Australia’s ambitious target of constructing 1.2 million new homes by 2029 remains elusive, despite a noticeable uptick in housing building approvals for December 2024. New data from the Australian Bureau of Statistics shows that the country is significantly behind its goal, with an Australia’s ambitious target of constructing 1.2 million new homes by 2029 remains elusive, despite a noticeable uptick in building approvals for December 2024.
New data from the Australian Bureau of Statistics shows that the country is significantly behind its goal, with a shortfall of over 68,000 homes in the first year alone.
Building Approvals Fall Short of Target
In 2024, Australia approved 171,394 homes, falling far short of the 240,000 new homes needed annually to meet the target. While there was a slight increase in approvals in December 2024, the overall pace is insufficient to hit the 1.2 million target by 2029. Here’s a breakdown of the approvals and targets for 2024:
- Construction target of 1.2 million homes by 2029 – This is the goal set by the National Housing Accord.
- Shortfall of 68,606 homes in 2024 – Australia was already behind its target in the first year.
- 171,394 homes approved in 2024 – This is the total number of homes approved for construction in 2024, well below the 240,000 needed annually.
- 15,174 homes approved in December – December saw a slight recovery in building approvals.
- 15.2% increase in private sector dwellings – This includes semi-detached houses, row houses, and apartments, categories that saw a notable rise in approvals.
- Estimated 180,000 new homes to be built annually – This is the estimate based on the current approval rate of 15,000 per month.
- 7.0% rise in detached housing approvals – This figure was reported by Master Builders Australia’s CEO, Denita Wawn.
- £10,000 bonus for apprentices in residential construction – This initiative is part of a government policy aimed at stimulating the workforce in the construction sector.
December Sees a Small Recovery
December brought a modest recovery, with building approvals rising to 15,174 for the month after a 3.4% decline in November. Particularly noteworthy was the surge in private sector dwellings, which increased by 15.2%, driven by a rise in apartments, townhouses, and similar dwellings. This fluctuation is often seen due to large apartment complex approvals, which can shift monthly totals significantly.
Government Responses and Economic Implications
Economists, such as Ivan Colhoun from CreditorWatch, view the December uptick as a positive sign for the construction sector. This is expected to benefit mortgage holders, with potential interest rate cuts by the Reserve Bank of Australia on the horizon. However, there are concerns that the current approval rates may not be enough to address pent-up housing demand.
Challenges in the Construction Sector
Master Builders Australia has pointed out that Australia is facing a housing crisis, with a 3.9% annual rise in approvals primarily driven by detached housing. The sector urgently needs to reduce construction costs and increase workforce participation to meet housing needs. Rising rents and homelessness are exacerbating the problem, affecting the wellbeing of Australian communities.
Here are some of the key issues at play in the Australian housing market :
- High construction costs : Without reducing the cost of building homes, supply will continue to lag behind demand.
- Workforce shortage: The construction sector is experiencing a critical shortage of skilled workers.
- Increased demand for social housing: The housing crisis is further strained by rising demand for affordable housing options.
- Rising rents and homelessness: The lack of new homes is contributing to higher rents and an increase in homelessness, impacting the social fabric.
Government Initiatives to Stimulate Workforce Growth
To address the labor shortage in the construction sector, Prime Minister Anthony Albanese announced a $10,000 bonus for apprentices working in residential construction. This initiative is designed to attract the next generation of tradespeople, offering a crucial boost to an industry struggling to meet demand.
