Reardon warns Australia's cheaper homes won't solve its building shortage

The housing industry economist sees a brief opening for first-home buyers, but argues that weaker investment will leave Australia short of new homes.

Channel: 7NEWS Australia ·

AustraliaStory of November 8, 2026Trari Newsroom

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'Get in now': Why this property expert stresses a tough 2027 for first home buyers | THE ISSUE

Things we can learn from the video

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4:10Reardon expects another rate rise early next year because domestic inflation and wage pressures remain persistent.
9:00He argues that negative gearing and capital gains tax changes deter investment in new construction.
15:23His first-home buyer message: the established-home price dip offers a narrow purchasing window closing shortly after Christmas.
20:00Buyer assistance can initially lift prices, he says, but moderate schemes may support longer-term supply.
25:17Modular construction may become cheaper, but Reardon says land and labour costs prevent it solving the shortage alone.
26:37He proposes faster depreciation deductions for new-home investors to restore confidence and encourage construction.

Falling house prices may help Australians buy a home without making it easier to build enough of them. That distinction runs through housing economist Tim Reardon's interview with Josh Martin on Australia's 7NEWS Australia programme The Issue.

Reardon, chief economist of the Housing Industry Association, which represents residential builders and developers, forecasts a difficult 2027 followed by a sharp recovery in building activity in 2028. He expects another interest-rate increase early next year, arguing that domestic inflation and wage pressures have not eased enough to end the tightening cycle.

The programme opens by reporting five cash-rate increases within a year, taking the rate to 4.85%. It also reports a projected shortfall of roughly 200,000 homes against the national target of 1.2 million by June 2029.

Reardon's warning to prospective buyers concerns established homes: he sees a narrow opportunity during the price dip, closing shortly after Christmas. The programme separately cites Commonwealth Bank's forecast of a 14% peak-to-trough fall in national house prices. In an included clip, Labor minister Tanya Plibersek argues that lower prices have improved affordability for young Australians.

Reardon nevertheless argues that federal changes to negative gearing and capital gains taxation discourage investment in new construction. His proposed response is accelerated depreciation, allowing investors to deduct building costs faster, to restore confidence and help finance more homes. He also advocates replacing stamp duty with broader consumption taxes.

The interview examines several other proposed solutions. Reardon says low-deposit assistance and access to superannuation can push prices upward initially, but may support supply over time if introduced moderately. He acknowledges the need for public housing while stressing the importance of private construction, and argues that rent caps discourage investors from financing additional rental homes.

On migration, he welcomes priority processing for skilled construction workers and calls for predictable settings. On modular housing, discussed alongside a government funding initiative, he says factory-based construction could reduce costs over time but cannot remove expensive land and labour from the equation: "Modular housing in itself isn't going to be a solution to a housing shortage."

The conversation also draws on Reardon's experience owning The Canberra Distillery. He describes reduced drinking and excess stock at home and overseas, offering another example of the subdued business conditions behind his economic outlook.

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