Australia will need 20,000 additional homes a year over the next decade to meet demand and address the country’s housing shortage.
According to new Property Council of Australia research, the country will find itself 163,400 homes short of expected demand between 2025 to 2032.
While housing supply may appear healthy in the short term, the research showed that a major supply crunch was on the horizon.
Property Council of Australia Chief Executive Ken Morrison said demand for new households would outstrip supply, as the economy and net overseas migration recovered.
“Overall housing supply is expected to fall by around one third in just four years from 2023,” Morrison said.
“That can’t be good for housing affordability.
“At a time when housing affordability is front of mind for some many Australians, the last thing we can afford is having supply and planning constraints putting further upward pressure on rents and prices.”
The research highlighted significant greenfield land supply constraint in key markets including Sydney and southeast Queensland, which could limit the industry’s ability to meet demand.
The research comes as new housing approvals rose, alongside increasing land prices and construction costs.
In November last year, new housing approvals rose 3.6% in seasonally adjusted terms across Australia, fuelled by a surge in new units across the country.
There were 16,448 new dwelling approvals made up of 10,892 detached house approvals and 5,315 non-house approvals in November, according to the Australian Bureau of Statistics (ABS).
The uptick in monthly housing approvals followed a 13.6% fall in October.
Land prices jumped more than 12 per cent across Australia last year, marking the biggest annual price rise since 2006.
The median price of land in Australia increased by 12.6% for the year to September 2021, according to the HIA-CoreLogic research.
House building costs in Australia jumped 7.3% during 2021, the highest annual growth rate since March 2005, according to CoreLogic.
Higher construction costs are likely to add to affordability challenges already at play across the established housing market.
In 2021, Australian home values finished 22.1% higher, however a two-speed property market emerged across the state capitals.
Interested in the housing market? Take a look back at Australia’s biggest home sales in 2021.