Smarter incentives, more homes
11.03.2025 - 09:12
Mandala, in partnership with the Property Council of Australia, has released a landmark report examining the economic benefits of achieving the National Housing Accord's 1.2 million new homes target by the end of FY2029. Our analysis reveals current projections fall 40% short of this ambitious goal. Successfully meeting the target would deliver substantial benefits: reducing weekly rents by $90 in well-located areas, moderating price growth, generating $128 billion in economic activity, and supporting 368,000 jobs annually. While the Australian Government's $3 billion New Homes Bonus incentive scheme establishes a strong foundation, our research identifies opportunities to enhance its effectiveness. The current retrospective payment structure and high thresholds limit jurisdictional engagement with the scheme. Mandala recommends a refined approach including earlier payments, extending the program timeframe, doubling funding, improving transparency through robust reporting, and strengthening federal leadership.
Australia's housing affordability challenge continues to deepen, with the time required to save for a house deposit in capital cities increasing to over 10 years. This challenge stems from insufficient housing supply, with Australia having fewer dwellings per capita than the OECD average, and historically low vacancy in existing homes.
The Australian Government has responded by setting an ambitious target of 1.2 million new well-located homes by the end of FY2029, through the National Housing Accord. Currently, Australia is forecast to achieve 60 per cent of the National Housing Accord’s target, with an uplift of 462,000 homes needed to reach 1.2 million new homes.
Accelerating housing construction to achieve the 1.2 million target would have large impacts on housing affordability. Rental prices could be reduced by $90 per week in well-located areas and housing price growth would slow. Further, the construction would contribute $128 billion in economic activity over the five years and support 368,000 jobs each year.
The target is supported by the $3 billion New Homes Bonus, designed to incentivise more housing construction. However, stakeholder consultation and analysis of previous incentive payment schemes suggest that the New Homes Bonus could be better designed to improve its efficacy. The current retrospective payment structure and high threshold requirements make the scheme challenging for jurisdictions to engage with effectively.
With the exception of the ACT, no state or territory is projected to meet the scheme's threshold within its current timeframe, potentially undermining its effectiveness as an incentive for reform.
To optimise the scheme's impact, the Australian Government should consider:
- refining the scheme by bringing forward payments and extending its duration to seven years to enable jurisdictions to undertake longer-term reforms
- increasing the total value to $6 billion to reflect the scale of the housing challenge and ring fencing any unspent funding for future housing supply initiatives
- strengthening transparency through clear public reporting on progress and establishing forums to share insights between jurisdictions
- enhancing Australian Government leadership through establishing a Housing Sub-Committee of Cabinet and considering all available levers to support housing supply
These changes would help ensure the New Homes Bonus effectively supports the critical goal of improving housing affordability across Australia, while fostering greater coordination between different levels of government in addressing this complex challenge.
Read full report here.
Read our latest posts
Harnessing AI in the court system
Mandala’s latest research, commissioned by Microsoft, examines how AI can help Australian courts improve access to justice by reducing persistent case backlogs. We find that three promising AI applications (smart scheduling, document review and legal research support) could deliver around 95,500 additional case finalisations a year. These applications help courts manage existing workloads more efficiently, while reinforcing the integrity of court processes.
29 Oct, 2026
Rethinking the APR
Mandala's latest research, commissioned by Block, examines whether US credit disclosure requirements remain fit for purpose in a rapidly evolving lending market. Drawing on economic analysis, a survey of nearly 1,600 US consumers and small business decision-makers, and proprietary credit data, the report finds that Annual Percentage Rate (APR) disclosures can misrepresent the perceived cost of short-term borrowing and influence consumer choices. The report makes the case for modernising credit disclosure requirements, with a more flexible approach that better reflects different credit products while preserving consumer protection and access to credit.
15 Oct, 2026
The augmented attacker: the growing AI-driven cyber threat to Australian businesses
Mandala's latest research, commissioned by CyberCX (part of Accenture), shows that the AI-driven cyber threat to Australian businesses is growing. The report finds that AI could increase the frequency and severity of cyber incidents targeting Australian businesses. As AI-driven threats grow, Australian businesses could face losses reaching up to $37 billion a year. However, investing in foundational cyber defences such as patching known vulnerabilities could reduce annual losses from $37 billion to $13 billion, a $24 billion saving. Three-quarters of the savings are from preventative actions. The report highlights the actions required from businesses and government to improve cyber defence.
13 Oct, 2026
The Stagnant Nation: Lifting Australia’s Dynamism
Australians are going backwards on real wages and income. Real wage growth has fallen from 0.6 per cent in the 2000s to -0.7 per cent today, the slowest rate since the 1990s recession. Weak productivity growth is a key driver. Productivity growth has dropped from 2.2 per cent in the 1990s to just 0.1 per cent today. The Productivity Commission has pointed to declining economic dynamism as one cause for weak growth, with fewer businesses starting, growing and competing. We confirm declining economic dynamism across five key dimensions and estimate that reversing this decline seen since the mid-2000s could see a GDP uplift of $101 billion per year over the next decade. Our analysis finds that regulation could account for around 20 per cent of declining dynamism. Reducing regulatory burden to late-2000s levels could see GDP uplift of at least $20 billion per year over the next ten years.
7 Oct, 2026