Sunita SomvanshiAustralia committed in July 2024 to building 1.2 million new homes over five years. Two years in, that promise sits in serious trouble. Reuters broke the exclusive on August 12, revealing construction is running 27% below the pace needed.
New home construction is running 27 percent below the pace needed to hit the target by June 2029, according to official data reported by Reuters on August 12. The Housing Industry Association forecasts Australia will miss the goal by about 15 percent. But the real problem may run deeper: a peer-reviewed systems dynamics model published in MDPI Systems this year projects that even with existing capacity, Australia will complete only 880,000 to 920,000 dwellings—falling 23 to 27 percent short. The study concludes the target “appears structurally infeasible.”
The slowdown is sharp. In the first quarter of 2026, new dwelling commencements fell 11.2 percent from the previous quarter. Apartment construction dropped 20.7 percent for the quarter alone; house construction fell 3.5 percent. Year-on-year, growth slowed to 0.2 percent from 26.1 percent.
Almost 70 percent of apartments approved in Australia since 2020 have never progressed to construction, according to data from property consultancy Urbis. The worst performing cities tell the story: Gold Coast at 83 percent, Sydney at 64 percent, and Melbourne at 62 percent.
The bottleneck stems partly from construction capacity stretched to breaking point. Apartment construction time has grown to 33 months from 21 months a decade ago. Houses now take 11.5 months to build instead of 8.6 months. Concrete costs have climbed roughly 150 percent in six years, plasterboard up 46 percent, and pine frames up about 35 percent.
Labor shortages compound the crisis. Jay Perham, manager at Brisbane’s Axiom Construction, describes crews pouring concrete at night under head torches because daytime workers cannot be found. Nearby, construction workers are being drawn away to work on Brisbane’s 2032 Olympic Games—expected to generate around A$7 billion in construction activity.
“I was never on the tools before,” said Rami Issa, director of Sydney’s Roar Constructions. “I was running the site, but now I’m jumping on the tools with the boys to try and cut down on working hands.”
The Reserve Bank of Australia has sounded alarm bells. In its August 2026 Statement of Monetary Policy, the RBA warned that house price corrections, elevated interest rates, and rising construction costs will hamper building. Governor Michele Bullock was more direct at an August 11 media conference: “Construction costs are rising, and if established housing prices are falling, then what you can sell new construction for obviously is going to come down as well. At the same time, we’ve got construction costs rising. We’re already hearing, particularly in the high density market, that it wasn’t worth building because you couldn’t—the cost it took you to build, you couldn’t sell for it.”
Apartment developer Tim Gurner blamed government policy. “It’s never been harder to develop residential real estate,” he said. “Your policies will limit supply. That’s as simple as that.”
The federal budget in May changed negative gearing and capital gains tax rules with the intention of boosting home construction. Instead, dwelling values have fallen roughly 2 percent over four months, making new developments harder to justify financially.
There is a paradox to Australia’s housing crisis, according to Kenan Yazici of Sydney’s Betacon Construction: “During the period where interest rates are going up, people pull back from development, so there’s fewer projects coming onto the market. Then all of a sudden, interest rates start to go back. Everyone flocks back to the property market. Guess what? There’s not enough supply to keep up with it.”
Construction firm insolvencies totaled 3,472 in the financial year ending June 30, 2026, up from 2,977 two years prior.
The NSW Housing Council’s State of the Housing System 2026 report found that even if current trends continued, the 1.2 million target would not be reached until September 2030—just over a year beyond the Accord period.
According to official data, housing prices have declined 1.6 percent nationally from their March peak, with auction clearance rates continuing to fall. One innovative response to the housing shortage has been 3D-printed homes — Australia’s first multi-storey 3D-printed house is nearing completion in Melbourne, promising to slash building times by 70%. NSW has also revived the abandoned Woollahra Station and rezoned the area for 10,000 new homes where the population fell 11% while Greater Sydney grew 74%. Japanese architect Shigeru Ban’s paper tube structures have also offered quick, low-cost housing solutions for disaster-affected populations — a technology potentially adaptable to Australia’s housing emergency.