Outlook worsens for government to meet 1.2 million houses promise

The federal government's ambitious target of building 1.2 million new homes is facing further delays, with advisors now projecting the goal will not be met until the end of 2030. This represents a further push back from earlier forecasts of June 2029 and then September 2030, as the housing market grapples with rising interest rates and significant tax system overhauls.

Recent policy changes, including the May federal budget's rewrite of tax perks for housing investors, have altered the landscape. The budget ended negative gearing benefits on existing properties purchased after budget night and tightened capital gains tax discounts on investment properties. Compounding these factors, the Reserve Bank has increased the official cash rate for the third time this year to 4.35 percent, adding pressure to the market.

Despite the revised timeline for the overall target, there are signs of progress in housing construction. Since the National Housing Accord commenced, housing approvals have surged by 26 percent, and commencements have risen by 15 percent. However, the performance varies considerably across states and territories.

Victoria is on track to meet its share of the target just after the deadline in December 2029, while Western Australia has completed about 29 percent of its obligation, South Australia 28 percent, and Queensland 24 percent. New South Wales, the nation's most populous state, faces the longest delay, with its target not expected to be met until March 2032. The Australian Capital Territory has built 34 percent of its share, the Northern Territory 28 percent, and Tasmania lags significantly, with only 16 percent completed and its target not anticipated until June 2034.

Federal government officials maintain that planning reforms aimed at increasing density, unlocking land, and investing in infrastructure are strengthening the housing pipeline. They also note that construction price increases have stabilized, slowing from a 17 percent annual rise in 2022 to 3.8 percent. Housing Minister Clare O'Neil stated the government's focus remains on removing roadblocks to increase housing supply and help more Australians secure homes.

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Our focus is simple, keep building, keep removing roadblocks and get more Australians into homes.