Australia is not building enough homes despite the federal government throwing $25 billion at the problem via 17 different housing policies.
Treasurer Jim Chalmers says the sluggish pipeline of new home building is worrying and there will be more measures in the upcoming budget to spur construction.
Money has already been set aside to train extra bricklayers, plumbers and other tradies to plug workforce shortages, which the government says is holding back new supply.
"The housing pipeline is not what it needs to be," Dr Chalmers told ABC radio on Wednesday.
"And that’s why we’re investing already $25 billion in 17 different ways to build more homes for Australians," he said.
Not enough houses to meet demand is pushing rents higher and adding to the Reserve Bank of Australia's inflation challenge.
Even though the central bank opted to keep rates on hold on Tuesday, lingering price pressures have the RBA on high alert and warning more hikes are still on the table.
At the post-meeting press conference, Governor Michele Bullock said the fast-paced migration surge post-pandemic was putting pressure on the housing market and rents.
Yet she said the relationship between migration and inflation was not straightforward, with new arrivals also adding to the supply of workers.
Dr Chalmers said the post-COVID migration boom, especially the quicker-than-expected return of students, was adding to the nation's housing challenges but there was more to the story.
"One of the reasons why we’ve got an ambitious but achievable target to build 1.2 million homes in the five years from July is because we recognise we started a long way back," he said.
Opposition Leader Peter Dutton says there's "no way in the world" the government will meet its home-building target.
"We want to see more houses built, we all do, but the prime minister is making terrible economic decisions, which is driving up inflation, which is why people's interest rates are higher," he told reporters on Wednesday.
The government was also "supporting the tactics" of the Construction, Forestry and Maritime Employees Union, Mr Dutton said, which was driving up the costs of building and construction.
The RBA's refreshed economic forecasts - unveiled at the same time as the May interest rate decision - revealed sharp upgrades to its near term inflation forecasts, largely driven by rising petrol prices and strength in the jobs market.
Westpac chief economist Luci Ellis said the central bank sharpened its rhetoric around inflation proving harder to tame than thought.
The post-meeting statement highlighted that inflation was declining but more slowly than expected, Dr Ellis said, with services inflation moderating only gradually due to a resilient labour market.
Westpac economists remain of the view that the next move is down but "further upside surprises will change the calculus".
"As the governor noted in the media conference, it is hoped that they will not need to raise rates further but they will act if needed," Dr Ellis said.
