Construction activity in the state of Victoria has fallen to its lowest level in 11 years, as the state heads toward a potential failure to meet its target of building 800,000 new homes over the next decade. Data indicate that the target could be missed by around 200,000 homes, equivalent to nearly four years of construction.
According to recently released statistics from the Australian Bureau of Statistics, 54,368 new homes were built in Victoria over the past 12 months to September, the lowest figure since December 2014, when only 53,432 homes were completed.
In a development that further complicates the housing crisis, the Bureau also revealed that permits were issued to demolish 8,063 homes in the state during the same period. This means the net number of new homes added over the past year did not exceed 45,000, despite government efforts to address the housing shortage and boost construction.
The target of building 800,000 new homes by 2034 was part of the state government’s plan announced in 2023, but it now appears increasingly out of reach. Since the timeline began in 2024, the average pace of construction has been about 4,800 homes per month, with approximately 101,010 homes completed so far. If the current rate continues, achieving the target would take 14 years instead of 10, resulting in a total of only about 577,200 homes by the deadline.
Andrew Loockook, Chief Executive Officer of the Real Estate Institute of Australia, commented that these figures reflect a major challenge for a state that was once a benchmark in the home-building sector.
He pointed to the complexity of the property tax system—such as increases in land tax and the windfall gains tax—and the negative role played by Australia’s highest investor taxes globally in discouraging investment and delaying residential projects. He added that reaching more appropriate construction levels is impossible under current policies.
For his part, Tom Devitt, Chief Economist at the Housing Industry Association, said the gap between current achievements and the required target is extremely wide, necessitating reforms in taxation, planning, and skilled migration to ensure progress toward the goal. He stressed that issues related to rapid population growth and the increasing demolition of traditional homes further reduce the benefits expected from construction plans.
If the current trend continues, with an average of 633 demolition approvals per month, the net increase in new housing could decline by nearly 76,000 units. Although demolitions usually lead to replacement with new developments in the long term, their impact remains significant in the short term.
A government official stated that Victoria has outperformed other states in housing construction, exceeding New South Wales by 10,000 units and Queensland by 20,000 units over the same period. He added that the most extensive planning law reform in the state’s history is currently underway to improve the situation. The aim is to modernize outdated planning regulations and create a fairer environment that supports young people seeking housing opportunities.
