Home building set to slow for at least 12 months
A major home-building body has poured cold water on the federal government's aspiration to build one million homes as new construction stalls.
Home construction has fallen sharply and new forecasts from the Housing Industry Association suggest the number of dwelling builds will be slow for at least the next 12 months.
The association's chief economist Tim Reardon said the outlook jeopardised the chance of delivering one million homes over the next five years, as targeted by the federal government in its housing accord.
The accord is one pillar of the government's plan to ease pressures on the stressed housing market, along with its $10 billion Housing Australia Future Fund aimed at boosting the supply of affordable and social homes.
As per updated HIA predictions, the industry body expects new house starts to decline 9.4 per cent in 2023 and 11.3 per cent in 2024, reaching an annual trough of 96,310 before recovering modestly over 2025.
New apartment building is expected to recover gradually after experiencing a decade low of 63,240 starts in 2022.
In 2023, multi-unit construction is tipped to lift 6.6 per cent, to 67,430, before rebounding more strongly in 2024.
Alongside the slowdown in new home building starts, thousands of projects have been put on hold according to fresh analysis from KPMG showing 10,500 dwellings in Victoria approved but not yet started, up from 5000 dwellings in March of the year before.
The slowdown in new builds is also set to collide with migration levels reaching record highs, according to the report, with the bulk of the population growth concentrated in Sydney and Melbourne where apartment living is most common.
Mr Reardon said the aggressive interest rate hiking cycle was largely to blame for the slowdown in building activity, and that the full impact was yet to be felt.
He also said a range of regulatory and cyclical challenges were weighing on new supply.
"The government's Housing Australia Future Fund isn't a solution to all of these problems, but it is a necessary step toward improving the supply of new homes," he said.
The fund may not even materialise, with the Greens blocking its legislation in the Senate in the hopes of pressing the government into a more ambitious package to address the housing crisis.
Deputy Liberal leader Sussan Ley said the fund's earnings would pay for a "woefully inadequate" number of new homes.
"It wouldn't actually address the housing needs across this country," she told ABC Radio on Thursday.
Assistant Treasurer Andrew Leigh said the opposition should get out of the way and back the fund.
"The totality of what we're doing in housing is very substantial, more substantial still if the Liberals were to support building more homes," Dr Leigh told ABC News.