The Housing Industry Association (HIA) has warned the Federal Budget goal of creating one million new homes in five years could already be on rocky ground.
New forecasts from the HIA have calculated construction will start on 970,720 new homes in the five years ending in 2028, according to realestate.com.au.
The prediction is contained in the HIA’s National Outlook Spring 2022 report and, if it eventuates, the Federal Government will miss the promise it made when outlining the new national Housing Accord in last month’s Budget.
Under the Accord, Treasurer Jim Chalmers said the Federal Government, state governments, the construction industry and private investors would join forces to build one million new, well-located homes over five years from mid-2024.
But only 10,000 would come from the Federal Government, Mr Chalmers said on Budget night.
The HIA outlook suggested the government and the Reserve Bank of Australia were headed towards conflict over the one million homes.
“The RBA and the government have gone head-to-head with ambitious, and conflicting goals,” the outlook read.
It warned further rate hikes could see the almost 30,000 home shortfall blow out even more.
“If the RBA continues to increase the cash rate in 2023, this forecast will be downgraded, and the challenge of building one million homes will become increasingly difficult,” the report said.
HIA senior economist and report co-author Tom Devitt said the goals “seem to be at cross purposes”.
“But even though they do appear to be conflicting on that front, there are other tools at the government’s disposal,” Mr Devitt said.
According to realestate.com.au, Mr Devitt said one option would be to provide grants to local governments that expedite land releases to effectively reduce prices and encourage house and land purchases.
The HIA report showed Australia had built more than one million homes in a five-year period before, but that was at a time when there was an unprecedented apartment boom.
The HIA expects multi-unit construction will rise from 73,920 starts this year to more than 85,500 in 2024.
The report suggested a notable upswing in these figures would need to be achieved to reach the one million homes target by the government’s December 31, 2028, deadline.