- In InvestorKit research, more than 300 SA3 regions were analyzed
- Each was given a score based on established and future supply risk, housing affordability and other metrics
- More effective planning is one way to tackle the housing crisis, says Arjun Paliwal
Australia’s housing supply crisis looks set to continue into 2023, with new research revealing it will be felt in the short term, thanks to the lack of established supply for sale and in the short to medium term for homes new.
Buyers agency InvestorKit has revealed 11 regions across Australia that are being hit hard and how this issue can be addressed.
Over 300 Statistical Area Level 3 (SA3) regions were analyzed to determine the 20 areas most facing a shortage of self-contained housing, of which 11 were found to be most affected.
For each of these regions, a supply shortage score (SSS) out of five was assigned based on factors such as established supply risk, future supply risk, movement of people, affordability of housing, rental pressure and pressure on prices.
“A combination of many existing and emerging issues have contributed to the housing supply crisis,” said Arjun Paliwal, founder and head of research at InvestorKit.
“These include net migration adding immediate demand to the rental market, declining average household size, difficulties in accessing new land offers and delays in development approvals, concentration of people in large cities and coastal areas as Australians hold on to their properties for longer, and delays in construction due to soaring material costs and labor shortages, and a suppression of investor activity
Mr Paliwal noted that in the sales market, listings for sale in Australia have been on a downward trend since the peak in 2011.
“However, our population has grown steadily over the years, which has resulted in a decline in available stock per capita. Likewise, rental listings have been on a downward trend since 2016, which has led to lower vacancy rates since,” he explained.
“Unfortunately, the solution is not as simple as building new homes, as the construction industry is already struggling to meet the underlying demand.
“To solve Australia’s housing shortage problem, we need a more even population distribution, a more efficient planning system, a fairer tax system to encourage stock mobility, policies more investor-friendly, a greater diversity of housing providers, etc. take a long time to accomplish.
Areas most affected by the housing shortage in Australia
- Brisbane Inner – North, QLD
- Camden, New South Wales
- Penrithith, New South Wales
- Toowoomba, QLD
- Mount Gambier, South Africa
- Albury-Wodonga, NSW
- Tuggeranong, ACT
- Wagga Wagga, New South Wales
- Prospect-Walkerville, SA
- Charles Sturt, SA
- Onkaparinga, SA
Brisbane Inner – North, QLD – SSS of 4.7
Brisbane, like the rest of Queensland, has seen its population increase dramatically. In particular, the population of Brisbane Inner North has increased by 26.1% between 2012 and 2021, although the total number of listings for sale has fallen by 44% over the same period. The tension is compounded by the low level of construction approvals, with the total number of construction approvals last year accounting for just 0.78% of all homes.
The current volume of inventory on the market is low (at 1.18%) compared to the total inventory of homes in the area.
The housing stock has been recovering since the beginning of the year due to a drop in sales volume and a slight increase in supply. However, it is still at a low level. The vacancy rate is 0.7%, leading to an increase in rental prices of 10.7% in one year.
Camden, New South Wales – SSS of 4.7
Over the nine years to 2021, Camden’s population has increased by 35.7%. On the other hand, the total number of listings for sale decreased by 24.8%. The number of construction approvals has been declining since 2018. There has been a 47.5% increase in announcements for sale, which has led to a recovery in inventory since the start of the year, but inventory remains at a low level. There was an 18.9% rise in property prices through August.
Penrith, New South Wales – SSS of 4.5
Penrith’s population has grown by 21.9% in the nine years to 2021, while enrollment numbers have increased by 2.3%. Home prices through August 2022 are up 15.6%. On the rental market, vacancy rates have been below 1% for 12 months, resulting in rental growth of 11.1% in one year.
Toowoomba, QLD – SSS of 4.3
Between 2012 and 2021, the total number of listings for sale in Toowoomba decreased by 39.3%, while the population increased by 9.8%. The drop in demand and the increase in supply, however, led to a replenishment of stocks. Despite this, the vacancy rate remains low, which has led to a 16.7% increase in rental prices this year.
Mount Gambier, South Africa – SSS of 4.5
Over the past decade, the population of Mount Gambier has increased by 5.8%. The number of ads for sale has also fallen sharply. There was a 36.5% drop in inventory levels despite a slight drop in sales volume. Price growth increased by 22.8% in the year to August 2022. Across the rental market as a whole, vacancy rates have been below 1% for the past two years, leading to an increase of 16, 7% of rental prices during the year.
Albury-Wodonga, New South Wales – SSS of 4.4
In the nine years to 2021, the population of Albury-Wodonga has increased by 6.7%. The total number of listings for sale decreased by 65.9% over the same period. While demand for sales volumes fell 20.4%, the recovery in inventory levels is slow. Prices are up 21.9% in the year to August 2022. Rental prices are up 12.2% over the past year.
Tuggeranong, ACT – SSS of 4.3
Over the past five years, the population of Tuggeranong has steadily recovered, increasing by 3.9%. Inventory recovers as sales volume decreases and listings increase. Yet prices are still up 22.2% in August, with rental prices up 22.8%.
Wagga Wagga, New South Wales – SSS of 4.3
Between 2012 and 2021, the population of Wagga Wagga increased by 5.6%, but the total number of listings for sale fell by 66.9%. Inventory levels are still at an extremely low level, leading to price growth of 22.8% in the year to August.
Prospect-Walkerville, SA – SSS of 4.3
In the nine years to 2021, the population of Prospect-Walkerville in Adelaide has increased by 6.1%, while the total number of listings for sale has increased by 6%. A smooth recovery in inventory is taking place, thanks to a 6% year-on-year increase in supply. However, house prices still rose 44% in the year to August. The vacancy rate is 0.6%, causing rental prices to rise by 11.1% in one year.
Charles Sturt, SA – SSS of 4.3
Charles Sturt’s population has increased by 10% in the nine years to 2021, while the total number of listings for sale has decreased by 40.2% over the same period. Inventory has been trending higher since the middle of 2022, with listings rising and sales falling. However, recovery is quite slow. This translated into annual price growth of 19.3% through August. On the rental market, the vacancy rate is now 0.6%, resulting in rental price growth of 11.1% over the year.
Onkaparinga, SA – SSS of 4.3
Situated on the southern fringe of Adelaide, Onkaparinga, SA has seen its population grow steadily over the past decade. The number of listings for sale, however, tends to drop. There was an annual price growth of 23.7% in the year to August. The vacancy rate is only 0.2%, causing rental prices to rise by 17.3%.