‘Significant uplift needed’: The home building shortfall Australia needs to meet 

A new report has revealed the country’s supply of new homes is near its lowest level in a decade.  

In its annual State of the Housing System 2025 report, the government-backed National Housing Supply and Affordability Council said 177,000 new homes were completed in 2024, falling behind the demand which was estimated to be 223,000 for the same period. 

These completions were near the lowest supply of new homes in about a decade.  

The report, now in its second iteration, details Australia’s current housing demand, affordability conditions and what is expected to come over the coming years.  

It also outlines the country’s supply in relation to the National Housing Accord target, which is to build 1.2 million new, well-located homes from 1 July 2024 until 30 June 2029. 

According to the council’s latest figures, the nation is set to fall short on that goal, with 938,000 new homes predicted to be built over the five-year period.  

This means, the country will have a 262,000 shortfall – with no state or territory anticipated to meet its share of the target.   

“The Australian housing system remains far from healthy and is continuing to experience immense pressure,” Chair of the council Susan Lloyd-Hurwitz said.  

“The nation is still very much in the grips of a housing crisis that has been decades in the making through our persistent failure to deliver enough homes to meet demand.”  

Despite the gap, the council says the National Housing Accord target of 1.2 million homes “remains suitable”.   

“The target is rightfully ambitious, highlighting the magnitude of the community’s challenges; communicating government policy intentions; galvanising and focusing effort across governments, industry and the community sector; and facilitating transparency, accountability and performance assessment,” the report outlined.   

“Such a target should exceed expected demand to address the significant unmet demand for housing already in the system, including for people experiencing homelessness and to offset the effect of demolitions.”  

The council forecasts underlying demand will be for 904,000 dwellings over the Housing Accord period, and with 113,000 dwellings expected to be demolished, at least 1.017 million new homes are needed to simply keep pace with demand.  

According to the council, the target of 1.2 million new homes is consistent with these principles, as it currently exceeds current projected supply by around 28%, and projected demand plus demolitions by around 18%.  

What can the industry do?  

The report noted that significant system-wide reform, government support measures and industry innovation are needed to improve the housing system.   

According to the council, five key policies should be prioritised:  

• Increase social and affordable housing 

• Improve construction capacity and productivity 

• Reform planning systems 

• Provide further support for renters  

• Ensure Australia’s taxation system supports housing supply and affordability. 

Within these five areas, the council makes 15 policy recommendations.  

According to analysis, 938,000 new homes are predicted to be built over the five-year National Housing Accord period. Picture: Getty

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“A significant uplift is needed to support Australians who depend on social and affordable housing for shelter and as a foundation for building their lives and participating in their communities,” Ms Lloyd-Hurwitz said.  

“The council acknowledges the work underway across the housing spectrum, including work undertaken by states and territories to enhance planning systems. Our collective focus needs to remain on consistent and coordinated effort.”  

The NSW government responded to the report by noting its role in reaching the target – including the Transport-Oriented Development program, which is set to deliver 231,855 homes.  

NSW minister for planning and public spaces Paul Scully said given the costs of construction and economic pressures, it was never going to be easy to make up deficits through mid-2029.   

“Planning approvals are 15% faster today than they were in March 2023, the number of applications lodged is up 28% on the same time last year, and NSW has the most homes under construction in the country,” Mr Scully said. 

“There are thousands more homes and DAs being finalised that are embracing our planning reforms such as the Housing Delivery Authority and the Low and Mid-Rise policy. We’re building a pipeline that will actually deliver homes. 

“The State of the Housing System report shows us that we have our work cut out for us, but as a government we’ve got our priorities right.” 

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