Australia's Housing Target Likely to Miss Mark Amidst Data Centre Boom
New data suggests the nation is significantly behind its goal of building 1.2 million homes in five years, as the construction sector faces competing demands.
Australia is projected to fall short of its ambitious National Housing Accord target, aiming to construct 1.2 million homes within five years, with only 355,817 dwellings completed in the first two years of the initiative.
To remain on track for the mid-2029 deadline, the nation needed to have built 480,000 new homes by the end of June 2026. The current pace leaves a deficit of 124,183 homes. Industry groups have expressed doubts about meeting the target, suggesting it may become another unfulfilled promise by the Albanese government.
While the construction sector shows signs of increased activity, with 47,168 homes completed in the June quarter—an improvement from the previous quarter—it still falls short of the required run rate. However, total dwellings commenced in the quarter rose by seven percent to 52,201, primarily driven by a surge in detached house construction. The total number of dwellings under construction has reached a record high of 248,733.
Treasurer Jim Chalmers and Housing Minister Clare O'Neil acknowledged the encouraging figures but cautioned that quarterly data can fluctuate and more work is needed. They highlighted that construction activity has strengthened since Labor took office in 2022, contrasting with falling commencements and completions at that time.
Economists suggest that falling house prices, influenced by rising interest rates and changes to property investor tax breaks, could temper growth in dwelling investment. Master Builders Australia forecasts a shortfall of 262,000 homes against the Accord's target. The organization's chief executive, Denita Wawn, noted that recent policy decisions have created significant challenges for small building businesses, hindering their ability to contribute to housing supply.
The construction industry is also facing increased competition from a booming data centre sector. The pipeline for data centre projects grew by 20.1 percent in the June quarter, following a 62.6 percent surge in the preceding quarter. Data centre construction now accounts for 2.5 percent of GDP, a substantial increase from 0.4 percent two years ago.
This surge in data centre development intensifies competition for skilled construction workers and materials, making it more difficult for home builders to secure the necessary resources. Industry associations have called for increased investment in apprenticeships and faster skilled migration pathways to address these shortages. The federal coalition has proposed to increase the skilled migrant intake, prioritizing construction trades, if elected.