Chair of the National Housing Supply and Affordability Council – Ms Susan Lloyd-Hurwitz AM
Welcome to today’s event. Thank you for joining the Council here in the City of Melbourne.
I acknowledge the traditional custodians of the land on which we’re meeting this morning, the Wurundjeri peoples of the Kulin Nation, and pay my respects to elders past and present, and extend my respect to any First Nations people here today.
We’re here today because we all share a purpose – to improve the housing outcomes of all Australians.
Australians seeking to purchase their first home.
Australians navigating the rental system.
Australians who rely on social and affordable housing for shelter and as a foundation for building their lives and participating in communities.
For far too many Australians and for far too long, finding a home that is affordable, fit-for-purpose, and secure has been a challenge – if not approaching impossible.
The impact of housing stress on the livelihoods and wellbeing of individuals and households cannot be understated.
Many households are forced to make really difficult trade-offs in the face of rising housing costs – reducing or eliminating spending on other essential items, living further away from places of employment, education and family networks, or living in unsuitable housing.
The decline in housing affordability has contributed to higher rates of housing stress and more persistent homelessness. Almost 170,000 households are on public housing waiting lists and over 120,000 people are experiencing homelessness. Of those who accessed specialist homelessness services in 2023-24, 60% were females, 41% were children or young people and 34% lived as part of single parent families. Many of these households are one small step away from homelessness.
Fixing our housing system isn’t a theoretical exercise. This is about homes and shelter for all, not about assets.
Putting our collective effort into developing a more healthy housing market really matters.
It matters to the women and children fleeing domestic violence who face homelessness with crisis accommodation at capacity.
It matters to those living in insecure rental accommodation, who fear eviction in such a competitive rental market.
And while it matters deeply to individuals and households, there is perhaps an even more fundamental reason why having a healthy housing system matters for the entire nation.
Access to safe, affordable and secure housing is a human rights issue, and one that is essential for an inclusive and prosperous society. As the Australian Human Rights Commission says “the right to housing is more than simply a right to shelter. It is a right to have somewhere to live that is adequate.”
Failure to provide access to adequate housing is linked to extremely poor social, health, educational, justice and wellbeing outcomes.
Rental stress is becoming more prevalent and more enduring. More than half of lower-income households were in rental stress in 2023, experiencing worsening mental wellbeing and increased risk of homelessness. Around a quarter of renter households in stress did not have as much as $500 to manage an emergency.
What we are experiencing as a nation is a housing system that is very far from healthy.
One that has been under pressure for decades.
One that remains firmly in crisis – driven by a persistent lack of sufficient supply to meet the housing needs of Australians.
Housing affordability has deteriorated sharply since the pandemic – for mortgage holders, aspiring homeowners and renters.
Several measures of affordability are now at their worst levels on record and pressure is being felt right across capital cities and regional areas.
In December 2024, 50 per cent of median household income was needed to meet repayments on new mortgages, while 33 per cent of median household income was needed to meet the rental costs of a new lease.
For aspiring homeowners, the average number of years required to save for a deposit rose to 10.6 years, up from 8.6 years just five years earlier.
The problem we are facing is clear but complex.
At its heart Australia simply does not have enough homes – both cyclical and structural factors constrain our ability to get new homes on the ground quickly.
The Council expects that new housing supply will be insufficient to meaningfully improve housing affordability. New supply is low and is forecast to remain low for the next few years. Higher-density supply is particularly weak.
New housing supply remained near its lowest point in around a decade in 2024, with 177,000 dwellings completed. After accounting for demolitions, we estimate that 155,000 dwellings were added to the housing stock in 2024.
Labour shortages, high material costs, land availability and financing costs are expected to continue to weigh on new supply – though these constraints are easing slightly.
There continues to be an inadequate pipeline of skilled workers, low rates of productivity and innovation in the construction sector, and restrictive and complex land use and planning approval systems in most jurisdictions.
Our modelling forecasts 938,000 new dwellings will be built in Australia over the Housing Accord period. This implies a shortfall of 262,000 dwellings relative to the 1.2 million Housing Accord target.
No state or territory is forecast to meet its share of the target. Although Victoria may come close.
Despite this shortfall, the target is key. We need to have this target to ensure that we mobilise the effort required to build the homes Australians need.
It highlights the magnitude of the challenge facing us, communicates government policy intentions, provides guidance to people who work in the ecosystem, and facilitates accountability and performance assessment.
There isn’t any doubt that the housing system is under immense pressure. However, the Council acknowledges the work done over the past year across the housing ecosystem to help change our trajectory and move us ever so slowly towards a healthier housing system.
We welcome and support the Federal Government’s national leadership on housing policy, and the efforts of state and territory governments to increase the delivery of homes.
This effort must continue. Housing must remain a priority.
The supply of social and affordable housing is expected to accelerate, reflecting an increase in government investment and incentives to encourage private investment. 2,600 new public dwellings were completed in 2024, and governments are targeting delivery of 55,000 new social and affordable housing dwellings during the Accord period.
These are homes for our most vulnerable households; our First Nation communities, women in need of shelter in times of crisis and our veterans who have served our Country and now need our support.
This is a positive stride forward. Social and affordable housing should be seen as essential infrastructure that plays a vital role in reducing homelessness and the incidence of poverty. It boosts social and economic inclusion and fosters diverse and vibrant communities.
Yet social housing as a proportion of all stock continues to fall, down from around 6 per cent in 1991 to around 4 per cent today.
The Council’s analysis has shown slight improvement in some parts of the housing system which is promising news.
Growth in house prices and rents slowed over 2024.
Construction costs have stabilised, although they remain at very elevated levels, challenging project feasibilities.
New demand for housing is moderating. New underlying demand – which reflects demographic factors such as population growth and the age structure of the population – is expected to slow to 205,000 dwellings in this financial year and to return to its long run average of around 175,000 dwellings from 2025–26, to a level more consistent with expected dwelling completions.
So having deteriorated significantly over the past few years, affordability is expected to broadly stabilise over the next few years, but not improve significantly.
The Council’s vision for Australia’s housing system is clear. All households of all incomes and in all locations should have access to affordable, fit-for-purpose and secure housing.
Australia needs a better housing system – one that can provide Australians with the homes they need. This means a housing system that can provide home ownership and rental options to all households, meet the diverse housing needs of the community, and ensure the safety and wellbeing of all Australians.
Achieving this better housing system will require significant deep-seated reform and ongoing investment from government and industry. It will also require leadership, courage and accountability.
In our report we suggest 5 key areas for reform with specific recommendations under each one:
- increasing investment in social and affordable housing and improving regulatory frameworks in the social and affordable housing sector. We are calling for a target of social and affordable housing to return to 6% over the medium term, and 10% over the long term, as a proportion of stock. That will require a significant investment
- improving construction sector capacity and productivity
- applying best practice principles to planning systems across all jurisdictions and ensuring more developable land is made available
- supporting better outcomes for renters and
- ensuring the tax system supports housing supply and affordability.
Progress towards reform has begun. However, the Council believes a further step change in reform effort and investment is required beyond current policies and programs to truly change the trajectory of housing supply and affordability on a persistent basis.
Actioning recommendations made in the report will require effort and coordination right across the housing system.
Navigating the housing crisis was always going to require effort from every part of the housing ecosystem. We must maintain our collective focus on consistent and coordinated effort.
I’d like to focus for a couple of minutes on the issue of productivity.
Lack of productivity in the construction sector is a significant contributor to our failure to produce enough housing.
Over the past 30 years, labour productivity in housing construction fell by 12%, while labour productivity in the broader economy grew by almost 50%. As the Productivity Commission pointed out, there isn’t one driver of poor productivity, there are many.
The approvals process is slow and complex, many key approval agencies are under resourced and there is a poor level of coordination between local government, utilities and government departments responsible for the approval process.
Levels of innovation are low, the industry is highly fragmented and lacks scale, and there are significant workforce challenges.
There is an enormous amount of regulation covering all aspects of the process that must be navigated to bring housing to the market including considering biodiversity, safety, quality, sustainability, design, fire protection, environmental assessment and on and on. The National Construction Code alone is over 2,000 pages long. There is certainly a case for appropriate regulation in the sector – we all want dwellings that are well designed, well built, safe, sustainable and which enhance community rather than detract from it – but the cumulative burden of over regulation dampens productivity, significantly.
Action is needed on all these fronts. We need to support modern methods of construction such as modular construction, use of AI, digitization, implement best practice planning and zoning principles, expedite the approvals process and address labour shortages through training and skilled migration programs.
I am hopeful that through the productivity focus that is currently ongoing, both in the housing sector and as a nation, that we will make progress towards addressing the lack of productivity, in the construction sector in particular. Because improving productivity in the sector would make a significant difference to the entire housing system.
Finally, thank you to the many stakeholders who have been so generous with their time and have shared their views and insights to help inform the Council’s State of the Housing System 2025 report – many of whom are here today.
These stakeholders include Commonwealth, state and territory government agencies; residential construction and development peak bodies and entities; the community housing sector; stakeholders with expertise and experience in First Nations housing issues; research institutions and the academic community just to name a few.
Thank you also to my fellow Council members, and the Office of the Council for providing continued support and for their tireless work in producing this report. It does make for sobering reading but does seek to set out a pathway forward.
Thank you.
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