- RMIT expert predicts housing shortfall in Australia will not abate in the near future.
- Australian housing market likely to heat up in the coming months, bucking expectations.
- Future housing supply inadequately matched to projected demand.
Australia’s housing shortfall will most likely continue into 2024-25, according to RMIT senior lecturer in the School of Property, Construction and Project Management, Dr Peng Yew Wong.
Property Market to stay hot in the coming months
As we move through the spring selling season, the RMIT lecturer predicted that the property market would experience more activity in the coming months.
“Spring and summer tend to be more popular months to sell – and therefore buy – homes,” said Dr Wong.
“If you’re looking to buy property, you may have noticed a lack of homes for sale during winter.
“Now that we’ve entered the warmer months, we are likely to see increased activity in the property market.
“This year, we are experiencing a market trend not witnessed in Australia since the 2008 Global Financial Crisis.
“Instead of the much-anticipated downturn caused by high cost of living and high mortgage repayments, house prices continue to perform strongly – consistently registering positive growth since the beginning of 2023.”
“CoreLogic housing data showed prices rose 0.8% nationally in September 2023 and Australian house prices are expected to hit a new record high in the final quarter of 2023.
“This will present a difficult conundrum for homebuyers, and especially prospective first-homebuyers.”
Worst has yet to come for homebuyers
With the nation’s population growth continually outpacing listings, the future remains grim for homebuyers.
“This year, the key driver for the housing market is undoubtedly the shortage in housing supply.”
Dr Peng Yew Wong, RMIT Senior Lecturer
“The National Housing Finance and Investment Corporation (NHFIC) estimated that household demand in Australia will grow from 10.7 million to around 12.6 million in 2033 and showed housing supply is already in a shortfall condition, with the supply to household formation balance to be a cumulative negative, in the territory of a -106,300 balance over the next five years,” Wong said.
“House prices shall continue to go from strength-to-strength into 2024-25 in the midst of high inflationary pressure, due mainly to the housing supply shortage.”
Wong told The Property Tribune that the current housing market was not necessarily a housing crisis but a housing cycle favouring landlords.
Indeed, homeowners across the country have seen the values of their properties skyrocket through the last few years.
Australia’s longstanding housing predicament
The RMIT expert explained that Australia’s housing market issues have evolved over the past decade and that this dynamic environment necessitated continuous efforts and long-term planning.
“The nation’s housing market issue or crisis is not quite a new topic, and it will most likely be a sticky problem for the nation into the foreseeable future,” he said.
“As such, continuous efforts and long-term planning are needed to ease the housing market pressure.
“We had been monitoring the Australian housing market for the past decade and noticed that the housing market drivers were constantly evolving. For example, the market boom during 2015 observed some significant foreign purchases.
“The market downturn in 2018 was due to the infamous Royal Banking Commission Enquiry 2018 that caused a credit squeeze, followed by another significant boom due to the expansionary fiscal and monetary policies implemented during the COVID-19 pandemic.
“This time around, the key driver is the housing market supply shortage that pushed up the house prices in the midst of a high inflationary era.
“However, the current supply shortage in the housing market is viewed as significant and impactful if not resolved in an orderly manner, potentially surpassing all the housing market drivers’ significance we observed for the past decade.
“The Housing Australia Future Fund is a good start; the 30,000 new dwellings target, however, is still perceived as inadequate based on NHFIC’s projection.
“Perhaps private and institutional investment will help fill the gap.”
Two issues bogging down Australia’s housing market
Wong stated that two main problems were hindering Australia’s housing market: inefficiencies in dwelling construction caused by bureaucratic delays and a labour shortage in the construction industry.
“If the government wish to encourage more investment in the Australian housing market, two issues need to be arrested, i.e. local authorities and the human resource capacity,” he said.
“Out of the two obstacles mentioned, both the Federal and State Governments should immediately arrest the “easier problem” by getting the local and state governments to ensure project and construction can kick start without hindrance by the non-productive bureaucracy delay.
“The second issue has been a long-standing one in the country and, thus, perhaps requires a long-term plan to ensure the human resources capacity availability and human cost efficiency.
“Besides enabling training programs nationwide to encourage more workers in the industry, the government must allow a flexible, skilled migration program to both fill the workers’ gap and reduce the cost of construction.”