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  • In the InvestorKit research, over 300 SA3 regions were analysed
  • Each were given a score based on established and future supply risk, housing affordability and other metric
  • More efficient planning one way to tackle housing crisis, argues Arjun Paliwal

It appears Australia’s housing supply crunch will continue into 2023, with new research revealing that it will be felt in the short term, thanks to the lack of established for-sale supply and in the short-to-medium term for new houses.

Buyers agency InvestorKit has revealed 11 regions across Australia that are facing the brunt, and how this issue can be resolved.

Over 300 statistical area level 3 (SA3) regions were analysed to determine the 20 areas most facing a freestanding house supply shortage, 11 of which were deemed as the most impacted.

For each of these regions, a Supply Shortage Score (SSS) out of five was given based on factors including established supply risk, future supply risk, people movement, housing affordability, rental pressure and price pressure.

“A combination of many existing and emerging problems have contributed to the housing supply crunch,” said Arjun Paliwal, founder and Head of Research at InvestorKit.

“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, 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, and a suppression of investor activity

Mr Paliwal noted that in the sales market, Australia’s for-sale listings have been trending down since the peak in 2011.

“However, our population has been growing steadily over the years, leading to a decline in available stock per capita. Similarly, rental listings have been trending down since 2016 – resulting in falling vacancy rates since them,” he explained.

“Unfortunately, the solution isn’t as simple as building new houses, as the construction industry is already struggling to meet underlying demand.

“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.”

Regions most impacted by the Australian housing supply shortage

  1. Brisbane Inner – North, QLD
  2. Camden, NSW
  3. Penrithith, NSW
  4. Toowoomba, QLD
  5. Mount Gambier, SA
  6. Albury-Wodonga, NSW
  7. Tuggeranong, ACT
  8. Wagga Wagga, NSW
  9. Prospect-Walkerville, SA
  10. Charles Sturt, SA
  11. Onkaparinga, SA

Brisbane Inner – North, QLD– SSS of 4.7

Brisbane, like the rest of Queensland, has seen its population increase dramatically. In particular, Brisbane Inner North’s population increased by 26.1% between 2012-2021, although the total number of for-sale listings fell by 44% during the same period. The tension is made worse by the low level of building approvals, with last year’s total number of building approvals only representing 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.

Housing stock has been recovering since earlier this year due to decreased sales volume and a slight increase in supply. However, it still sits a low level. The vacancy rate is at 0.7% – leading to rental prices increasing by 10.7% within the year.

Camden, NSW – SSS of 4.7

During the nine years to 2021, Camden’s population increased by 35.7%. On the flip side, the total number of for-sale listings decreased by 24.8%. The number of building approvals has been falling since 2018. There has been a 47.5% increase in sale listings which has led to a recovery in inventory since earlier this year, however, inventory remains at a low level. There has been an 18.9% rise in house prices to August.

Penrith, NSW – SSS of 4.5

Penrith’s population has increased by 21.9% during the nine years to 2021, while number of listings has risen by 2.3%. House prices to August 2022 rose by 15.6%. In the rental market, vacancy rates have been below 1% for the past 12 months, leading to 11.1% rental growth in a year.

Toowoomba, QLD – SSS of 4.3

Between 2012 and 2021, the total number of for sale listings in Toowoomba declined by 39.3%, while the population increased by 9.8%. The decrease in demand and increase in supply, however, has led to a recovery in inventory. Despite this, the vacancy rate remains low which has led to a 16.7% rise in rental prices this year.

Mount Gambier, SA – SSS of 4.5

Over the past decade, the population in Mount Gambier has risen by 5.8%. The number of for-sale listings has declined sharply, too. There has been a 36.5% drop in inventory levels despite a small decline in sales volume. Price growth has increased by 22.8% in the year to August 2022. Across the rental market, vacancy rates has been below 1% for two years, leading to a 16.7% rise in rent prices during the year.

Albury-Wodonga, NSW – SSS of 4.4

In the nine years to 2021, Albury-Wodonga’s population increased by 6.7%. The total number of for-sale listings has decreased by 65.9% during the same period.  While demand for sale volumes has declined by 20.4%, the recovery in inventory levels is slow. Prices have grown by 21.9% in the year to August 2022. Rental prices have increased by 12.2% over the past year.

Tuggeranong, ACT – SSS of 4.3

In the past five years, Tuggeranong’s population has recovered steadily, up by 3.9%. Inventory is recovering as sales volume declines and the number of listings increases. Yet, prices are still up by 22.2% to August, with rental prices are up 22.8%.

Wagga Wagga, NSW – SSS of 4.3

Between 2012-2021, Wagga Wagga’s population increased by 5.6%, however, the total number of for-sale listings fell by 66.9%. The inventory level is still at an extremely low level, resulting in 22.8% price growth in the year to August.

Prospect-Walkerville, SA – SSS of 4.3

In the nine years to 2021, the population of Prospect-Walkerville in Adelaide increased by 6.1% while the total number of for-sale listings increased by 6%. A gentle recovery in inventory is occurring, thanks to a 6% year-on-year increase in supply. However, house prices have still risen by 44% in the year to August. The vacancy rate is at 0.6%, leading to rental prices rising by 11.1% in a year.

Charles Sturt, SA – SSS of 4.3

The population of Charles Sturt increased by 10% in the nine years to 2021, while the total number of for-sale listings decreased by 40.2% during the same time. Inventory has been trending upward since mid-2022 as listings increased with sales decreasing. However, recovery is fairly slow. This has resulted in annual price growth of 19.3% to August. In the rental market, the vacancy rate is now 0.6%, leading to rental prices growing at 11.1% during the year.

Onkaparinga, SA – SSS of 4.3

Located on Adelaide’s southern fringe, Onkaparinga, SA has seen its population increasing steadily over the past decade. The number of for-sale listings, however, has been trending down. There has been 23.7% annual price growth in the year to August. The vacancy rate is at just 0.2%, leading to a 17.3% rise in rental prices.

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