The government's housing target is out of reach

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The government is extremely unlikely to meet its ambitious housing target. Picture by Elesa Kurtz

The State of the Housing System report released by the National Housing Supply and Affordability Council on Friday confirmed what almost everybody knew. The Albanese government's chances of delivering its promised 1.2 million new houses over the next five years are Buckley's and none.

While it's no surprise Housing Minister Julie Collins asserted getting the 1.2 million homes built is "a challenge we are up for", one suspects she may have had her fingers crossed behind her back.

Australian housing approvals are running at their lowest levels in more than a decade. Work started on just 100,000 houses and 70,000 multi-unit homes in 2023.

According to the Housing Industry Association, while work on new apartments will increase to an estimated 84,400 this year, new house construction starts will fall to 95,400.

Although a net increase of 9800 new homes under construction (to 179,800) over the previous year, it is well short of the numbers needed to meet the objectives spelt out by the Albanese government in its 2023 Housing Statement and the National Housing Accord.

Even if, as the HIA predicts, new dwelling starts claw their way back up to 200,000 a year, the government will miss its ambitious target - which includes 30,000 social and affordable homes underwritten by the $10 billion Housing Australia Future Fund - by at least 200,000 houses and apartments.

The numbers crunched by the NHSAC are even worse. It predicts a shortfall of 250,000 dwellings over the period and notes the housing crisis will only get worse - even if the target was achieved - so long as immigration continues unabated.

"We are looking at a shortfall of new demand vs new supply of 40,000 [homes] over that period [and] of course that does not go to address the undersupply that is already in the system," NHSAC chair Susan Lloyd-Hurwitz said.

Ms Lloyd-Hurwitz said the situation was already dire: "There are 170,000 [people] on wait lists for public housing, another 122,000 people experiencing homelessness, and very significant housing stress ... for vulnerable cohorts of the community".

One of the hardest hit of those cohorts are women and children fleeing family and domestic violence.

"It is unacceptable that women and children need to choose between being unsafe in their home and being homeless," Ms Lloyd-Hurwitz said.

The housing supply problem, to be fair, is not entirely of the federal government's making. State and territory governments and councils, which are responsible for planning and development applications, have much to answer for. The old adage "you can't fight city hall" has never been truer than it is today.

According to some developers, uncertainty surrounding planning approvals is a greater impediment to getting a major project off the ground than interest rates, labour shortages and rising costs.

It is worth noting that just this week the ACT government knocked back a project that would have delivered 300 new apartments, albeit for what appears to have been very good reasons.

A lack of new housing starts is just one part of the problem. The other issue is housing affordability.

Kerry Pearse, of the north coast's Housing Matters Action Group, absolutely nailed it when he said adding more supply didn't mean a thing if the asking price was more than people could afford to pay.

It's not too late for the government to go back to the drawing board. It's currently tracking to come in at least a day late and a dollar short.

And leave negative gearing alone. Abolishing it would only make matters worse.