How to resolve AdBlock issue? HIA wants govts to ‘step in’ on public housing as private investors retreat
“GOVERNMENTS have an opportunity to accelerate public housing construction in 2027 as private sector investment retreats,” Housing Industry Association (HIA) chief economist Tim Reardon said today.
HIA has released its November 2026 Economic and Industry Outlook, forecasting new home commencements to decline from 199,520 in 2026 to 191,040 in 2027, before recovering in 2028.
“Australia needs to build more homes to address the housing affordability challenge, yet the number of new homes commencing construction is forecast to fall next year,” Mr Reardon said. 
“More concerning is that there are no upside risks to this forecast. The relatively modest decline forecast for 2027 assumes that inflation moderates sufficiently in the December quarter to avoid further interest rate increases.
“New home building will remain robust in the first half of 2027, reflecting relatively strong sales prior to this year’s Budget and the full impact of rate increases,” he said. “It takes 12 to 18 months for a rate rise to flow through to lower home building on the ground.
“If inflation remains elevated and interest rates rise again, the downturn in new home building could be considerably deeper and extend into 2028.
“The December quarter inflation result will be critical to determining whether confidence begins recovering in 2027 or whether the downturn extends into 2028.
“Interest rates are not the only problem. Recent changes to housing taxation and restrictions on borrowing by self-managed superannuation funds have also weakened the investment needed to finance new homes,” Mr Reardon said.
“Historically, a decline in established prices would see investors step in and put a floor under the market.
“Private investors, business investors and SMSFs (self-managed super funds) have historically played an important role in financing new housing.
“Large superannuation funds may invest in build-to-rent apartments, but there is no evidence that they will replace the gap left behind by individual investors, SMSFs and business investors in financing new home building.
“If private investors are withdrawing from new home building, who is going to finance the construction of the homes Australia needs?
“This creates an opportunity for governments to bring forward public and social housing projects that are ready to commence construction.
“As private home building slows, construction capacity may become available that could be used to deliver additional public housing without placing the same pressure on labour and materials,” Mr Reardon said.
“Public housing investment is not a substitute for restoring private investment. Australia now needs around 260,000 new homes each year to meet the National Housing Accord target, and the overwhelming majority will continue to depend on private finance.
“A recovery in investment in new home building depends on inflation moderating, interest rates stabilising and confidence returning before the existing pipeline of work is exhausted.
“If those conditions do not materialise, Australia risks entering 2028 with fewer homes under construction, a deeper housing shortage and even greater pressure on affordability,” Mr Reardon said.
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