New home starts continue to lag expectations
The National Housing Accord is increasingly unlikely to meet its objectives, with the national housing deficit worsening since April, latest projections from Master Builders Australia have indicated.
According to the report, 180,500 new dwellings commenced in 2024-25, falling almost 60,000 short of the Accord’s annual benchmark of 240,000. Over the full five-year period, the cumulative shortfall is now expected to reach 180,200 homes, up from the 160,000 estimated earlier this year.
“These forecasts highlight the scale of demand going unmet,” said Shane Garrett, chief economist at Master Builders Australia. “Australians are crying out for more housing, but demand is being left unrealised.
“Projects are stalled by rising costs, low productivity and long build times. Without rapid reform, the activity needed to deliver 1.2 million homes will not materialise. No state or territory is on track to meet its target. High-density housing must accelerate quickly, but many jurisdictions lack the capacity to deliver at scale. Governments must streamline planning and approvals now to unlock supply.”
Garrett (pictured below left) added that the workforce challenge is just as pressing. “Construction employment is near record highs, but productivity has fallen 18% over the past decade,” he said. “Longer build times and higher costs are holding us back. We need more workers across trades and professions to restore capacity and viability.”
Denita Wawn (pictured above right), chief executive of Master Builders Australia, noted that while builders are prepared to address the challenge, they face significant obstacles. “Australian builders are keen to get on with the job, but under current conditions, the Accord’s 1.2 million home goal looks less achievable every day,” she said. “Without urgent action to fix productivity, approvals, costs and workforce shortages, the target will be missed.”
The total number of dwellings approved in July dropped by 8.2%, raccording to figures released Monday by the Australian Bureau of Statistics.
“We will be closely watching new dwelling approvals, especially high-density projects which must rise sharply to get back on track,” Wawn said. “Tackling the housing crisis requires cooperation across governments and across portfolios. We need a whole-of-government approach to remove the barriers in our way.”
Beyond the housing sector, the forecasts point to positive developments in other areas of construction. Civil and engineering work reached its highest level in a decade at nearly $138 billion, largely driven by utilities and resources projects. This segment is expected to expand further, with activity forecast to peak at over $154 billion in 2026-27 before moderating, averaging $147.8 billion per year over the forecast period. This marks a more than 20% increase compared with the previous five years, underlining the sector’s significance for economic growth and employment.
Non-residential building activity eased slightly in 2024-25 but is projected to recover, with robust growth anticipated in social, cultural and recreational facilities, supported by public sector investment. These areas are set to remain key contributors to industry demand and the wider economy.
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