States and territories in Australia are projected to miss out on approximately $11 billion in stamp duties and GST revenue due to a significant shortfall in new home construction under the Albanese government’s Housing Accord. Official data from the Australian Bureau of Statistics (ABS) reveals that in the first two years of the accord, which aims to deliver 1.2 million new dwellings by 2030, housing completions fell nearly 95,000 units short of the target.
The Housing Industry Association (HIA) estimates that the lower-than-expected building activity has created a $2.8 billion shortfall in stamp duty collections and reduced GST revenue by an estimated $8.2 billion. The foregone dwellings could have accommodated around 242,160 people, based on average household sizes. Beyond tax implications, the HIA’s managing director, Jocelyn Martin, highlighted that the deficit also represents a $45 billion loss in potential economic activity that would have been generated if construction targets had been met.
Martin urged governments to reconsider treating housing predominantly as a source of tax revenue. She said new housing construction is generally revenue positive for the government, but recent policy measures, including tax increases introduced in the federal budget, risk dampening supply further. These measures notably include the removal of negative gearing exemptions on established homes, higher capital gains tax rates, and restrictions on lending to self-managed superannuation funds for property purchases.
Modelling by the Master Builders Association projects the government could ultimately miss the overall housing target by as many as 262,000 homes by the end of the decade.
Meanwhile, major financial institutions have revised their housing market outlooks downward in response to recent trends. National Australia Bank (NAB) forecasts an 8 percent decline in capital city dwelling prices from peak to trough, marking a darker outlook than previous projections. Sydney is expected to experience the steepest correction, with prices falling by up to 14 percent, while Melbourne, Brisbane, and Perth may see falls around 11 percent, and Adelaide approximately 8.5 percent.
The June quarter ABS figures showed that non-residential construction activity rose 12.1 percent, outpacing the 7 percent increase in dwelling construction. Detached home starts increased more strongly (11.3 percent) compared to unit commencements, which edged up by only 0.6 percent.
Anthony Walker, director of sovereign and international public finance ratings at Standard & Poor’s, confirmed that the federal budget changes are impacting the housing sector alongside rising interest rates. He warned that lower home sales are expected to reduce state government revenues by between $6 billion and $10 billion over the next year. Walker also noted that builders, including some major developers, are facing increasing challenges amid the current market conditions.
Addressing broader challenges, Matthew Kandelaars, policy and advocacy executive at the Property Council of Australia, expressed skepticism about meeting the government’s housing targets given the present market dynamics and policy environment. Kandelaars pointed to competition for construction workers from major infrastructure projects, energy transition initiatives, and data centre developments as additional pressures on the housing sector. He described the current data as "looking in the rear-view mirror," warning that the full effects of policy uncertainty and tax increases have yet to be fully felt.