Australia is on track to see more than one million new homes commence construction over the next five years, according to the Housing Industry Association (HIA).
However, the nation still faces a shortfall against the government’s 1.2 million homes target.
The latest HIA quarterly Housing and Economic Outlook Report revises forecasts upward in light of stronger population growth and recent government policy announcements.
HIA Chief Economist Tim Reardon said commencements are now expected to reach 1.01 million in the five years to June 2029, compared with the previous forecast of 986,000.
“Higher than previously anticipated population growth, and changes to government policy, have resulted in an upgrade to our forecasts for the number of homes that will commence construction over the next five years,” Mr Reardon said.
Despite this, he warned that policy settings remain too restrictive to deliver the government’s 1.2 million homes goal.
Regional variations and policy shifts
Mr Reardon noted that while a fall in the cash rate has lifted home building activity, the improvement is uneven across states and building types.
Western Australia, South Australia and Queensland are leading growth due to lower land and construction costs, while New South Wales and Victoria continue to lag because of higher barriers and expenses.
Population growth is forecast to remain elevated, with Australia likely to surpass 30 million people before the end of the decade.
Reardon said this will push up the cost of established homes and make new builds a comparatively more affordable option.
In New South Wales, forecasts have been revised higher following state Budget measures such as underwriting apartment sales, introducing a pattern book, and fast-tracking approvals.
Nationally, the federal government’s move to reduce the cost of Lenders Mortgage Insurance for first home buyers is expected to add as many as 10,000 new homes a year.
“Changes to government policies are starting to focus on reducing the costs and barriers to new home building and will add further to the supply of new homes,” Reardon said.
Forecasts by dwelling type
Detached houses:
- 28,620 starts in March 2025, with 28,240 forecast for June.
- 2025 total: 115,070, up 7.2 per cent on 2024.
- Peak expected in 2027 at 125,840 before moderating to 116,370 in 2029.
Multi-unit dwellings:
- 19,450 starts in March 2025, dropping to 17,440 in June and steadying through the year.
- 2025 total: 72,070, up 17.2 per cent on 2024’s 13-year low.
- Gradual increase to 76,570 in 2026, accelerating to 99,960 by 2029 as apartment projects become more viable.
Mr Reardon stressed that while interest rates remain the key cyclical driver of home building volumes, structural factors such as government policy and population flows will determine where activity is concentrated.
“Home building activity will flow to those regions with the lower cost of delivering new homes to market. Upside risks could emerge in other regions if governments remove constraints on new home supply,” he said.
