powering smart financial decisions

The great housing drought

The great housing drought

Australia’s housing shortfall is getting worse, with demand for an extra 214,700 homes nationally not being met.

This grim picture of a housing supply that continues to fall short of demand emerged from the State of Supply Report 2011 by the federal government’s National Housing Supply Council, released in December.

According to the report, construction of new homes failed to keep up with increased underlying demand in 2009-10 and 2010-11. New South Wales and Queensland have the biggest housing gaps, with shortfalls of 73,700 and 61,900 respectively.

The council has also projected that the gap between supply and demand will rise to 640,000 homes over the next 20 years. “This growing gap indicates that housing production needs to lift well above trend to reduce the likelihood that housing shortages and poor affordability impact adversely on economic growth and standards of living,” the report stated.

The president of the Real Estate Institute of Australia, Pamela Bennett, called on all levels of government to work together to address the problem of housing supply. “The constraints on supply are well known and include land availability, lengthy planning delays, skills shortages, the cost of entering the property market and state government charges,” she said.

“We need to see immediate action by all levels of government. An adequate supply of housing is crucial in addressing housing affordability in Australia.”

Caryn Kakas, executive director of the Residential Development Council, agreed, telling the Property Council of Australia that an integrated approach from all levels of government was the only way to successfully tackle the housing supply problem and build new homes.

“The federal government’s involvement must be matched by leadership from the states and territories to support a more affordable future,” Kakas said.

The council’s recommendations to improve housing supply and affordability include government funding for additional housing for lower income people (such as the National Rental Affordability Scheme); changes to the planning system to make approval for new housing easier; and changes to infrastructure provision and financing to ensure funding for infrastructure doesn’t fall on one market segment alone.

The National Housing Supply Council chairman, Dr Owen Donald, said that while land release has improved in several states, there is still room for improvement. “Much more of this is needed and infrastructure financing and scheduling are still major issues,” he said.

“So too are planning and development approval arrangements for infill housing in most jurisdictions, with delays, uncertainty and adverse community reaction being major obstacles to increasing supply within existing urban areas.”

With a growing chorus of voices addressing this pressing issue, 2012 could be the year Australia tackles its housing supply gap with greater determination.

Did you find this helpful? Why not share this news?



More home loans news

More news? Read more here

Learn more about home loans