The Housing Industry Association released its November outlook today and the headline is not great, but certainly not unexpected. HIA expects new home starts to fall from 199,520 this year to 191,040 in 2027, before things pick up again in 2028.
HIA also says Australia now needs around 260,000 new homes a year to hit the Housing Accord target. That is a gap of roughly 69,000 homes between what HIA expects to start in 2027 and the pace it says we need.
I’ve said it before, and last week the Reserve Bank’s forecasts said it too: home building will go backwards from late 2027. Now our industry’s own forecasters agree.
The banks are saying it as well
On the same morning, ANZ chief executive Nuno Matos was in front of a parliamentary committee in Canberra. He told MPs that without more houses and more spending on building, we will never get out of this problem. He also said that for housing to become more affordable, interest rates need to come down.
I think he is right on both counts. House prices have fallen, about 8% from the peak by the figure put to him at the hearing, but with five rate rises this year the repayments have gone the other way. HIA’s own index says housing is still 5.4% less affordable than a year ago. A cheaper house is no help if you can’t borrow enough to buy it.
When he was asked whether government spending is adding to inflation, Matos said lower government spending would mean lower inflation, and called it simple economics. Funny that! It’s the same point I made on Cup Day.
HIA’s idea: public housing fills the gap
HIA’s chief economist Tim Reardon says governments have a chance to bring forward public and social housing in 2027 while private investment pulls back. His argument is that the builders and trades the private market isn’t using could build those homes without adding the same pressure on labour and materials.
I’ve got some sympathy for that. A good carpenter or bricklayer who can’t find work in housing for six months doesn’t sit at home waiting for us to get busy again. They go wherever the work is, and a lot of them don’t come back. Then when the market turns, every builder is chasing the same smaller pool of people, jobs take longer and the price of a new home goes up. Keeping those people working on homes through a slow patch is worth more than it looks on paper.
So if governments are going to spend money, I would much rather they spent it on homes that are ready to start, using trades who would otherwise be standing around, than on the long list of other things that are feeding inflation right now. There is so much more the government can save costs on. Someone needs to fix this by spending less overall and, at the same time, spending where it gets the best outcome. If the current government can’t, it’s time to replace them.
But let’s not kid ourselves. HIA says it too: public housing is not a substitute for private investment. The overwhelming majority of those 260,000 homes a year will still need private money, from home buyers and from investors.
What would actually help
What we need is to make new homes stack up again for private buyers and investors, not just waiting for the Reserve Bank to cut.
- Governments: cut the taxes, charges and delays that sit on top of every new home. HIA is asking for this again. It goes at the cost of building a home instead of adding more demand to the economy.
- Governments: if you have social housing projects that are approved and ready, bring them forward into 2027 and let them soak up the spare capacity. Don’t start new programs that compete with private builders for the same trades.
- Home buyers and investors: remember new builds kept their tax breaks. Investors in new homes can still negatively gear, and can still choose the 50% capital gains discount, for homes bought after Budget night (the final definition of a new build is still before the Senate). That was the whole point of the changes, so use it.
- Builders: keep your good trades close. The ones you let go in 2027 will be very hard to get back in 2028.
The government’s target is 1.2 million homes. HIA already expected us to fall about 200,000 short before today’s forecast. The Reserve Bank, the industry and now the bank bosses are all saying the same thing. We should be taking notice.
Data: Housing Industry Association (November 2026 outlook, as reported by ABC News; affordability index; 3 November release), Reserve Bank of Australia (Statement on Monetary Policy, November 2026), Australian Government Budget 2026 to 27.
This is general information, not financial or tax advice.
Darren Wallis is Chairman of G.J. Gardner Homes and was its CEO and Managing Director from 2000 to 2020.