New South Wales Premier Chris Minns has waved the white flag and admitted the state has “no chance” of meeting its first 12-month housing target as part of the National Housing Accord.
Under the accord, announced by the Federal Government in its October 2022 mini Budget, 1.2 million new, well located homes were to be built across the country, over five years from mid-2024.
The Federal Government set the target and the states and territories agreed to them.
But Mr Minns told The Daily Telegraph NSW will fall short of building its target of 75,000 new homes this year.
“The 75,000 (new homes) target will be very difficult to meet in the short term,” he said.
Under the deal, NSW would receive up to $915 million in Federal Government funding if it built 75,000 homes each year between now and 2029.
While conceding the state would not meet that target initially, Mr Minns would not say how many new homes would be finished, instead stressing that they would “build as many as we possibly can”.
“We’ve been clear from the very beginning that 75,000 (new homes), from almost a standing start, would be difficult to accomplish in 12 months, but we want to see forward progress as in a major increase in the amount of development within NSW in a 12-month period,” he told The Daily Telegraph.
Mr Minns also refused to put a date on when NSW would hit its target, but insisted changes to the planning system had already sped up housing supply.
The news comes as industry experts warned Australia was not starting construction on enough new homes to meet the National Housing Accord targets.
That’s also 17.4 per cent down on the corresponding quarter in 2022.
HIA Senior Economist Tom Devitt said it would be a tough task to reach the desired housing targets.
“Australia commenced construction of just 23,058 new houses in the September Quarter 2023, the weakest quarter in over a decade and down by 21.6 per cent on the same quarter last year,” he said.
“This data reveals there were 103,707 detached houses that commenced construction in the twelve months to September 2023, down by 17.0 per cent on the 124,940 commenced in the previous twelve-month period.
“This points to a slow start to National Cabinet’s ambition to build 1.2 million homes over the next five years, starting mid-2024.”
“A number of earlier projects are also being cancelled, with banks withdrawing finance in the face of soaring building costs and shrinking home buyer borrowing power,” he said.
“This lack of new work entering the construction pipeline is expected to produce a trough in new house commencements in 2024, when Australia will start construction on just 95,400 new houses, the weakest year in over a decade.”
Mr Devitt said the number of multi-unit projects starting construction had also declined, with a 9.6 per cent drop recorded in the September quarter of 2023, to just 13,916 units.
He said construction on 84,499 new multi-units was expected to start this year.
“This would still put total detached and multi-unit commencements at less than 180,000 in 2024, far below the 240,000 per annum required to meet National Cabinet’s target.”
Mr Devitt said private housing would have to shoulder the majority of the burden if the National Housing Accord targets were to be met.
“As fewer new projects begin construction, the pipeline of work that Australia’s home builders have under construction is expected to shrink rapidly this year,” he said.
“Meeting National Cabinet’s target will be largely dependent on the delivery of adequate private housing across the housing continuum.
“This will also have the biggest impact on the cost of housing and rental availability.
“Holding all levels of government to account for improving planning regimes, reducing red tape, and supporting the development of appropriate infrastructure and a skilled construction workforce, must be a priority this year.”