Australia’s Housing Challenge: A Growing Gap and Solutions Ahead

Australia’s ambitious goal of tackling its housing affordability crisis seems to be encountering challenges in its initial phase. Recent reports suggest that the nation is projected to fall more than 60,000 new homes short of its yearly target, marking a significant discrepancy in the housing program’s objectives. However, with the rise in property listings in Australia’s largest cities, there seems to be a glimmer of hope for potential buyers.

According to an article by Nathan Mawby, the Housing Industry Association’s National Outlook forecasts only 178,839 new properties will be built next year, falling significantly short of the 240,000 target set by the national cabinet. By 2025, this number is expected to be only around 195,105 new homes. This comes despite the cabinet’s recent commitment to address Australia’s housing shortage as a critical priority, having declared a goal to construct a million new homes by the end of 20291. As Tom Devitt, HIA senior economist, noted, this new target is “very doable” but requires “explicit actions by the government”. He highlighted the need to incentivise investors, especially from abroad, and suggested revisions in property taxes and planning timelines.

Concurrently, Daniel Butkovich’s report indicates an early surge in property listings in Australia’s major cities, particularly Melbourne2. New property listings in Melbourne and Sydney saw a 9% year-on-year increase in July. This boost is attributed to the stabilization of interest rates and the recovery of property prices. As Angus Moore, PropTrack economist, explained, “There were more new listings in both cities in July than has been typical for this time of year over the past decade”. Such dynamics might signify an uptick in confidence among vendors and a prospective equilibrium in the housing market.

Interestingly, while the housing numbers might seem to be a challenge at the national level, local markets are showing potential shifts. In Sydney’s eastern suburbs, for example, listings in July were 13% higher than the same time last year. Angus Gorrie, a real estate agent and director at Ray White Eastern Beaches, mentioned, “People now have confidence they’re going to get the price they want, so they’re going to try and sell now”. Additionally, the surge in investor sales, which accounted for about 30% of Victorian properties sold in July, is providing buyers with more choices. However, rising interest rates and other economic challenges are prompting some investors to exit, as observed by Josh Stirling, McGrath St Kilda principal.

In conclusion, while Australia faces a considerable task ahead in bridging the gap between housing targets and actual construction, evolving market conditions in metropolitan areas provide hope for a solution. A combination of policy initiatives, investor incentives, and market dynamics could pave the way for the nation to address its housing shortage effectively.

References:

“Australian housing crisis: Nation to fall more than 60,000 short of target in first year: HIA” – https://www.realestate.com.au/news/australian-housing-crisis-nation-to-fall-more-than-60000-short-of-target-in-first-year-hia/ 

“The cities where homebuyers now have more choice” – Daniel Butkovich https://www.realestate.com.au/news/the-cities-where-homebuyers-now-have-more-choice/