Australia’s housing supply crunch will continue well into 2023, says a buyer’s agent, who has also identified the nation’s 11 worst affected regions.
Research conducted by buyers agency InvestorKit showed that pressure will be felt in the short term for established for-sale supply and in the short-to-medium term for new houses yet to be built.
InvestorKit analysed more than 300 statistical area level three regions to determine 20 areas most facing a supply shortage of freestanding houses, identifying 11 as the most impacted. The company took into considering factors such as established supply risk, future supply risk, movement of people, housing availability, rental pressure and price pressure.
InvestorKit director and head of research Arjun Paliwal (pictured above) said a combination of many existing and emerging problems contributed to the housing supply crunch.
“These include net migration adding immediate demand to the rental market, the average household size declining, difficulties in accessing new land supply and delays in development approvals,” Paliwal said. “Add to that the concentration of people in major cities and coastal areas, Australians holding onto their properties for longer and delays in construction due to soaring material costs and labour shortages.”
Paliwal said in the sales market, Australia’s for-sale listings had been trending down since the 2011 peak, however, the population had been growing steadily which led to a decline in available stock per capita.
“Unfortunately, the solution isn’t as simple as building new houses as the construction industry is already struggling to meet underlying demand,” he said.
“To resolve Australia's housing supply shortage issue, we need a more even distribution of population, a more efficient planning system, a fairer tax system to encourage stock mobility, more investor-friendly policies, higher diversity in housing providers and more, which would take a long time to achieve.”
The 11 regions which made InvestorKit’s Housing Supply Crunch list are:
Paliwal said while Brisbane inner north's population increased by 26.1% between 2012-2021, the total number of for-sale listings fell by 44% over the same period.
“The low level of building approvals does not ease the tension as last year’s total number of building approvals only represent 0.78% of all houses. The current volume of stock on market is low (at 1.18%) compared to the region's total house stock,” he said.
Paliwal said Camden's population increased by 35.7% in the nine years to 2021, but the total number of for-sale listings decreased by 24.8% over the same period.
“The number of building approvals has been declining since 2018 (the past whole year’s total number represent only 1.23%), indicating a tightening supply level. The current volume of stock on market is low (0.83%) compared to the region's total house stock.”
Paliwal said Penrith’s population increased by 21.9% in the nine years to 2021, while the total number of listings for sale had only risen 2.3% over the same period.
“The declining level of building approvals has added to the supply shortage, with last year’s total building approval number representing 1.56% of all houses, approximately half the figure in 2018.”
Paliwal said the total number of for sale-listings in Toowoomba declined by 39.3% between 2012-2021, while the population increased by 9.8%.
“The balanced level of building approvals (just 1.71% of all houses this year) does not contribute to easing the tension. The current volume of stock on market is still low compared to the region's total house stock at 0.77%.”
Paliwal said the population in Mount Gambier had risen 5.8% over the past decade, but the number of for-sale listings had seen a sharp decline.
“The low level of building approvals (just 1.48% of all houses this year) is not enough to relieve the city's supply crisis. The current volume of stock on market is low compared to the region's total house stock at 0.48%.”
Paliwal said Albury-Wodonga's population increased by 6.7% in the nine years to 2021, but the total number of for-sale listings dropped by a dramatic 65.9% over the same period.
“The current volume of stock on market is low compared to the region's total house stock, at 0.82%, while demand for sales volumes have declined by 20.4%.”
Paliwal said Tuggeranong's population had been recovering steadily in the past five years, up by 3.9% during that time.
“The extremely low level of building approvals (only 0.19% of all houses this year) is not supplying enough housing. Further, the current volume of stock on market is very low compared to the region's total house stock, at 0.46%.”
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Paliwal said between 2012-2021, Wagga Wagga’s population increased by 5.6% but the total number of for-sale listings dropped by 66.9%.
“The balanced level of building approvals (around 1.52% of all houses this year) has done little to ease the housing crunch. The current volume of stock on market is still low at 0.68% compared to the region's total house stock.”
Paliwal said the population of Prospect-Walkerville increased 6.1% in the nine years to 2021, while the total number of for-sale listings increased by 6% over the same period.
“The current volume of stock on market is low compared to the region's total house stock, at 0.78%. The slight increase in supply and decline in sales volumes have led to a gentle recovery in inventory, however, it is still at an extremely low level and has resulted in an impressive 44% annual growth in median house price to August.”
Paliwal said Charles Sturt's population increased by 10% in the nine years to 2021, while the total number of for-sale listings decreased by 40.2% over the same period.
“With around 600 new building approvals this year, representing 1.92% of all houses, it is not enough to ease the tension. The current volume of stock on market is low (0.84%) compared to the region's total house stock, with inventory started trending upward since mid-2022 as listings increased and sales decreased.”
Paliwal said the population of Onkaparinga had been increasing steadily over the past decade, up by 6.5%, while the number of for-sale listings had been trending down.
“The current volume of stock on market is low compared to the region's total house stock at 0.64%. Inventory is recovering as demand trends slow down and supply level is lifted, however, still at a fairly low level, which has led to a 23.7% annual price growth to August this year.”
