Australia will not build a sufficient number of new homes in the private housing market to meet expected growth in housing demand over the next six years, a report has found.

And new housing supply will fall well short of the national housing target.

Last week, the National Housing Supply and Affordability Council released the 2024 edition of its annual State of the Housing System report.

The report is the first to be published after the Council was established last year.

Overall, the report found that the number of new homes that are expected be constructed over coming years will not be sufficient even to meet new housing demand let alone address the existing housing shortfall.

Across the six-year period from 2023/24 until 2028/29, the Council projects that new housing demand will amount to 1.080 million households.

Over that same time period, the net supply of new market housing is expected to increase by only 1.040 million homes (net of demolitions).

In addition, a further 40,000 social homes are expected to be added through means such as the Housing Australia Future Fund.

All up, this means that new market housing additions (excluding social housing) are expected to fall short of demand by around 40,000 homes.

Only with the addition of the 40,000 social homes will overall housing stock additions be sufficient to simply meet new housing demand.

As a result, there will be an insufficient number of new housing additions to make any inroad into the nation’s current housing shortage.

Furthermore, the report projects that new housing additions will fall well short of the target to deliver 1.2 million new well-located homes over the five years from 1 July 2024 that was agreed to by National Cabinet in August last year.

To meet that target, the nation would need to deliver an average of 240,000 homes per year.

However, the Council projects that only 173,000 homes (net of demolitions) will be delivered on an annual-average basis over the six-year period referred to above.

The projections come as the report provides a dire assessment of the current state of the national housing market.

According to the report:

  • Average prospective homeowners now need to save for around a decade in order to generate 20 percent deposit for an average dwelling. Even with a deposit, only 13 per cent of the homes sold in 2022–23 were affordable for a median income household.
  • Average advertised rents have increased by around 35 percent over the past decade whilst rental vacancy rates stand at just 1.6 percent nationally and are as low as 0.5 percent in some capital cities.
  • Public housing waiting lists – now standing at 1690,000 households – increased by 9.1 percent between 2019 and 2023 whilst wait lists for indigenous housing increased by 10 percent from 2020-21 until 2022-23.

Adding together both the forward projections and the current housing situation, the report indicates that the housing outlook for many Australians is grim.

“The overall shortfall in new supply relative to new demand will add to the already significant undersupply of housing in the system,” the report said.

“As a result, housing affordability is expected to deteriorate further over the forecast horizon. There will be no surplus of new housing supply that could address the significant unmet demand for housing that currently exists due to affordability constraints or to accommodate the 122,000 Australians experiencing homelessness at the time of the 2021 Census.

“These projected outcomes will have significant implications for many Australians. For those looking to acquire their first home or upgrade to a more expensive dwelling, costs will remain high. For tenants, rental costs will continue to consume a large share of their income and rental housing will remain scarce.

“For the most vulnerable in the community, who are the least able to manage elevated housing costs and access scarce rental accommodation, Australia’s high cost of housing will continue to negatively affect wellbeing. It will also add to overcrowding and homelessness, and limit economic and social inclusion. Implementation of announced housing policy measures to increase the supply of new housing is required to avoid this outcome.

In its report, the Council encouraged action across several areas.

These include:

  • Unlocking greater housing supply in suitable locations through more efficient planning systems and a more productive home-building industry.
  • Greater institutional investment in rental housing and the provision of suitable regulatory frameworks that provide tenants with adequate protection and greater tenure security.
  • Consideration of potential taxation reforms which could better support housing affordability and supply and contribute to a more equitable housing system.
  • Greater investment in social and affordable housing beyond existing commitments which have been made under the National Housing Accord.

“Australia deserves a better housing system,” the report said.

“A better system would promote social and economic inclusion, and improve health and social outcomes and overall community wellbeing.

“It would yield broad economic benefits, including increased productivity by encouraging labour force participation and mobility.

“It would improve fiscal outcomes by reducing government spending on services related to homelessness, health, justice, and unemployment, and by underpinning the retirement income system.”


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