Australia Faces Challenges in Meeting Ambitious Housing Target Amid Opposition and Politics

Australia faces a housing crisis, with a target of 1.2 million new homes by 2024 proving challenging due to community opposition and government-developer tensions. The crisis disproportionately impacts youth, with urgent calls for increased government support.

Geeta Pillai
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Australia Faces Challenges in Meeting Ambitious Housing Target Amid Opposition and Politics

Australia Faces Challenges in Meeting Ambitious Housing Target Amid Opposition and Politics

Australia is confronting a housing crisis as the government aims to build 1.2 million new homes over the next five years. However, meeting this ambitious target in 2024 is proving to be a challenging task due to various factors, including community opposition, local council politics, and the need for better communication between developers and residents.

The tensions between different levels of government and local communities have come to the forefront, as exemplified by the controversial approval of a Gold Coast shopping centre and a giant housing estate by the state government against the wishes of the local council. These incidents highlight the challenges in balancing the pressing need for housing with the concerns and preferences of local residents.

The rental affordability crisis is particularly acute for youth aged 16-17 in major Australian cities, with some spending up to 94% of their income on rent. Homelessness Australia has called for increased government support, such as a higher Youth Allowance and a 60% increase in Commonwealth Rent Assistance, to alleviate the burden on young renters.

The housing market has also been impacted by a decline in apartment construction in New South Wales and Brisbane, attributed to factors like reduced foreign investment and unfavorable tax policies. While Brisbane and Adelaide have seen significant property value growth, experts note that Perth's market has reached its peak.

Why this matters: The housing crisis in Australia has far-reaching implications for the country's social and economic well-being. Addressing the challenges in meeting the government's ambitious housing target is critical to ensure adequate and affordable housing for all Australians, particularly vulnerable groups such as youth and low-income households.

Property developer Andrew Welsh, through his company Wel Co, has a $2 billion pipeline of 10,000 lots across Victoria, South Australia, and Queensland, representing a significant portion of Australia's growing land development industry. However, concerns have been raised about Melbourne's growth corridors, where sales have declined in the last 12 months, and changes in planning policy have slowed down further rezoning.

The end of the federal government's HomeBuilder stimulus and rising mortgage interest rates since 2021-22 have led to an expected contraction in industry revenue, with challenges around subcontractors, supply price increases, and availability of materials. Despite these obstacles, Australia has seen house price growth in 2023, with prices up 4.9% according to Knight Frank research, attributed to limited available stock, strong employment, and robust wage growth.

The Queensland government has introduced a new streamlined approvals process called the State Facilitated Development (SFD) team to fast-track housing projects that align with state priorities, including affordable and diverse housing. Projects featuring affordable housing for low to moderate income households will receive top priority. The Planning Institute of Australia and Villawood, a property developer, have expressed support for the initiative, stating that it will help address the high demand for affordable and diverse housing in Queensland due to strong population growth and smaller household sizes.

Australia requires 345,000 actual dwelling completions to keep up with population growth, which would require a 98.1% increase in the number of dwelling completions seen in the year to September 2023. However, with significantly higher interest rates and high new home prices, the current environment for homebuilding is not conducive to a strong resurgence in home completions, at least not yet. "The nation requires 345,000 actual dwelling complet

Key Takeaways

  • Australia aims to build 1.2M new homes by 2024, but faces challenges like community opposition.
  • Rental affordability crisis hits youth, with some spending up to 94% of income on rent.
  • Apartment construction decline in NSW and Brisbane due to reduced foreign investment and unfavorable tax policies.
  • Queensland introduces streamlined approvals to fast-track affordable and diverse housing projects.
  • Australia needs 345,000 dwelling completions annually to keep up with population growth, a 98.1% increase.