Australia could face a “worrying” housing deficit of more than 160,000 homes over the next decade, according to new projections.
The National Housing Finance and Investment Company Housing State of the Nation 2021-2022 The report shows that when net migration overseas returns to pre-covid levels by 2024-2025, the number of new households will begin to outstrip supply by 163,400 households by 2032.
Australian Property Council chief executive Ken Morrison said the report highlighted problems with housing supply and affordability in Australia.
“The projections in this report are concerning and reflect the same warnings that the Property Council of Australia has been making for some time,” Mr Morrison said.
“The report clearly shows that between 2025 and 2032, Australia will end up with 163,400 homes below projected demand.
“It’s an average deficit of 20,000 homes per year, every year, until 2032.
“Overall housing supply is expected to fall by about a third in just four years from 2023. That can’t be good for housing affordability.”
Real Estate Institute of NSW chief executive Tim McKibbin said the supply crisis needed to be resolved quickly.
“At a time when supply is the best solution to affordability, it also appears to be the most under threat,” McKibbin said.
“The supply crisis is no magic bullet and recent figures from the NSW Planning Department underscore the enormity of the challenge. Less than 30,000 homes have been completed in the Greater Sydney in 2020-21, down from over 42,000 in 2017-18 and 2018-19, and well below requirements.
“The pandemic may have temporarily dampened demand, but the level of pent-up demand has remained unmet for some time and this decline in new home deliveries, combined with the economy and the opening of borders, is exacerbating a situation. already perilous.”
Real Estate Institute of Australia (REIA) President Hayden Groves has called on the Federal Government to address the impending supply shortage.
“Household formation is expected to broadly exceed supply by 164,300 by 2024-25 after some short-term relief this year and next, which will keep pressure on affordability, particularly as rates rise. interest are increasing,” Groves said.
“With these challenges, a federal and state plan for housing supply and affordability is badly needed.”
The report found that it will take a number of years for net overseas migration figures to fully recover from international border closures.
The NHFIC estimates that the supply of new homes will exceed new household formation by 115,300 in 2022 and 35,500 in 2023, with over 550,000 new homes expected to be built (184,000 per year) over the next three months. years.
The report notes that while more than 1.7 million new households are expected to form across Australia from 2022 to 2032, Australia’s population is expected to be 1.5 million lower in 2031, compared to pre-pandemic estimates due of border closures.
The strongest growth in new households is expected to come from one-person households (595,000), followed by families without children (488,000), then families with children (361,000).
According to the NHFIC, the supply of serviced and development-ready greenfield land remains a significant constraint in key markets, such as Sydney and the South East of the QLD. Given that it may take several years for new housing supply to come on the market in some areas, this could limit the industry’s ability to meet future demand when population growth resumes.
Mr Morrison said more land needed to be released to ease supply pressures.
“The report rightly draws attention to the importance of lead times in its forecast, noting that it can take more than six years to bring new homes to market in some jurisdictions,” Mr Morrison said.
“At a time when housing affordability is a priority for many Australians, the last thing we can afford is to have supply and planning constraints that put further upward pressure on rents and the costs.”
The NHFIC notes that a shortage of multi-unit housing completions is expected over the next two to three years, especially as rental markets are already tightening and demand will increase as international border restrictions will be relaxed.
He said more, higher-density housing will be needed closer to CBDs to meet unmet demand.
Over the course of 2021, rents have risen significantly across the country, while affordability for first-time home buyers has deteriorated as prices have risen sharply.
Mr Groves said there was little relief on the horizon for renters and first-time home buyers.
“Affordability for renters and first-time home buyers deteriorated in most cities and regions in 2021 (through September), except in Sydney and Melbourne, where overall rent affordability s improved slightly,” Groves said.
“However, rental pressures have been building up in these cities more recently and this situation is expected to worsen in the short term.
“Rents are expected to continue to rise in the near term as international border restrictions are eased.
“Sydney and Hobart remain the most unaffordable cities for first-time home buyers, with the lowest earning 60% able to buy less than 10% of the properties available on the market.
“All of these factors underscore the need for a long-term plan and resources at all levels of government.”