New dwelling figures due this week unlikely to close the gap on the 1.2 million home goal
Australia is on track to fall short of its five-year target to build 1.2 million homes, ahead of fresh construction data due this week.
The Australian Bureau of Statistics (ABS) will release dwelling commencement figures on Wednesday, in an otherwise light week for economic data.
More than 53,000 homes began construction in the December quarter, an 8% increase on the previous quarter and a 26% rise over the year.
Tom Devitt (pictured right), senior economist at the Housing Industry Association, said commencements were likely to continue rising in the March quarter.
Completions are also expected to improve, though not enough to meet the National Housing Accord target.
Around 173,000 homes were completed in 2025, compared with the 240,000 needed each year to reach the goal.
“Our forecasts have them well under,” Devitt said. “HIA has just released its own report estimating how many homes we need on a sustained basis, not just to meet population growth, but to also meet shrinking household sizes ... and to actually start making a dent in the pre-existing shortage.
“And the number we came up with was 250,000 homes per year.”
Construction times improve
A spokesperson for Housing Minister Clare O'Neil said building times had shortened, with new homes now completed 10% faster than when the accord began in July 2024.
“Fixing a problem generations in the making takes time but we're seeing good progress in housing supply across the country with more homes being approved, more homes being built, and, importantly, they're being delivered faster,” they stated.
Wednesday's data will cover the first month of the Middle East conflict, which lifted fuel prices after the Strait of Hormuz closed to oil tankers.
Economists had warned construction costs could rise by up to 10%, but Devitt said this had not occurred. “Anecdotally... it's more like 1%; a few thousand dollars added by fuel costs and other isolated supply constraints as a result of the Iran war, which isn't nothing but it's relatively limited,” he explained.
Devitt added that the sector's fundamentals remained sound, even if activity slowed because of interest rate rises, restrictions on negative gearing and changes to the capital gains tax discount.
“Once this uncertainty clears, the limitations on activity will really be things like interest rates and the extent to which policymakers can bring land and infrastructure to market, so that housing can actually commence,” he said.
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