Ambitious housing target hits regulatory roadblocks

Immigration and housing targets have become a political football as the National Housing Agreement’s target of 1.2 million new homes by 2029 appears to be nearing the end.

Population growth, labor shortages and supply chains, combined with formidable planning hurdles, magnified by bureaucratic red tape at all levels of government, stand in the way of achieving this goal; the system simply grinds too slowly to meet market demand.

To add to the dilemma, Australia’s population grew by 651,200 to a record 26.97 million people in 2023, according to the latest figures released this week by the Australian Bureau of Statistics (ABS).

This above-trend population growth continues to be driven by increased net overseas migration.

ABS figures show that net overseas migration (NOM) was 26.3 percent higher in the 2023 calendar year.

HIA chief economist Tim Reardon said the construction industry has consistently advocated for stable and reliable population growth.

“The boom/bust cycles in migration that we have seen during the pandemic period are leading to undesirable economic, social and business outcomes.

“As the key determinant of population growth, the fluctuating nature of NOM has a crucial impact on labor force participation rates, national skills, productivity and overall economic output.

“The HIA supports a managed migration program that provides sufficient skilled migrants in the construction and construction trades and occupations to meet Australia’s ongoing housing needs.”

The HIA estimates that future underlying housing demand in Australia is in excess of 200,000 homes per year.

Unfortunately, only 172,725 homes have been completed in the 2023 calendar year, which will increase pressure on rents and house prices.

“The significant imbalance between supply and demand in the construction of new homes requires significant and rapid policy action from all levels of government,” Reardon said.

“Up to 50 percent of a new house and land package consists of taxes, levies and charges. Reducing these costs is necessary to deliver more homes,” Mr Reardon concluded.

HIA senior economist Tom Devitt said state and federal policymakers should incentivize local authorities to accelerate the release of land ready for shoveling and enable higher density development in existing suburbs near jobs and transportation.

“Addressing tax, planning, land and regulatory constraints on the housing sector is the only hope of achieving state and national housing targets in the coming years and addressing the nation’s housing crisis.”