The New South Wales government reported in June that due to factors such as continuous population growth and increasing demand, the state will need about 900,000 additional housing units by 2041. Similarly, Sydney is currently facing a shortage of at least 134,000 housing units over the next five years.
Not only is there a severe shortage of houses in major Australian regions, but the pace of new housing construction has also significantly slowed down, with the planning processing time skyrocketing from an average of 69 days in July 2021 to an average of 116 days by March 2023. Mark Bouris, Executive Chairman of Yellow Brick Road Home Loans and a finance expert, expressed disappointment with the Australian housing supply shortage and blamed the government's actions or inactions.
Bouris stated that new immigration policies have led to continuous population growth in Australia, but housing supply has not been able to match the increase in population reasonably. The shortage of housing supply is a problem not only for the federal and state governments but also for local councils.
Bouris and others are perplexed about how to increase housing supply to meet demand, which is growing faster than new construction. The biggest issue in real estate development over the past four or five years has been obtaining government approval. Project approval is a key obstacle to constructing new houses in Australia, but this problem has not received appropriate attention or resolution from the federal government.
Bouris mentioned that real estate market data from September or October might provide a better perspective on the supply situation and revealed that next month will be a busy one for real estate agents in Sydney, as data shows that the number of people signing contracts in September is three times that of the same period last year.
Although rising inflation, consecutive interest rate hikes by the Reserve Bank of Australia, and increasing loan rates could suppress housing demand, the Australian real estate market suffers from severe supply and demand imbalance due to continuous price increases, population growth, and a shortage of housing supply. This not only increases the financial burden but also poses a potential threat to future economic prospects.
Recently, Westpac stated that the bank expects Australian property prices to increase by 7% by 2024, with the significant demand driven by population growth being a primary factor in the rise of housing prices.
