ABS forecasted a population increase of 13 million by 2072, requiring 6.2 million new homes – prompting Nerida Conisbee (pictured above), chief economist at Ray White, to remark, “We are very likely to have a much bigger Australia.”
Just how will Australia accommodate this additional 13 million people? Conisbee cited 10 strategies.
Melbourne is expected to surpass Sydney in size by 2037 and will require about 22% of the new homes. Sydney and Brisbane are also set to see significant housing demands.
“This of course could change,” Conisbee said. “As we saw during the pandemic, population in Brisbane increased far quicker than Sydney and Melbourne. Over a long time period, similar shifts could occur to other parts of the country.”
To manage this growth, Australia will need to increase its urban density significantly.
“Globally, Australia is one of the least dense countries in the world, with a very low proportion of high-density housing,” Conisbee said. “As our population increases, it will become far more expensive to continue to provide infrastructure to such a widely spread population.”
The “missing middle” – medium-density housing in suburban areas – is seen as a critical area for development. Conisbee stressed the importance of expanding housing types like townhouses and larger apartments to meet diverse needs, saying, “Not everyone wants to live in very high-density areas, or far from the city.”
The demographic shift toward more renters, particularly among Millennials, indicates a need for more rental properties.
“More people are renting and renting for longer,” Conisbee said, suggesting a shift in how rental properties are owned and managed, particularly through institutions rather than private landlords.
In Australia, most rental housing is supplied by private investors. As the demand for rentals grows with the population, diversifying ownership sources becomes crucial. Government-owned rentals have declined for decades, shifting focus to institutional ownership. The Build to Rent sector, though currently small, is set to expand significantly.
Australia's average household size has decreased from 3.1 to 2.5 people over fifty years.
“During the pandemic, we saw that given the opportunity, many people prefer to live alone and there was a spike in single person households,” Conisbee said. “Since then, rental increases have forced more people back to sharing.”
Despite rising rental costs encouraging shared living, the trend toward single-person households is expected to persist, influenced by an aging population and longer lifespans. This shift challenges the dominance of large family homes.
The government has historically struggled with direct home provision, as the stock of government rentals has consistently declined.
Effective assistance now involves adjusting planning controls to increase density in low-density suburbs and revising tax policies. While negative gearing has kept rents affordable, stronger measures are needed to increase housing construction.
Tax incentives for institutional investors and foreign buyers could attract additional capital, facilitating more home development. This approach has proven effective in the past, notably during the last decade's record housing construction, Conisbee said.
The pressure on older Australians to downsize is growing, yet appropriate housing options are lacking. Sustainable home design is also becoming a priority, driven by cost savings and comfort as much as environmental concerns.
Cost savings and comfort are driving the adoption of energy-efficient and sustainable home designs, especially as energy prices rise.
New regulations now enforce specific energy efficiency and sustainability standards in home construction and renovations.
Market trends also reflect an increase in property listings highlighting energy-efficient features, showcasing their appeal in the housing market.
With approximately 10% of homes vacant, there is increasing pressure to make better use of these properties, especially in sought-after locations. Measures like the Victorian government’s vacant property tax are aimed at addressing this issue.
This comprehensive approach, combining governmental action, market adaptation, and changes in public behavior, is essential to prepare for Australia's future housing needs, Conisbee said.
To read the Ray White article in full, click here.
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