Australia's Housing Targets in Jeopardy as Developers Refuse to Proceed

The Australian housing market is facing a crisis as property developers are increasingly refusing to proceed with major housing projects due to rising interest rates, record construction costs, and plunging buyer confidence.

This has put the federal government's ambitious target of building 1.2 million new homes by 2029 in jeopardy. According to Master Builders Australia, the country is already on track to fall short of its targets, with a deficit of 62,000 homes expected in March and a total deficit of 262,000 homes projected over the full term of the national housing accord.

Property developers say that the profit margins are not viable due to higher interest rates, which make it costly for them to hold land and fund developments. The average cost of building a standard two-bedroom 75 sqm apartment in Sydney has climbed past $1 million, making high-density projects nearly impossible to stack up financially.

RBA governor Michele Bullock acknowledged the structural under supply of housing, which is exacerbated by the current market conditions. She noted that governments are trying to find ways to remove obstacles to development and encourage higher density and medium density developments.