Understanding the National Housing Accord’s ambitions
Three years into Australia’s National Housing Accord, the landmark agreement between all levels of government, super funds, and housing industry bodies appears to be delivering more headlines than homes. The objective—deliver 1.2 million new dwellings over five years, equating to about 240,000 a year—has run into the stubborn reality of a complex market driven by demand as much as by supply.
How demand swamps supply in the current climate
The newest data show prices continuing to rise, with the national median price up 0.8% in September—the largest monthly gain this year. Over the Accord’s timespan, the national median has climbed by about $127,117, reflecting a compound annual growth rate of around 5.5%. Critics point out that this mirrors a long-running trend rather than a breakthrough in affordability.
The core problem is straightforward: supply is expanding too slowly to keep up with demand. In the first year after the accord began, just 170,000 homes were delivered, meaning future targets must be boosted to roughly 260,000 homes annually for the remaining four years. Meanwhile, approvals have slipped by 6% in August, underscoring a fragile link between planning promises and real-world construction.
What’s driving the surge in prices?
Several forces are lifting demand and, in some cases, inflating prices. The Reserve Bank’s rate cuts have encouraged existing buyers to borrow more and bid higher, lifting the price ceiling without necessarily expanding sustainable demand. The RBA cash rate remains higher than in October 2022, limiting the benefit of rate relief for new buyers.
The “5% deposit scheme” is a policy attempt to broaden access to homeownership, particularly for those who don’t have a large cash buffer. Treasury modelling suggests a modest 0.5% price increase over six years—though such projections can be uncertain. The larger driver, however, is population growth, especially migration, which adds to housing demand beyond what simple supply expansion can offset.
Migration, students, and the supply shortfall
Since the Accord’s signing, migration has surged far beyond penciled projections. Net arrivals total 1.4 million, lifting population by 1.7 million. Over the same period, housing supply has grown by about 512,000 homes. With typical household sizes around 2.4 people, the supply shortfall is roughly 200,000 homes—a gap that helps explain why prices and rents continue to rise despite policy efforts.
Why the Accord focuses on supply—not demand
Two political realities shape the Accord’s design. First, negative gearing and the capital gains tax discount are politically sensitive and unlikely to change soon. Second, the Reserve Bank signed the Accord loosely and has control over monetary policy and interest rates, not immigration levels or housing supply targets.
In practice, the plan leans heavily on densification—especially around train stations—and state-led planning. Victoria and New South Wales are moving faster on this front, with Melbourne and Sydney suburbs being targeted for higher-density development and transit-oriented expansion. NSW’s approach includes a controversial pre-sale guarantee mechanism to finance affordable housing, though outcomes depend on local enforcement and market response.
Are there enough workers to build the homes?
A looming obstacle is the construction workforce. BuildSkills Australia warns of a shortfall of about 116,700 workers (roughly 24% of the required level) to meet the target. Even if immigration and apprenticeships ramp up, productivity has stagnated, and sector capacity remains limited. The result is a mismatch between ambitious targets and the practical ability to deliver new homes in time.
What lies ahead?
In the near term, the Accord’s success will depend on a combination of faster planning approvals, stronger construction capacity, and a calibrated approach to migration and housing demand. Three-year election cycles reward short bursts of policy energy, but housing affordability demands a long-term, cross-jurisdictional strategy that blends supply growth with responsible demand management.
By 2029, the effectiveness of the Accord will be judged not just by the number of homes delivered, but by whether affordability has meaningfully improved for renters and first-time buyers. Until then, expect ongoing debates about where, how densely to build, and how to finance the next wave of affordable housing.
