There will continue to be upward pressure on prices and rents for the foreseeable future, with no end in sight for the imbalance between supply and demand in residential property markets across Australia.

National valuation firm Herron Todd White reports that, nationally, home prices have increased for 17 consecutive months and the median home price is now $784,000.

According to Oxford Economics, the nation’s housing supply and affordability crisis is likely to deepen and will remain a “chronic” issue for years to come.

Oxford Economics is predicting we will fall well short of the Federal Government’s ambitious plan to build 1.2 million new homes over the next five years.

A new report from the firm, Building in Australia, forecasts just 960,000 new homes will be built between now and 2029, well short of the 1.2 million target in the government’s National Housing Accord.

The figures underline industry fears that it will struggle to keep up with an ongoing population rise fuelled by a wave of new migrants – and also not helped by labour shortages, dysfunctional planning systems and high construction costs.

The report author Timothy Herbert, Oxford Economics head of property and building, says while new housing construction could well reach record levels by the end of the decade, it wouldn’t be enough to keep up with demand.

Herbert says: “While industry capacity is showing signs of improvement in some areas, labour shortages remain that will place a speed limit on the early to mid stages of the recovery.”

But he also says: “We will continue to experience a dwelling stock deficiency, but activity will inevitably recover in the residential sector. All build forms will contribute, driving total dwelling commencements to a new record level by the end of the decade.

“Attached dwellings are forecast to join the upswing from FY2026 with support from falling interest rates, the upward rebasing of rents, co-ordinated social housing investment, and planning tweaks in key markets. Build-to-rent development has risen to around one-fifth of apartment starts and is expected to grow this share a little further through the late decade.”

This report adds to the views of many others that the Federal Government’s stated goals for housing construction were never realistic and had no chance of being achieved – and therefore the shortage would not be adequately addressed, keeping pressure on prices and rents.

The Housing Industry Association earlier this month warned the government would fall short of its housing targets by 64,000 properties in the first year alone.

To reach the 1.2 million target by the end of June 2029, an average of 240,000 homes need to be built each year, a level that has never been achieved in the nation’s history.

Only 963,000 new homes were completed over the past five years despite the pandemic HomeBuilder stimulus, which sent building levels to record highs.

The HIA is calling for tax relief, planning reforms and incentives to attract more workers to the industry in order to avoid what it predicts will be a 180,000-home shortfall over the next five years.

And the Government-appointed independent advisory body - the National Housing Supply and Affordability Council - has also shot down the government’s targets, estimating a homes shortfall of almost 300,000.

It suggests the private market will only be able to supply 903,000 new homes to 2029.