Owen noted that in the short term, reprieve from the current housing crisis was most likely to come from a moderation in net overseas migration, as some temporary migrants started to depart and arrival numbers were expected to normalise post-COVID. The Centre for Population forecasts indicated that this moderation could occur as early as the next financial year. Until then, renters may be seeking more shared accommodation or exploring cheaper rental markets in outer metro fringes or regional Australia. Ray White chief economist Nerida Conisbee expressed that the market was “really stuck,” attributing this to construction problems and a lack of funding to build homes. She predicted that the federal government would need to provide more funding for build-to-rent projects in the upcoming budget, but this would not be sufficient to meet the demand for the 1.2 million homes needed over the next five years.
AMP chief economist Shane Oliver highlighted that the number of people per household declined during the pandemic, leading to a “spreading out” of individuals who would usually live together. The reintroduction of migration and student arrivals has prompted a need for a unit-building boom to accommodate the growing population. Oliver noted that if people started to form larger households, it could alleviate some pressure on the market, but prices would stabilize rather than fall. To see a decrease in prices, more supply of housing would be necessary. The Property Council of Australia’s Matthew Kandelaars echoed the sentiment, stating that the nation’s ability to meet housing targets was grim based on building approval data released by the Australian Bureau of Statistics. Despite a slight rise in approvals in March, they were still lower than the previous year, indicating a significant shortage of labor and barriers to investment.
Kandelaars emphasized the need for the government to adopt a pro-construction approach and potentially adjust migration intake to ensure enough skilled workers are available to build the necessary homes. He pointed to complex planning regulations and tax systems as deterring factors for investment, particularly foreign investment. The current situation necessitates a strategic and coordinated effort to increase housing supply and address the underlying issues contributing to the housing crisis. Oliver added that while a shift towards shared living arrangements may provide temporary relief, a sustained solution requires a significant increase in the construction of housing units. He stressed the importance of a unit-building boom to address the shortage of homes and stabilize prices in the long term.
Overall, the housing market is facing significant challenges due to a lack of supply, constraints on construction, and hurdles to investment. While short-term solutions like a moderation in migration or shared living arrangements may offer some relief, a comprehensive approach that focuses on increasing housing supply through targeted investments and policy adjustments is essential. Addressing labor shortages, streamlining planning regulations, and incentivizing investment in the housing sector are key components to tackling the housing crisis and ensuring affordability and accessibility for all Australians. It will require collaboration between government, industry, and stakeholders to implement effective strategies that can alleviate the current pressure on the housing market and foster sustainable growth in the housing sector.
