Australia’s home building sector is tipped to rebound over the next few years, with strong migration, low unemployment and interest rate cuts fuelling demand. But long-term hurdles continue to challenge the national housing supply, according to the Housing Industry Association (HIA).
HIA Chief Economist Tim Reardon said the sector is showing signs of recovery, particularly in detached housing, after a period of subdued activity.
“We expect new home commencements to increase steadily through the second half of the decade,” he said. “Detached housing will lead the way, peaking in 2027, with apartment construction following more gradually.”
Detached housing commencements rose by 7 per cent in 2024 and are forecast to hit a peak of 120,910 starts by 2027, before tapering off due to land and cost pressures. Apartment construction, which hit a 13-year low in 2024, is expected to climb from 60,940 starts to more than 100,000 by 2029, helped by easing constraints, population growth and Olympic-driven investment in Brisbane.
Despite this positive outlook, the HIA warns Australia will still fall short of the federal target of 1.2 million new homes over five years. Land shortages, complex planning rules and punitive state taxes continue to hamper supply.
“The only way to close the growing gap between supply and demand is through meaningful reform—particularly at the state level,” Mr Reardon said.
He called for urgent action to unlock land, streamline planning and reduce costs, warning that without structural reform, affordability, economic opportunity and living standards will continue to erode for future generations.
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