Australia’s Population Boom Intensifies Housing Crisis

Australia is on the verge of a significant population surge, with estimates projecting an increase of 7.4 million people by 2041. Yet, as the nation prepares for this influx, experts warn that the country remains embattled with its ongoing housing affordability and supply crisis.

In a recent report by demography group, Informed Decision, data suggests that this increase will necessitate the construction of an additional two million homes by 2041. This authoritative data, trusted by over 100 municipal councils across Australia, is publicly available for the first time. It bolsters arguments that a target of 1.2 million new homes by 2029 is pivotal to alleviate the situation.

However, Ivan Motley, founder of Informed Decision, remains skeptical about the immediate implications for housing prices. “It’s unlikely what we are projecting will have a big impact on prices,” he commented. Motley believes the key is in enhancing the supply of new homes, emphasizing the need for robust infrastructure to enable dwelling construction.

Melbourne and Sydney are the anticipated epicenters of this growth, requiring 723,000 and 582,000 new homes respectively by 20411. Furthermore, a substantial portion of the projected population increase is expected to be concentrated in the major capital cities, which are already grappling with soaring rental prices.

The September 2023 PropTrack Market Insight showed a continuation of the dismal trend with advertised rents increasing by 3.8%, and median rental prices witnessing a 14.6% spike year-on-year. As stated by Cameron Kusher, PropTrack director of economic research, “Rents are climbing at a rapid pace…The ongoing rapid rate of population growth, coupled with a persistent reduction in the supply of properties available for rent, have maintained the pressure on the cost of renting, particularly in major capital cities”.

Maiy Azize, spokesperson for Everybody’s Home, underscored the dire nature of the situation. “Australia’s housing crisis just keeps getting worse,” she lamented. Azize highlighted the increasing strain on renters and the necessity for the government to intervene, proposing the establishment of more social housing units.

The scenario underscores a critical juncture for Australia. As economist Paul Ryan articulates, “Unlocking new housing, particularly in well-located areas where people want to live, will be key”. While it remains to be seen how the Australian government will address these concerns, one thing is clear: decisive action is essential to navigate the impending demographic and housing challenges.

References:

Australia’s bold population forecast has grim home truth: Informed Decision – Nathan Mawby https://www.realestate.com.au/news/australias-bold-population-forecast-has-grim-home-truth-informed-decision/