The Mandala Partners report, commissioned by the Property Council of Australia, reveals that Australia is projected to be 462,000 homes behind the 1.2 million new homes in well-located areas target by 2029.
But there is good news - if housing supply speeds up to meet the target, renters across the country could see significant savings.
To help meet our welcome and ambitious housing targets, the Property Council is calling for the New Homes Bonus, a $3 billion reward program for jurisdictions that build more homes than their share of the housing target, to be doubled alongside improving its implementation.
New South Wales faces a large gap of 185,000 homes, with potential savings for renters rising to $130 per week if the shortfall is addressed.
If Queensland's projected shortfall of 96,000 homes is bridged, renters could save up to $80 per week. In Victoria, closing the 71,000-home shortfall could cut rents by up to $50 a week.
In Western Australia, overcoming the 56,000-home deficit could see renters save $100 per week, while closing South Australia's 32,000-home gap could bring renters a $70 weekly saving.
Across the country, over seven million renters would collectively save $253 million each and every week if we reach our housing targets.
Property Council Chief Executive Mike Zorbas said we need to redouble our supply efforts.
"2025 is the year for Australia to redouble our housing supply efforts with the urgency and commitment this crisis demands," Mr Zorbas said.
"Missing the target by 462,000 new homes by July 2029 would set off a housing affordability time bomb. Thankfully, we can avoid this.
"Ideally, hitting the targets will make housing more accessible and more affordable for millions of Australians.
"Boosting housing supply is the only long-term, sustainable way in which we can boost affordability of homes to buy and to rent," he said.
The Australian Capital Territory is the only jurisdiction currently projected to reach its target and potentially receive part of the $3 billion New Homes Bonus, but this remains uncertain.
Mr Zorbas said reworking the New Homes Bonus scheme can give a shot in the arm to our ambitious housing target with only a minimal cost to the government's Budget.
"The scheme should be extended to seven years with upfront payments to support long-term reforms," Mr Zorbas said.
"Its value should increase to $6 billion, with unspent funds reserved for future housing initiatives. That increase would be just 0.1 per cent of the Australian Government's 2024/25 Budget.
"We also need to improve the scheme's transparency through public reporting and highlighting best practice to ensure accountability.
"The Property Council has called for incentives for two decades because they are vital to boosting housing supply. Our proposal will make sure this worthy scheme delivers on its promise.
"Three in ten dollars a buyer spends on a new home is governments' taxes. Any Federal boost would need to be matched by changes to gouging state and territory tax regimes and planning systems to support the delivery of new homes," he said.
Constructing 462,000 additional homes is expected to contribute $128 billion in economic activity and support 368,000 jobs, the report found.
The report also found that overcoming the 462,000 shortfall of well-located homes by 2029 is forecasted to moderate price growth by -0.2 per cent on a compound annual basis in the weighted national average house price in well-located areas through to 2029.
For instance, if New South Wales addresses the forecasted deficit of 185,000 homes by 2029, house prices in well-located local government areas are forecasted to undergo an average compound annual decrease of one per cent per year, ultimately adjusting NSW home prices to February 2024 levels. In Victoria, the compound annual growth rate is expected to decrease by 1.5 per cent but will remain positive at one per cent if the shortfall of 71,000 homes is overcome.
To help reach our housing targets, the Property Council is calling for the following changes to the New Homes Bonus scheme:
- Refine the scheme by bringing forward payments and extending its duration to seven years to enable jurisdictions to undertake longer-term reforms
- Increase the total value to $6 billion to reflect the scale of the housing challenge and ringfence any unspent funding for future housing supply initiatives
- Strengthen transparency through clear public reporting on progress and establish forums to share insights between jurisdictions
- Enhance Australian Government leadership through establishing a Housing Sub-Committee of Cabinet and considering all available levers to support housing supply.
"These changes would ensure the New Homes Bonus supports housing affordability in Australia and fosters better coordination between all levels of government to address this challenge," Mr Zorbas said.
