In an effort to solve the housing affordability crisis in Australia, the federal government agreed to a Housing Accord that included state governments, local governments and the construction sector.
The Accord came with many targets, with the core one being building 1.2-million new homes by 2029 to help ease the pressure on the housing industry. There simply aren’t enough houses to go around, with net migration still sitting at high levels, state governments not building enough social housing and a post-COVID population that has a preference for living alone.
The accord construction aim has always seemed ambitious. The construction program kicked off a few months ago in mid-2024, and already there are signs that the targets are going to be difficult to achieve.
The Stats of Falling Short
According to the Housing Industry Association, we’re going to fall over 200,000 homes short of the 1.2-million target by the time 2029 rolls around. There is a positive in that we will still see 975,970 homes get built over the next five years, but such is the nature of the crisis that falling short in this way will have an impact on housing affordability.
Every state and territory looks set to not reach both annual housing construction targets and the five year target. For example in 2024 construction will commence on only 165,510 homes – well short of the 240,000 required.
The Tradie Crisis
What is up with the construction industry – why can’t we simply get these houses built? The problem lies in a skills shortage – there aren’t enough tradies to go around. In fact, Australia needs an extra 83,000 tradies if they want to hit the goal of 1.2-million new houses. That includes 22,000 carpenters, more than 17,300 electricians and almost 12,000 plumbers!
We would need to double the number of apprentice tradies we currently have in training in order to satisfy the Housing Accord requirements. While the national shortage of tradies has improved since 2022, it is still worse than any time in the 15 years before Covid.
Placing further pressure on the housing industry is the fact that national infrastructure projects such as road and rail building have syphoned off tradies that would otherwise be building houses. Infrastructure building is vital to the progress of our country, but it does mean we’re going to have to look at other options to get more houses built.
A Migrant Solution?
Much of the pressure on housing is due to high net migration rates. Here’s the problem though – the construction sector isn’t adequately catered towards in the government’s migration strategy. The high immigration levels are pushing up the demand for property without adding any supply to help solve the situation, because tradies are underrepresented in the migrants entering Australia.
The CEO of Master Builders, Denita Wawn, had this to say:
“If we’re to have any hope of building 1.2m homes we need to get more skilled tradies into the country and quickly. Skilled migration is a vital piece of the workforce puzzle in the building and construction industry. In the short term, we cannot address labour shortages through domestic apprenticeships alone.”
What Does This Mean for Australian Real Estate?
High demand and not enough supply will always only have one outcome – an increase in value. Owning property continues to be a cornerstone of the Australian dream, it’s just becoming harder for people to break into that market with the affordability crunch.
For buyers, putting off buying today is most likely going to mean paying more tomorrow. If you have the means, there’s no time to get onto the real estate ladder than the present.
For homeowners and vendors, the challenges faced in housing construction is adding value to your already established property. If you’re selling, you just need to be able to leverage the interest in a way that gets you the price you need and deserve for your home.
Let’s Talk Real Estate
If you’re a homeowner looking to sell and you’re feeling uncertain or even overwhelmed by the real estate industry at the moment, get in touch and I’ll gladly answer your questions and guide you with your property decisions. I’ve been selling property on Brisbane’s Southside and all around the city for 15 years now, and I’m always happy to share my knowledge and insights. Get in touch here and let’s have a chat.
