Australia faces housing crunch as population growth accelerates

AUSTRALIA is battling a housing supply crunch, driven by a failure by its government to plan for a rapidly rising population, the Property Council of Australia (PCA) said.

In a report published on Wednesday (Feb 8), the council noted that more than 80 per cent of Australians surveyed said there was a lack of affordable housing in their area. More than seven out of 10 renters surveyed cited excessive deposit costs as the biggest barrier to buying a home in the next five years. A majority of renters also said that they felt trapped with few alternative options.

The dire results came even as median home prices in Sydney slipped below A$1 million (S$921,975) for the first time in almost three years.

They also underscore the challenge for Australia’s Labor government, as a lack of new supply in the housing market drives a surge in rents, exacerbating cost-of-living pressures. Rising interest rates, as well as falling property prices, are set to further discourage developers from pushing ahead with new projects. Demand is set to swell further, as international students return to study in the country, and the pace of immigration roars back to pre-pandemic levels.

Property Council of Australia chief executive Mike Zorbas said there was a need to “change things up”.

“Whether it’s owned, rented or social housing, we need to provide more opportunities to produce new and more housing options.”

The report included potential solutions, such as boosting the supply of retirement living, purpose-built student accommodations, and build-to-rent housing. Nearly half of those surveyed in the report also believed that the government should provide incentives, to encourage developers to build more affordable housing stock for key workers, including nurses, the police and teachers.

Minister for Housing Julie Collins said at the report’s launch: “We don’t have enough homes. We need to build more, and we need to build them sooner. The shared ambition to build a million new homes will require meaningful change, and we are looking at ways we can ensure each level of government does their bit.”

The minister added that the Australian government was establishing a A$10 billion Housing Australia Future Fund, to support 30,000 new social and affordable dwellings in their first five years of operation.

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A separate 2022 report by Demographia found that Australia was the sole nation with all of its major cities ranked as “severely unaffordable”. Sydney was the second-least affordable market among the 92 cities surveyed in that report. BLOOMBERG