A major supply crunch is on the horizon for Australia’s housing market, with the latest National Housing and Finance Investment Corporation (NHFIC) report predicting dire dwelling shortages.
The NHFIC second State of the Nation Housing report highlights the urgent need for housing across the country and describes a healthy market in the short term soon to be a shattered by demand.
According to Property Council of Australia chief executive Ken Morrison, as net overseas migration and the economy recovers, new household demand will outstrip supply.
“The projections in this report are concerning and mirror the same warning the Property Council of Australia has been making for some time,” Mr Morrison said.
“The report clearly shows that between 2025 to 2032, Australia will find itself 163,000 homes short of expected demand. That’s an average deficit of 20,000 homes a year, every year, until 2032.”
He said that housing supply is expected to fall overall by around one third in four years from 2023.
“At a time when housing affordability is front of mind for many Australians, the last thing we can afford is having supply and planning constraints putting further upward pressures on rents and prices,” Mr Morrison said.
“The fresh NHFIC data also correlates with Property Council/Urbis data, which showed apartment supply in 2020 to 2024 is likely to be around just one fifth of levels we saw in 2014 to 2018.”
He urged governments of all levels to take immediate steps to address the major concerns the report has flagged.
The Real Estate Institute of Australia (REIA) said the NHFIC report confirms the need for national plans for renters, first home buyers, and owner occupiers in Australia.
REIA president Hayden Groves said the report reiterates the Institute’s stance that the government needs to address supply, which is the main way to solve the affordability crisis.
“Affordability for renters and first home buyers deteriorated across most cities and regions in 2021 to September, except in Sydney and Melbourne, where aggregate rental affordability modestly improved,” Mr Groves said.
“However, rental pressures have been building in these cities more recently and this situation is set to worsen in the short term. Rents are likely to continue to rise in the near term as international border restrictions are relaxed.”
He said the NHFIC report was consistent with the REIA’s Housing Affordability Report which found that housing affordability deteriorated throughout 2021 due to strong price growth.
“Average loan sizes have increased to $570,000 while the weighted average median house price for the eight capital cities increased to $961,059 over the year to September 2021,” Mr Groves said.
“All of these factors point for the need for a long-term plan and resourcing from all levels of government.”
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