Funding for the next round of the Albanese government’s ambitious 40,000 social and affordable housing scheme has “slipped” into the next financial year as the number of new homes barely tops 3 per cent, a Senate hearing has been told.

Anthony Albanese pledged to deliver the new homes over five years from 2024 through the Housing Australia Future Fund (HAFF), a $10bn dedicated investment vehicle that provides grants and loans to social and affordable housing projects.

The scheme is being driven by Housing Australia, whose chief executive Scott Langford told a Senate inquiry into intergenerational housing inequality on Monday that only 1432 homes had so far been completed, of which 979 were in the 2025-26 financial year.

Mr Langford said contracts for the third round of funding under the scheme, which opened to the business community in January, had “slipped” and were now no longer expected to be signed before the end of the financial year.

However, Mr Langford was confident all funding under round 3 of the HAFF would be “fully allocated” in 2026-27.

Asked whether that slippage impacted the scheme’s overall target of 40,000 homes by mid-2029, Mr Langford said Housing Australia “remain committed to the delivery of that”.

“Round 3 is designed to allow us to make funding decisions with sufficient delivery time,” he said.

“We’re coming towards the end of the second year of a five-year delivery window, and with funding commitments to be made in the second half of this financial year, we see a pathway to completion of those projects.”

Pressed later, Mr Langford said the slippage was “suitable” for the delivery of the targets and did not have a “material impact” on the overall target.

Mr Langford was also grilled over how many of the completed homes had been refurbished rather than being a new build.

He said HAFF did not “buy homes” but some funding recipients may have gone to developers whom they would pay upon completion – a phenomenon known as turnkey.

Of the completed homes, some 670 were turnkey.

However, Mr Langford said he would have to return with specific information about how many homes may have been purchased and renovated, rather than being a fresh build.

Under the HAFF scheme, funding was contracted for 18,650 homes between rounds 1 and 2.

Later, Treasury Housing Group Director-General Ben Rimmer said housing completions, across all programs, were projected to rise per annum during the National Housing Accord period to 219,000 in the last year of the accord period.

However, that modelling did not account for shocks stemming from the war in the Middle East.

“There are supply chain issues and cost issues that are now impacting the achievement of that target, that are impacting housebuilding in every developed country around the world,” he said.

“The National Housing Supply and Affordability Council has not yet modeled a kind of a post Middle East (war) scenario.”

The update comes amid renewed focus on Australia’s housing crisis.

The Albanese government has sought to boost supply and make it easier for first-home buyers to enter the market. Last week, it announced it would also seek to reform capital gains tax (CGT) and negative gearing.

The Coalition has instead pledged to scrap those reforms and the HAFF and focus on cutting red tape and tying migration to housing completions.

Treasury Deputy Secretary for Revenue Diane Brown told the inquiry changes to negative gearing the CGT would have a negative impact on housing supply, but that that impact was made up for in other measures in the budget.

Likewise, the inquiry was told the changes would also have a “small impact” on rents, but that in combination with other policies in the budget supporting supply, that “would also exert downward pressure on rents over time as well”.

Everybody’s Home national spokesperson Maiy Azize told the inquiry later on Monday the organisation was “broadly happy” with the reforms to CGT and negative gearing.

“They aren’t retrospective, but they also aren’t grandfathered, so that’s pretty good,” she said.

She said capital gains tax reforms were the “most impactful” but was war of predicting whether the changes would alter buyer behaviour. “I guess the question now, after 25 years of these arrangements being in place, is changing them in this way going to be enough to change investor behaviour now that there’s such a template for how people invest in property,” she said.

“There’s a strong case to be made for doing more on negative gearing. I would love to see them do more on negative gearing.

“The negative gearing changes are heavily grandfathered and do protect existing investors.”