Property professionals plead for housing supply action

According to the ANZ/Property Council Survey conducted in the June quarter, nearly 50 percent of the 744 surveyed property professionals identified housing supply and affordability as the most critical issue at the national level.

At the state level, an average of 49 per cent of respondents shared the same concern, marking a 6 per cent increase and setting a new record.

The Property Council of Australia’s chief executive Mike Zorbas expressed disappointment in the inability of government policies, at both state and federal levels, to meet the needs of all Australians.

Mr Zorbas emphasised the importance of better planning and increased housing supply in bridging the affordability gap.

“You can’t bridge the housing affordability deficit without better planning and more supply,” Mr Zorbas said.

The latest data warned that the shortage of housing is expected to worsen as demand continues to outpace supply.

Mr Zorbas highlighted that Australia is currently 1.3 million homes behind where it should be over the past two decades.

He added that a “10 per cent increase in supply would lead to a 25 per cent decrease in the cost of buying a home”.

Mr Zorbas has called for national housing and planning improvement targets and urged the Australian government to pass the Housing Australia Future Fund in the Senate.

“We also need state parliaments to red-card proposals and taxes that penalise the investment in new stock. Maximising new supply in brownfields and greenfields areas is the only serious path to exerting downward pressure on the cost of buying and renting homes,” Mr Zorbas said.

Interest rate expectations slow

The survey of Property Council members also revealed that expectations of future interest rate rises were slowing down.

While the Reserve Bank of Australia (RBA) maintained the cash rate at 4.1 per cent in July, borrowers are already facing challenges in securing new finance due to debt serviceability constraints.

ANZ senior economist Adelaide Timbrell said that rising interest rates and ongoing pricing pressures continue to dampen confidence in the industry.

She interpreted the slight improvement in expectations as a reflection of nearing the end of the rate hiking cycle rather than a fundamental shift in developer sentiment.

She added that developers are still “very pessimistic”.

“We forecast that the RBA will raise the cash rate to a peak of 4.6 per cent in 2023 and we are unlikely to see a decline in the cash rate until late 2024,” Ms Timbrell said.

Furthermore, respondents’ expectations regarding debt serviceability were diminishing, dropping below 20 points compared to nearly 30 points in the December 2022 quarter.

In fact, data from Lendi Group has revealed that around 15 per cent of Australian first home buyers (FHBs) rolling off their low fixed-rate periods could become ‘mortgage prisoners’ in the near future, as they have high loan-to-value ratios (LVRs) and may find it difficult to refinance.

The difficulties faced by mortgage borrowers have been echoed by the Finance Brokers Association of Australia, which has called for the Australian Prudential Regulation Authority (APRA) to lower the 3 per cent serviceability buffer to support more families into home ownership.

Recognising the constraints, lenders have been introducing revised buffers of 1 per cent for qualifying borrowers.

The Property Council’s survey also highlighted that while demand is not a concern for developers, the costs of funding, sourcing materials, and finding labour for construction projects continue to pose difficulties.

The survey indicated that 48 per cent of respondents in the June quarter anticipated at least a 5 per cent increase in construction material prices over the next year, up from 45 per cent in March, while less than 10 per cent of respondents expected a decrease in construction material prices within the same time frame.

Ms Timbrell said the prices of building materials remained a significant challenge; with considerable construction backlogs, the resilience of forward orders is expected to prolong as the economy slows down.

[Related: Brokers play crucial role in ACTs affordable home scheme]

Kate Aubrey is the senior content producer of Momentum Media's mortgages titles: The Adviser and Mortgage Business.

Prior to joining Momentum Media, Kate covered regional and breaking news for ABC Radio for more than three years.

She has a Master of Arts in Journalism from the University of Melbourne and a Bachelor of International Business and Business Management from Griffith University.

Email Kate at: This email address is being protected from spambots. You need JavaScript enabled to view it.