Housing Australia under scrutiny with slow pace of new homes

HALF way through a Housing Australia five-year plan to build 40,000 homes, only two per cent have been completed.

A report in the Australian Financial Review shows only 895 social and affordable homes in the Housing Australia Future Fund’s 40,000-home plan have been built across Sydney, Melbourne and Adelaide.

And that’s two years into the five-year target.

The homes built include multi-building developments delivered through partnerships between specialist affordable housing developers and community housing providers.

While the absolute number is modest relative to national need, sector analysts note that affordable housing delivery cycles are typically back-loaded due to planning, approvals, financing and construction lead times.

Despite the apparent slow pace of building thus far, Housing Australia has indicated that output is expected to accelerate significantly.

The agency reports nearly 9500 homes are currently under development and more than 8000 are in planning.

It forecasts up to 3000 HAFF-supported social and affordable dwellings could become operational in 2026.

Delivery data from the first two funding rounds shows a meaningful difference between procurement pathways.

Applicant-led developments, where approved providers manage and build projects directly, have produced more completed homes to date than turnkey acquisitions purchased from third-party developers.

This outcome is notable because turnkey purchases were initially positioned as a faster pathway to bring stock online. In practice, applicant-led projects have outperformed early expectations on delivery volume, though both models remain active within the program.

The third HAFF funding round introduces shorter delivery windows, with successful bidders required to have homes operational by mid-2029.

This compresses project timelines compared with earlier rounds and may influence bidders toward faster-to-deliver turnkey pathways, although Housing Australia maintains that ground-up developments remain viable within the schedule.

Financing structures are also evolving.

Round three increases the concessional loan component to 20 per cent for the contract term, alongside senior debt facilities.

Some community housing providers have raised concerns that the higher overall debt exposure, which becomes interest-bearing after 25 years, could pressure balance sheets and potentially force asset sales later, risking removal of stock from the affordable pool.

Housing Australia says asset value growth and portfolio structuring should support long-term retention.

The key measure of HAFF’s success will not be approvals or funding allocations but operational dwellings delivered and retained as affordable stock over time.

The current gap between targets and completions highlights the structural friction in scaling affordable housing nationally, from procurement design and funding mechanics to construction capacity and location suitability.

If the projected construction surge materialises, HAFF could still meet its aggregate targets within the revised delivery curve.

If not, pressure will likely intensify for procurement reform, financing adjustments and closer performance oversight.