Scheme on track to pay out less than one-fifth of $3 billion fund
A federal scheme designed to reward states and territories that lift housing supply is now expected to distribute less than 20% of its $3 billion budget, based on current building approval trends and updated construction forecasts.
Australian Bureau of Statistics data released earlier this week showed 14,565 dwellings were approved nationally in the latest month, the weakest result since mid-2024 and well below the trajectory needed to hit federal housing targets.
Under the New Homes Bonus, announced by the Albanese government in 2022 as part of the National Housing Accord, jurisdictions that deliver the largest volume of additional homes over five years are eligible for incentive payments. On present projections, only Victoria, Western Australia and the ACT are expected to qualify for any share of the scheme.
Analysis by Oxford Economics indicates that if the government pays out on the original one million homes target, Victoria would be in line for about $391.55 million, Western Australia for $163.965 million and the ACT for $28.4 million. All other states and territories would miss out.
Revised target unlikely to be met
Since the Accord was launched, governments have agreed to lift the national ambition to 1.2 million new homes between mid-2024 and mid-2029. Oxford Economics’ modelling suggests delivery will fall well short, with around 947,500 dwellings now expected to be completed over that period.
The think tank warns that even its current projections could be downgraded if monetary policy tightens further or if geopolitical risks escalate. The baseline outlook assumes one additional cash rate increase in 2025 and a prolonged period of restrictive settings.
“These forecasts assume another rate hike, likely in May, then holding steady until the beginning of 2028 — if we get more hikes this year, that could change the profile of the residential upturn,” said Maree Kilroy (pictured right), lead economist at Oxford Economics Australia. “And we aren’t factoring in a significant escalation (in Iran) in our baseline… but that might be a very big downside risk to the outlook for housing construction.”
Kilroy noted that New South Wales, in particular, is so far behind the required path that it is now highly unlikely to earn any bonus payment, while Queensland and South Australia may improve their position if approvals lift and projects move more quickly through the pipeline.
On current trends, less than $584 million of the $3 billion New Homes Bonus would be distributed. The balance would remain unused unless the Commonwealth revises the scheme or redirects the money to other housing-related initiatives.
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