Labor has promised 1.2m new homes in its second term. Is it possible?

The Guardian

14-06-2025

Anthony Albanese has conceded it is 'too hard' to build housing in Australia and promised the government will tackle regulation to fulfil its target of 1.2m new homes by June 2029.
At the national press club on Wednesday, the prime minister said his government would go further to bring down the cost of building by targeting red tape and pushing the states to build more.
Experts say state planning laws and red tape are two of the biggest barriers to building more housing, but if Labor pulls out 'all the stops' and addresses them, they say the government could get close to its housing targets.
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The opposition remains unconvinced, saying the Albanese government's approach of paying states to build more housing 'has not been a success' so far.
So how achievable is the goal, and what needs to happen?
Labor has promised to support the build of 1.2m homes, and 55,000 social and affordable homes, by June 2029.
Alongside the housing targets, the government has promised $10bn to help fund 100,000 new homes for first home buyers, including through concessional loans for states. It has also committed $2bn to states to provide new or refurbished social housing, legislated fee-free Tafe to respond to construction skill shortages and introduced incentive payments for apprentices in construction.
But whether or not Labor can deliver is unclear. The latest figures from the 2025 state of housing report by the National Housing Supply and Affordability Council (NHSAC) forecast 938,000 dwellings being completed during the period to June 2029; factoring in demolitions, the net new supply will be 825,000.
Even so, the target of 1.2m homes will bring Australia closer to building 'equilibrium' by June 2029, the target deadline, according to NHSAC chair and former Mirvac boss, Susan Lloyd-Hurwitz – even if NHSAC's modelling predicts a shortfall.
That's because, 'new supply and new demand will be roughly in line at around 175,000 new homes for 175,000 new households.'
Labor should focus on two policy areas, Lloyd-Hurwitz says: planning reforms and building more social housing.
Reducing approval times would make a 'real difference', pointing out that government was able to effectively fast-track other areas of regulation during the Covid-era without 'cutting corners'.
Since the election, the housing minister, Clare O'Neil, has been handed responsibility over the building and construction code and will now lead the planning ministers' council, to help streamline planning and development processes under the one minister. (The planning ministers' council used to be under the purview of the infrastructure minister.)
She says the new responsibilities give her 'more levers to improve the broader problem of construction productivity'.
The NHSAC chair also called for 'continued investment' in housing for those who most need it: 'roughly four times the amount of social and affordable housing than is currently planned'.
O'Neil is 'confident' 55,000 social and affordable homes would be delivered by June 2029, pointing out 28,000 of those homes were already in the planning or construction phase.
O'Neil, has also promised to slash red tape, though she hasn't said how.
'We've created a regulatory environment that says we don't want builders building the type of new homes we need most,' O'Neil told Guardian Australia.
'We've got so much red tape, and this is a real barrier … builders face a thicket of rules and regulations.'
Denita Wawn, CEO of Master Builders' Australia said in October there was 'no chance' Labor would achieve its target, but has since changed her tone, with the most recent policy changes, now saying it is 'not insurmountable'.
'There is the capacity to get to those targets. The only reason why you won't get to those targets … is an unwillingness at government level and industry level to collaborate to remove some of those impediments,' she said.
Wawn added fee-free Tafe would help ease critical skills shortages, and said she was also pushing the government to bring in more overseas construction workers on skilled visas.
Brendan Coates, Grattan Institute's housing program director, said the government also should push the states to change more zoning laws and update the national construction code saying it is 'illegal' to build higher density housing in some parts of inner Sydney and Melbourne where it's needed most.
'It's things like state land use planning controls that have the biggest impact on construction,' Coates said.
'It's not economic, for example, for a developer to knock down a free-standing home to just build three townhouses. Because you've got to buy the house, [and land] and that house is worth a million dollars before you knock it down, so the economics don't always stack up.'
Lloyd-Hurwitz says states including NSW and Victoria had started changing zoning regulations to get more medium and high-density housing near transport nodes, but added that the cost pressures for developers in recent years have been 'too great'.
'We have this perfect storm of high interest rates, low pre-sales, high costs, which makes feasibilities very difficult to stack up for developers,' she says.
'[It's] why we see, particularly in the high-rise space, we're at a historic low in terms of the number of completions of apartments, and they've got a very long lead time.' Federal incentives for states to build more housing also need to change, Coates says.
'The government is rightly trying to pay the states to get more housing built … They [the commonwealth] need to bring forward when the payments are made to pay them each year, rather than at the end of the five-year period of the national housing accord.'
The opposition's new housing spokesperson, Andrew Bragg, told Guardian Australia the current incentives for states are not working and that Labor should rethink its policies, for example, tying payments for states to certain conditions around housing targets.
'There are large financial transfers from the commonwealth to the states … and there are significant payments made for transport and infrastructure projects and the like that are made without conditions,' he says.
The Productivity Commission's damning report in February found productivity in the construction sector had dropped 12% over three decades, with the average time to complete a home increasing from 6.4 months to 10.4 months over the last 10 years.
It said the construction code contributed to poor productivity and imposed unnecessarily high costs on building construction, and needed to be changed.
Wawn says the complex code, which has more than 2,000 pages, has been hampering construction, and that additional varying state regulations make it more difficult for builders working across state borders to operate.
'When you have to read [the code] in conjunction with 120-odd regulated standards, of which people still have to pay for access, they're very hard to read, and there's inconsistencies,' she said.
She also warns the code is hampering investment into more modern building practices, like modular housing, and says the cost is too high for businesses.
O'Neil says Australia is lagging behind in modern construction techniques – the government has promised $54m for states and territories to invest in local programs developing prefabricated and modular housing.
Lloyd-Hurwitz says that investment is a good start, but a 'very small amount of money', and suggested the government should lean into procurement to support the modular supply chain and increase investor confidence.
'Construction innovation and modular construction, something that Scandinavian countries do very well and we do very poorly, would make a difference to cost and speed as well as sustainability.'
Bragg says the opposition, which will reconsider all its housing policies, will look at reforming the code.
'We need to look at how we can make it easier for people to build houses, all forms of housing.'