The National Cabinet announced in August 2023 a five-year plan to build 1.2 million new dwellings, beginning on 1 July 2024.
However, the federal, state, and territory governments will not build these 1.2 million dwellings. Their strategy is to ease planning and zoning laws to allow for greater density in the hopes that private developers will build the required homes.
Australia’s record for new home construction was around 223,000 in 2017, as illustrated in the next chart:
Therefore, the National Cabinet’s 1.2 million housing target, which requires 240,000 homes to be built every year for five consecutive years, would require Australia’s building industry to achieve a level of construction that has never been achieved before.
They would also need to magically build these homes in an environment of high interest rates, elevated materials costs, widespread builder failures, and endemic labour shortages as the construction industry competes with infrastructure for workers.
The National Cabinet’s 1.2 million homes target has already gotten off to a rotten start, with forward-looking construction indicators crashing to around decade lows.
Only 164,200 homes were approved for construction in the year to October according to the ABS, which is around 56,000 fewer than the target:
New home sales and loans for the purchase and construction of a new home are also tracking near historical lows, signaling lower construction ahead.
Phil Dwyer from The Builders Collective was interviewed by 7 News where he said outright that National Cabinet’s 1.2 million homes target “can’t, wont happen”.
The report notes that “new builds will plumet to a 10-year low in 2024 with only 95,000 houses tipped to be built around the country”.
Dwyer also warns of a “ripple effect” of insolvencies hitting sub-contractors that “don’t get paid, a huge amount money”, which will mean that they “will go under as well”.
Given the impossibility of meeting the 1.2 million new homes target, the only realistic solution to solving the nation’s housing shortage is to dramatically slow population growth by slashing net overseas migration.
Net overseas migration must be cut to a level that is less than the country’s ability to provide new housing and infrastructure.
Otherwise, Australia’s housing crisis will deteriorate further.
