The peak body rolling out govt grants has warned housing affordability is now so bad 60 per cent of income earners can’t afford 90 per cent of real estate that’s available in some cities.
The National Housing Finance and Investment Corporation State of the Nation’s Housing 2021-22 report, took a stab at the country’s affordability constraints and warned of major supply shortfalls.
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It said affordability was so bad in some places that the bottom 60 per cent of income earners could afford less than 10 per cent of available properties in the market in areas like Sydney and Hobart.
In Brisbane, currently touted as one of Australia’s more affordable capital cities, 60 per cent of income earners can’t afford 70 per cent of the housing stock “and it could get worse” given recent surges, according to Hugh Hartigan, NHFIC’s head of research.
“Affordability has deteriorated over 2021 over most regional areas and cities,” he said, with the situation especially dire for first home buyers.
The report found that more than 1.7m households were expected to form across the country between 2022 and 2032, outpacing new housing supply by a cumulative 163,400 dwellings to 2032.
“We can’t rest on our laurels when it comes to housing supply,” Mr Hartigan said. “We need to plan appropriately, and if we don’t plan appropriately we will be left with a lot of shortfall in our supply.”
An average 184,000 dwellings were expected to be completed each year through to 2024.
“Current levels of residential construction are pretty strong, If we were in more normal times this would only just be enough to cater for normal rates of household formation. when the population is growing at more normal levels.”
”Once overseas immigration returns to normal levels, we expect new household formation to exceed new net supply by a cumulative 163,000 dwellings, out to 2032.”
For places like Brisbane, that shortfall is around 15,000 homes, for Melbourne it’s 61,000.
“Once population growth returns to more normal levels our numbers anticipate that Brisbane would have a shortfall of 15,000 dwellings over that period,” Mr Hartigan said. “Unless we plan appropriately and unless housing authorities can facilitate enough supply to meet future rates of household growth, we are going to see affordability worsen more than it otherwise would be. And it’s already bad enough as it is.”
He warned the time frames were tight given developments like apartments could take up to six years to get stock to market.
“It gives you the sense that unless planning appropriately we’ll simply end up with an inadequate pipeline in three, four, five years’ time.”
He said there was a need for more development-ready land to be made available to stakeholders across the board.
NHFIC is the peak body responsible for helping struggling Aussies get into the property market via federal government grants.
NHFIC CEO Nathan Dal Bon said the research report came amid “the largest population shock in a century, unprecedented government stimulus, a widespread flight to the regions, and accelerating house price growth and tightening rental markets impacting housing affordability”.
Single person households were expected to see the strongest growth across the country over the decade (595,000), followed by couple families without children (488,000) and couple families with children (361,000).
The results were impacted in 2021/2022 amid closed borders and falls in Net Overseas Migration leading to fewer households forming, the report said, with population figures “still expected to be 1.5 million lower in 2031, compared with pre-pandemic estimates”.
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