to skilled labour, training and upskilling the existing workforce, and more support for apprenticeships.
He concluded that reforms in the areas would be a “material upside risk to this housing outlook”, which could see Australia reach above the government’s 1.2 million target.
More from this writer:
-
-
Are mum and dad investors ‘a threatened species’?
-
New build-to-rent project gets green light in WA
-
Victoria’s solar-powered apartment plan is now taking applications
-
Who is most interested in WA property?
-
First-time buyers susceptible to defective properties, expert warns
-
Is Qld’s new housing plan fit for purpose?