The latest projections from a major urban development industry body paint a worrying picture for both buyers and renters. New home construction across the capital cities is set to fall to about 115,100 dwellings this year, down from roughly 119,600 the year before and heading for the weakest annual supply since 2014. This slide comes at the same time the federal government is banking on a major building surge to support its Housing Accord, which depends on delivering 1.2 million new homes between mid 2024 and mid 2029.
The report estimates that to stay on track, Australia needs about 178,300 new homes a year in the big cities alone, yet current forecasts show only modest growth in activity from 2027 and still well below that level. Over the next five years, the cumulative gap in the capitals is expected to reach about 287,000 homes, rising to around 380,000 once regional markets are included. The industry group links this shortfall to a mix of stubborn cost pressures on builders, a tight pool of skilled workers and a shortage of land that is ready to develop with supporting infrastructure.
Behind the headline numbers, the mix of housing being delivered is also shifting in ways that could deepen the squeeze. Sales in new masterplanned housing estates have risen by about 10% over the past year, which suggests some recovery in demand for detached homes. However, sales of apartments and other multi unit projects have dropped to some of the lowest levels on record, and the organisation warns this segment is likely to weigh on total supply for at least the next three years. Even where councils are approving more projects, the long delay between a planning approval and finished buildings means any turnaround in medium and high density construction will take much longer to appear than in the detached home market.
Taken together, the data suggests Australia is likely to miss its housing targets by a wide margin unless governments move quickly to unlock more developable land, streamline approvals and better coordinate infrastructure. If the projected 380,000 home gap occurs, affordability pressures in both the purchase and rental markets are likely to intensify, particularly in fast growing capitals. At the same time, the reliance on detached housing over apartments could limit options close to jobs and transport, which raises questions about how cities will balance growth, liveability and sustainability over the rest of the decade.
