Doubt has been thrown on Australia’s ambitious housing goals. 

Australia is facing a severe challenge in meeting its housing needs, as a comprehensive report from the National Housing Supply and Affordability Council indicates that the country will fall nearly 300,000 homes short of its five-year target. 

The goal, set by the Albanese government, aimed for the construction of 1.2 million new homes by 2029. 

However, the council's projections show only 943,000 homes will be built, pointing to a significant discrepancy that could exacerbate the ongoing housing affordability crisis.

The report reveals a mismatch between the supply of new housing and the demand from new household formations. 

It anticipates that over the next six years, net new market housing supply will stand at 1.04 million dwellings, while demand will reach approximately 1.08 million new households. 

This imbalance is particularly pronounced for the 2023–24 financial year, with projected smaller shortfalls in the following two years.

The resumption of migration at pace and rising interest rates have intensified the housing shortfall. 

The report indicates that these factors, along with skills shortages and elevated construction company insolvencies, are pressing issues that need addressing to alleviate the crisis.

Housing affordability has deteriorated significantly for mortgage holders due to interest rate rises, with rents increasing by 35 per cent since 2020 and 8 per cent in 2023 alone. 

The national rental vacancy rate is at a low of 1.6 per cent, highlighting the difficulty many Australians face in finding affordable rental housing.

The report criticises the current levels of social and affordable housing supply, which have been in decline as a percentage of the total housing stock for the past three decades. It also suggests that the Australian tax system, particularly concerning negative gearing and capital gains tax concessions, may need reform to better support housing affordability and supply.

In response to the council's findings, Housing Minister Julie Collins highlighted the government's recognition of the issue and its commitment to a transformative approach towards housing policy. 

Over the next decade, more than $25 billion has been committed to various housing initiatives aimed at boosting the supply of homes across the country.

The council remains hopeful that state-level planning reforms and other measures might alleviate some of the supply issues. 

It projects that from 2025 onwards, an increase in supply could be stimulated by recent rent rises and a potential slowing in construction cost increases.

Looking further ahead, the council's report warns that without significant increases in housing supply, affordability will continue to deteriorate, affecting a wide range of Australians, from first-home buyers to the elderly and low-income families.

The National Housing Supply and Affordability Council's report lays bare the multifaceted nature of Australia's housing crisis. 

It calls for a comprehensive and multi-pronged approach to tackle both the supply deficiencies and the affordability barriers that threaten the economic stability and well-being of countless Australians. 

The full report is accessible here.