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National Housing Supply and Affordability Council’s (NHSAC) State of the Housing System 2024 report has outlined the extent of Australia’s current housing crisis.
Susan Lloyd-Hurwitz, chair of the NHSAC, said in the report that while the crisis is about insufficient supply, other contributing factors such as a rise in migration, interest rates, weakening consumer confidence, and cost inflation have made the situation “more acute”.
“Australia’s housing market is far from healthy,” she said.
“An unhealthy market has periods of rampant price growth, is unable to produce enough supply to meet demand, is overly reliant on an unsupported private market to address most of Australia’s shelter needs, creates scarcity and cannot match the rich expanse of demand with a breadth of housing choice.”
The report pointed towards worsening housing affordability over the last year, saying that deteriorating affordability was “widespread” across states and territories, cities and regions, income levels, age groups, and tenure types.
According to the report, mortgage interest rates rose by an average of 125 bps in 2023, with the average mortgage reaching $624,000. It estimated that minimum scheduled repayments for borrowers increased by “as much as 60 per cent” since the Reserve Bank of Australia (RBA) began increasing rates in May 2022.
As such, the report has identified nine goals for Australia to achieve a better housing system. Those goals include:
1. To ensure housing is affordable, fit for purpose, and secure for households across income and geographic distributions.
2. Fair access to home ownership or alternative tenures that offer comparable benefits.
3. Secure and dignified housing for tenants with a sufficient return for investors.
4. Ensuring there is a supply of new, well-located housing to match Australia’s growing population and support a productive economy.
5. Efficient distribution of and exchange of the existing housing stock.
6. Housing stock should be environmentally sustainable and energy efficient.
7. Social and affordable housing should be provided in sufficient amounts.
8. Ensuring that experiences of homelessness are rare, brief, and non-recurring.
9. Ensuring that the targets under the National Agreement on Closing the Gap for housing are achieved.
Commenting on the report, the Housing Industry Association’s (HIA) chief economist Tim Reardon said the government’s goal to complete 1.2 million homes by 2029 is “necessary to reduce the inequality occurring across the housing system”.
“Increasing housing supply to meet underlying demand will require the government to achieve their goal of building 1.2 million homes and continuing to grow the volume of home completions thereafter,” Reardon said.
“Reliable data on the availability of developable land is necessary to improve the supply of new homes. The lack of this data is one of the systemic failures of the current housing system.”
The NHSAC stated that a decline in interest rates of 50 bps would boost net housing supply by 54,000 dwellings, while a 50-bp raise would see net supply decrease by 45,000.
The Real Estate Institute of Australia (REIA) president Leanne Pilkington said: “Of relevance ahead of the Reserve Bank’s meeting this week is the abhorrent impact of interest rates on housing supply – the root of the current housing crisis.
“We hope the RBA heeds this warning shot issued by the government’s independent housing [adviser].”
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