Urgent action needed to double down on home building
- Radel Cabrera
- May 9, 2024
- 2 min read
Source: REA Group
The Challenges We Face!
Planning and zoning restrictions have made it tough to deliver on the number of homes we need in the right locations. But reforms alone won't address the acute challenges that are contributing to persistent under supply.
In the immediate term, unless we can ease construction capacity constraints and cost pressures, delivering enough new houses or apartments will be difficult and we will continue to see the housing and rental crisis worsen.
The residential construction industry has been challenged by capacity constraints and higher costs, and consequent tight housing supply is flowing through to both prices for existing homes and the rental market.
Rental vacancy rates are not far off record lows in most markets and rental prices have surged 42% across the capital cities and 41% in regional areas since the pandemic onset.
Over the past four years, rental vacancies have more than halved (-58%) across the capital cities and almost halved (-47%) in regional areas.
The data underscores a chronic shortage of housing, which, combined with Australia's continuing population growth, is expected to further drive-up record-high house prices and rents.
Increasing the supply of housing is one factor in curbing the decline in affordability that poses challenges for so many.
Many have pointed to the need to reform planning and zoning restrictions to unlock more housing supply and fast track approvals.
New builds sidelined as higher input costs squeeze developers Unfortunately, the supply side of the housing market has fallen short in responding to substantial demand.
Residential approvals and commencements are both at their lowest in over a decade according to the latest data from the Australian Bureau of Statistics (ABS) as industry-wide pressures weigh.
However, to understand some of the acute issues compounding the housing shortage we need to look at the data on how many approved homes are actually built.
There is a pipeline of homes that have been approved for construction where work is yet to commence.
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