- NHFIC has released its third ‘State of the Nation’s Housing 2022-23’ research report
- Dwelling supply will fall short by 106,300 dwellings over the next five years
- The Property Council of Australia highlights "grim warning"
The combination of a decline in housing construction and a rise in the number of households being formed is expected to result in a housing short supply according to the National Housing Finance and Investment Corporation (NHFIC).
Projections made in NHFIC’s third State of the Nation’s Housing 2022-23 research report place predict that dwelling supply will fall short by 106,300 dwellings (cumulative) over the next five years until 2027.
This trend is also projected to continue over the coming decade, with an estimated shortfall of approximately 79,300 dwellings over the years until 2033.
The report aims to provide an analysis of the current state of housing demand and supply throughout Australia, coupled with long-term projections.
NHFIC CEO Nathan Dal Bon says housing challenges are not going anywhere fast.
“NHFIC analysis shows housing affordability and supply are likely to remain challenging for some time, underscoring the need for a holistic approach to mitigate the housing pressures Australians are facing.”
Nathan Dal Bon, NHFIC CEO
Robust growth in household formation
Over the next decade, more than 1.8 million new households are expected to form in Australia, placing pressure on the already tight housing market.
This growth will bring the total number of households to 12.6 million (up from 10.7 million in 2022).
These households are projected to consist of approximately 1.7 million newly occupied homes, along with 116,000 vacant properties such as holiday homes.
Single-person households to dominate growth
NHFIC reports that within the next five years, lone-person households are expected to become the fastest-growing household type across the country.
Over the period of 2023 to 2032, household formation is anticipated to be primarily driven by lone-person households. Approximately 563,600 new households of this type are to form.
This demographic will be followed closely by households consisting of couples with children; an estimated 533,300 new households of this kind will form.
Earlier than expected interest rate rises
The recent and earlier than expected rise in interest rates is having a negative impact on the housing supply.
NHFIC predicts that approximately 148,500 new dwellings (net of demolitions) will be completed in 2022-23, after which the net new construction is expected to decline to 127,500 in 2024-25.
However, a recovery in housing supply is projected to occur after 2025-26, as a result of shifting macroeconomic conditions and robust underlying demand.
The Property Council of Australia highlights “grim warning”
Property Council Chief Executive Mike Zorbas said the report is a reminder that state, territory and local governments simply have to lift their supply of housing across
“This emerging 79,300 home deficit is a grim warning,” Zorbas said.
“We also need to urgently move the housing needle by creating the right investment conditions for new build-to-rent housing, purpose-built student accommodation and retirement living communities.”
Mike Zorbas,Property Council Chief Executive
“We need this for our existing population and to continue to attract the skilled migrants and students who support our education sector and bridge the huge gaps in our mining, construction agricultural and retail workforces nationally,” he said