Renters could save $90 a week if Australia meets its housing targets but more incentives are needed to address shortfalls.
The federal government has vowed to build 1.2 million well-located homes by 2029, but is expected to fall short by 462,000 homes, a Mandala Partners report commissioned by the Property Council of Australia has found.
“Missing the target .. would set off a housing affordability time bomb,” Property Council chief executive Mike Zorbas said.
NSW is 185,000 homes short, Queensland needs another 96,000, Victoria 71,000 and SA and WA tens of thousands.
The federal government has tried to boost housing supply through its $3 billion New Home Bonus program.
The program funds states and territories that exceed their share of the well-located homes target and incentivises them to introduce reforms to boost construction.
The ACT is the only jurisdiction that could receive funds as it is projected to reach its target.
But if Australia doubles and improves its New Home Bonus program, housing targets could be met and renters could save between $50 and $130 a week, the report says.
States and territories could undertake longer-term reforms if the scheme’s duration was extended to seven years and payments were brought forward.
The Property Council of Australia recommended increasing the fund to $6 billion to meet the scale of the housing challenge and allocating any unspent money to future housing supply initiatives.
The Greens, who have taken a different approach to housing, are prioritising tax reform to turn renters into home owners.
Greens housing spokesman Max Chandler-Mather has called on Treasurer Jim Chalmers to change negative gearing and the capital gains discount in the March 25 federal budget.
Negative gearing allows investors to claim deductions on losses while the capital gains tax discount halves the tax paid by Australians who sell assets owned for 12 months or more.
Mr Chandler-Mather said the concessions worked against renters.
“These deeply unfair tax handouts tilt the playing field in favour of wealthy property investors, inflating house prices and making it harder for renters and first-home buyers to compete,” he said in a letter to the treasurer.
The concessions will cost the budget $176 billion in the next decade, Mr Chandler-Mather said, with 80 per cent of the capital gains discount tax benefits going to the top 10 per cent of income earners.
He has urged the government to scrap the tax breaks and invest in social housing instead.