Australia Treasury Has Grim Outlook for Housing Goals

A mishap at the Treasury of Australia revealed that the country isn’t on track to meet its housing construction objectives.

Internal Treasury documents warned the incoming Labor Party government that its goal to build 1.2 million new homes over five years would “not be met,” RealEstate.com.au reported. The memo, accidentally released to the Australian Broadcasting Corporation, throws cold water on plans to ramp up housing construction in the second half of the decade.

Last July, the Australian government passed the Housing Accord, which called for the construction of 1.2 million new homes by mid-2029. At that pace, Australia would need to build at least 240,000 new homes each year. But just over 168,000 homes started construction in the 2024 calendar year, according to figures from the Australian Bureau of Statistics cited by RealEstate.com.au.

Australian Treasurer Jim Chalmers brushed off the leak and urged officials to try to meet the Housing Accord target.

“The point that the incoming government brief makes is the same point that I have been making, [Housing Minister] Clare O’Neil and others have been making, is that we will need more effort to reach that substantial ambitious housing target,” Chalmers said.

“We’re investing tens of billions of dollars, we’re working well with the states and territories and local governments, we’re engaging with the industry,” he added. “We’re trying to get the capital flowing, I’ve changed the tax arrangements for build-to-rent, there are a whole range of things that we’re doing and that Clare is doing to make an important contribution to achieving that target, but we will need to do better and we will need to do more and the advice just reflects that.”

The crux of the crisis can be traced back to bureaucratic hurdles, according to Anne Flaherty, senior economist at REA Group.

“The fundamental issue is making sure that planning and approval processes are improved because some states take significantly longer to secure building approvals than others,” she said. “I think it is important to have a target and from the government’s perspective, holding themselves accountable to that target is hopefully going to drive them to put forward more policy that will enable it to happen.”

Increasing construction costs, difficult labor markets and a decrease in buyer demand has made it harder for Australia’s home building industry to flourish. It comes as the country’s population grew by 1.7 percent, or 445,900 people, in 2024, building on record population growth in the years since the pandemic, according to the Australian Bureau of Statistics.

— Chris Malone Méndez