Australia's Housing Shortfall Is About To Get Much Worse

Australia's housing crisis can be complicated by politicians, economists, and bureaucrats with endless discussion about tax, grants, subsidies, and buyer assistance.

But the fundamental problem remains remarkably simple.

Australia does not build enough homes, and the latest figures suggest we are falling even further behind.

New modeling from Master Builders Australia forecasts the nation will fall 262,000 homes short of the federal government's National Housing Accord target of 1.2 million new dwellings by mid-2029.

Now, this is not a small miss.

It is more than a quarter of a million homes that Australia needs, but on current forecasts will not get.

Master Builders now expects fewer than 920,000 new homes to, to commence over the five years to financial year 2031 after cutting its previous forecast by 8.4%.

Its expectations for housing starts have deteriorated by another 62,000 dwellings since March.

This is the central issue in the national housing crisis.

Demand continues to exceed supply, yet governments repeatedly announce policies that stimulate demand while failing to deal effectively with the barriers preventing homes from being built, notably how long it takes and how much it costs to create new dwellings thanks to bad policy and bureaucracy.

The latest ABS figures underline how fragile the situation remains.

Total dwelling approvals fell 6.1% in August, including falls of 17.3% in New South Wales and a massive 22.5% fall in Queensland.

And approvals are not construction.

An approval sitting in a filing cabinet does not house anybody.

Projects still need finance, builders, tradespeople, materials, and commercially viable economics before construction can actually begin, and this is precisely where Australia keeps failing.

Master Builders says the industry faces workforce shortages, declining productivity, shortages of development-ready land, rising material costs, and an ever-expanding burden of regulation and taxation.

Its message is straightforward.

Australia needs more workers, more land, more materials, and less red tape.

Now, Victoria is forecast to fall 36,000 homes short of its housing accord target, while Queensland is projected to miss its target by around 42,000 homes.

Meanwhile, politicians continue announcing buyer assistance schemes while debating taxation settings, but helping more people compete for the existing housing stock does not solve a shortage.

Building more dwellings does.

But if the dwellings that are being built are unaffordable because of the high cost structures and the massive taxation component, then the housing crisis remains unresolved.

Prime Minister Anthony Albanese now acknowledges that supply is absolutely critical and that increasing it will take time.

Now, that admission is welcome, but Australia doesn't need more speeches about supply.

It needs policies that actually produce it.