The Housing Industry Association (HIA) believes the Federal Government’s target of one million new homes by 2028 is under threat, mainly due to rising land prices and cash rate increases.
HIA Senior Economist Nick Ward says the jump in land prices may affect the housing crisis in ways the Albanese Government have failed to anticipate.
“Land prices increased over the year to the June Quarter 2022 by 15.4 percent. Excluding the prior two quarters, this is the fastest rate of annual growth since 2004,” he says.
“Prices appear to have risen close to the consumer's capacity to purchase land. The increases in the cash rate will likely further constrain consumer’s ability to buy, risking a reduction in the number of homes expected to be built.
“In order to achieve the Australian government’s target of building one million new homes over five years from 2024, the supply of land will need to improve in the near future and the cost will decline.”
A recent Residential Land Report released by the HIA and CoreLogic has updated sales activity info on 51 housing markets across Australia including the state capitals. CoreLogic Economist Kaytlin Ezzy describes the housing targets set by the Federal Government as ambitious.
“Despite approximately 975,000 homes being completed over the five years to June 2022, the government’s goal to complete one million new homes is an ambitious one, especially given current land supply,” she says.
“While the interest rate rises seen over the past six months will have put some downward pressure on land prices, until there is a material change in supply, median land prices will likely remain elevated.”
To read the report in full, click here.
