Is the National Housing Accord Enough to Fix Affordability?
Three years into Australia’s National Housing Accord, the country is still wrestling with rising prices and a stubborn affordability gap. Signed in October 2022 by all levels of government, nine superannuation funds, and housing industry bodies, the accord aimed to unlock the supply side of the market and bring relief to homebuyers. Yet recent data shows that prices are accelerating again, with the national median rising by 0.8% in September—its biggest monthly increase this year.
The logic was simple: boost the number of homes, dampen price pressures, and affordability would improve over time. On paper, the target is ambitious: 1.2 million homes in five years, or roughly 240,000 a year. In the first year, signatories delivered around 170,000 homes, raising concerns about whether the target—and the housing market itself—can catch up with demand.
Demand Outstrips Supply: The Core Challenge
Housing affordability hinges on the balance between demand and supply. While supply has grown, underlying demand has surged due to population increases, immigration, and broader macroeconomic shifts. A key factor driving price acceleration in 2025 has been monetary policy: consecutive RBA rate reductions temporarily boosted what buyers could borrow and pay. Even with a lower cash rate, the RBA’s policy stance remains tighter than in late 2022, creating a persistent gap between new supply and the demand that exists today.
The Reserve Bank’s actions may have inflated the market beyond what sustainable demand would dictate, especially when coupled with other demand boosters such as low deposits through schemes that broaden access to mortgages. Treasury estimates of such schemes show mixed results, and independent observers warn that modelling around migration and demand is imperfect, making strong, supply-led fixes essential yet insufficient on their own.
Immigration, Migration Modelling and the Real Driver
Since October 2022, about 1.4 million net migrants have arrived, lifting the population by 1.7 million. Over the same period, around 512,000 homes were built. With household sizes averaging about 2.4 people, supply has fallen short of demand by roughly 200,000 homes, contributing to a notable price increase—about $42,000 in median price over three years. The accord’s focus on increasing supply, while politically pragmatic, does not address all levers of affordability. Negative gearing, the CGT discount, and even migration levels all influence the market in ways that a supply-centric plan does not immediately resolve.
What States Are Doing—and What’s Left to Do
State governments control town planning, and progress varies. Victoria and New South Wales have pushed for higher-density development around existing infrastructure, especially rail corridors. NSW’s Paul Scully has floated guarantees to underwrite pre-sold affordable housing, a policy that could hasten financing for developers if accepted nationwide. Yet other states have yet to commit to similar guarantees, and pre-sale insurance could become a national feature only if political winds permit.
There’s another bottleneck: the construction workforce. BuildSkills Australia warns a shortfall of about 116,700 workers—nearly a quarter of the needed labour—to reach the accord’s ambitious 1.2 million target by 2029. Productivity has also fallen by about 20% in a decade, echoing age-old challenges of labour supply and industry efficiency. Apprenticeships have waned post-pandemic subsidies, and policy changes take time to translate into tangible housing starts.
Looking Ahead: Will Supply Alone Solve It?
The short answer is complex: supply is a necessary condition for improving affordability, but it is not sufficient on its own. Without addressing demand dynamics—immigration policy, housing finance incentives, and Tax/CGT settings—gaps will persist. The 2029 results of the National Housing Accord will reveal whether more homes translate into affordable prices or simply smaller price growth.
In the meantime, the plan’s longevity will depend on cross-jurisdictional collaboration, sustained investment in the construction workforce, and pragmatic policies that align housing supply with real demand. If the states can accelerate approvals, unlock financing for developers, and boost productivity, the accord might gain the traction it needs. If not, affordability challenges will require a broader policy toolkit beyond building more homes.
Bottom Line
Australia’s affordability challenge is not solely a supply issue. The National Housing Accord marks a pivotal attempt to shift the market, but without coordinated demand-side measures and a stronger productivity push in construction, the target of 1.2 million homes by 2029 may fail to translate into meaningful relief for buyers.
