Housing shortage climbs to 250,000 homes
Jun 2 , 2016
There is an expected easing of construction activity this year.
AUSTRALIA’S housing market remains in significant undersupply, according to research — and the home construction boom is still years away from mopping up underlying demand.
The nation is forecast to have a shortage of about 250,000 homes, and while lower than previous estimates, the shortfall will remain above 200,000 beyond 2018.
In a research note, ANZ senior economists David Cannington and Justin Fabo said the mere fact housing demand would remain unmet in many parts of the nation would provide “significant support to the long-term level of house prices”.
However, those markets experiencing high levels of building completions — including Melbourne’s CBD apartment market — and those witnessing sharp population outflows, such as Western Australia’s mining belt, would be more susceptible to price falls, they said.
Despite the surge in residential construction over the past two years, home-building levels had only just reached a point suitable for current population growth, the analysts said.
That was largely due to an increased completion rate for apartments in Melbourne, Sydney and Brisbane.
“The surge in higher-density housing construction has driven housing construction levels to match annual underlying housing demand for the first time since 1995,” Mr Cannington said.
Since 2001 — the last time Australia’s housing market was deemed to be in “balance” — annual residential builds have undershot supply by about 18,000 homes, ballooning to about 250,000 on latest estimates. “To erase this shortage would take more than a year of housing construction at current unprecedented levels with no increase in the underlying housing requirement, ie. no population growth,” Mr Cannington said.
Instead, an expected easing of construction activity this year, albeit moderate, meant the supply imbalance would only be chipped away at in coming years, even as population growth slowed.
Across the nation, the only state or territory forecast to have a housing surplus is the ACT — which this year will have about 800 more homes than underlying demand requires.
Of the rest, New South Wales is gauged to be suffering the sharpest housing imbalance, with a shortage nudging 100,000 homes this year. Victoria is 42,000 homes off the pace, in line with Western Australia, with a shortage of 44,000, while Queensland is next at a 25,000 shortage.
Separately, ANZ said a sharp rise in foreign investment in Australian property over the past few years was also likely boosting the supply of new stock.
WHERE THE HOMES AREN’T
Australia’s great housing shortage