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Master Builders Australia’s latest industry forecasts revealed “cautious optimism” for the building and construction sector, with early signs of a housing market recovery.
However, the nation remains 160,000 homes short of the National Housing Accord target, highlighting the urgent need for co-ordinated government action to unlock the industry’s full potential.
The forecasts, covering the five-year Accord period, project around 1.04 million new home commencements – well below the 1.2 million homes needed to address Australia’s ongoing housing crisis.
Denita Wawn, CEO of Master Builders Australia, said: “While the latest data gives us cause for cautious optimism, now is not the time for complacency.
“The housing market is beginning to show signs of life after a difficult two years, and with inflation and interest rates easing, the conditions are right to support greater investment in new housing. But we need all levels of government to step up.”
Master Builders said that despite bipartisan recognition of the crisis, current efforts remain too fragmented to deliver lasting change.
“We’re still tinkering at the edges. It’s time to take the foot off the brake and put in place the reforms and investment needed to properly unlock supply,” Wawn said.
The Albanese government’s planning reform push, including the National Planning Reform Blueprint, has been welcomed by Master Builders.
However, the organisation stressed the importance of complementary commitments to improve home ownership and expand affordable and social housing.
“We welcome both parties’ support for first home buyers, but we remain concerned by the lack of a clear Coalition plan for affordable and social housing,” Wawn said.
“At the same time, Labor must do more to address the real costs of employing and training apprentices – particularly for the small businesses that make up 98 per cent of our industry.”
The Coalition’s proposed wage subsidy and apprentice payments are seen as a practical response to growing skills shortages and labour cost pressures.
“These are targeted policies that recognise the pressure small and medium businesses are under. Labor should match this level of support,” Wawn said.
According to Master Builders, around $1.6 trillion in total construction work was completed across the five years to 2029–30, representing an average increase of 21.5 per cent over the previous five-year period.
Non-residential building has performed steadily in recent years, but future activity is expected to remain relatively flat, with about $301 billion in work forecast – an average of 4.5 per cent more annually than the last five years.
Social, cultural, and recreational projects are tipped to grow in importance, while retail, commercial, and industrial building activity may slow.
Property heads respond to major parties’ housing reforms
With just under three weeks left until the federal election on 3 May 2025, both the Labor Party and Coalition have announced new policies directed at first home buyers in an attempt to boost home ownership among that cohort.
Most recently, the Coalition government announced the First Home Buyer Mortgage Deductibility Scheme (13 April 2025), which would allow for tax deductions on mortgage interest payments for first home buyers on new-build homes for the first five years.
This announcement was welcomed by The Property Council of Australia (PCA), labelling this scheme and the $5 billion Housing Infrastructure Program “pocket aces of housing supply”.
PCA CEO Mike Zorbas said: “First home buyers in capital cities are getting closer and closer to a median age of 40 just as we are undershooting our 1.2 million home ambition by a quarter or more.
“Many tens of thousands of new homes over five years alongside last mile infrastructure improvements are a shot in the arm for our national supply numbers.
“Coupled with supply improvement policies, deductibility of mortgage repayments on new builds will help first home buyers who are watching their dream of home ownership slip away.”
HIA’s managing director Jocelyn Martin also welcomed the policy, saying it would “increase the volume of new homes commencing construction and could be sufficient to achieve 1.2 million new homes commencing construction over a 5 cycle”.
According to Martin, the scheme would see “at least 30,000 new homes commence construction”, as first home buyers depart from the established homes market and search for new builds.
The Labor Party also announced plans to invest $10 billion towards the construction of 100,000 new homes for first home buyers, which is set to bring Australia closer to the long-coveted 1.2 million homes target. This came alongside an announcement that Labor would allow for first home buyers to access 5 per cent deposits and would be exempt from paying LMI charges.
Zorbas described Labor’s move as “a gamer changer for new housing supply" and welcomed the expansion to the Home Guarantee Scheme.
“100,000 new homes will be a big boost to our welcome and ambitious 1.2 million new homes target,” he said.
“We look forward to early industry involvement in the scheme design to make sure the benefits are maximised.
“Bridging the deposit gap is a critical factor in getting more young Australians into their own homes, many of whom are otherwise watching their dreams of home ownership slipping away.”
[RELATED: Coalition announces tax deductions for mortgage payments]
