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Housing Australia’s Future

[14/05/2018]


Over the past 15 years Australia has seen a substantial imbalance in the amount of new houses required, and the slow turnaround for these much needed houses being ready. This has caused prices to rise and has created an affordability crisis. The supply and demand is just currently too much.

As a result of this State governments have become pro-active by releasing more land and facilitating the construction of higher density dwelling in metro areas.

This, combined with the interest rate being so low, has meant that there was a record 233,544 dwelling commenced in 2016. This has exceeded any record previously set, and is approx. 37% higher than the annual average build of this century. The most important part of this, is that for the first time we are actually almost meeting demand.

Housing Industry Australia has predicted the following from its data:

‘Against these significant shifts in Australia’s housing environment – which are illuminated by 2016 Census data – HIA has updated its flagship analysis of Australia’s housing demand and supply, Housing Australia’s Future. Specifically, the report considers future economic and demographic scenarios and the corresponding level of housing demand the industry will need to satisfy.

From this analysis we conclude that if the population continues to grow at the current rate and economic growth remains modest at around current rates, Australia will need to increase the number of homes it builds each year from 2018 to 2050 by 20 per cent to avoid compounding the existing affordability challenges that the community already faces.

Achieving this goal is a challenge in its own right. The challenge would be exacerbated if Australia’s household income growth returned to a rate above its long-term average as this outcome would generate further housing demand. If this does occur, then Australia will need to build in excess of 250,000 homes each year on average simply to ensure that the current affordability challenge is not amplified. By way of comparison, Australia built just 175,000 dwellings per year on average over the 17 years since 2000.


A summary of the new home construction levels required out to 2050 is provided below. Details regarding the research and analysis underpinning these projections are provided in the body of the report.



This quantum shift upwards in the number of new homes required has not, and cannot, be met solely with the construction of the traditional detached house.

Census 2016 results demonstrate that apartments and semi-detached dwellings are housing a larger proportion of Australian households. This trend has partly been driven by households acting on a preference to enjoy inner-city living, which is most accessible through apartment dwellings and the affordability of apartment living. A third of Australian households are now living in an apartment, compared with 5 per cent 25 years ago.

Addressing the affordability crisis is not a task that can be completed in a few years, or by amending single Population Growth Low Medium High Low 131,371 167,041 215,123 Medium 148,737 184,407 232,489 High 166,103 201,773 249,855 Source: HIA Economics Household Income Growth Estimate of Future Housing Demand from 2018 to 2050 P3 HIA HOUSING AUSTRALIA’S FUTURE 2018 policies such as negative gearing and capital gains tax, placing punitive charges on foreign investors or focusing on short term development strategies.

A meaningful response to the affordability crisis must see the needs of the housing industry be a key focus of government policy – at each of the three levels of government. Improvements in the delivery of residential land and in approvals processes for new homes need to be accelerated.

Housing needs to be a key focus of an economic reform agenda in Australia, to ensure that the excessive and inefficient cost of new housing supply is reduced. This can only be achieved with the oversight and leadership of the Federal government working collaboratively with state and local governments and in collaboration with the housing industry.’

Source: Housing Industry Australia


This is great news for the Building Industry, for the affordability of housing and for those looking to get in the market. It also means that many peoples jobs are safe for many years to come as demand looks to continue for some time.

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