Australia facing shortfall of 100,000 homes as prices, demand skyrocket, supply issues mount

Australia’s ‘grim’ rental and housing crisis could be about to get far worse than anyone can imagine.

Australia’s housing and rental crisis is set to get even worse over the next four years as the country faces a dramatic shortfall of more than 100,000 homes.

Australia’s ‘grim’ rental and housing crisis could be about to get far worse than anyone can imagine, as the country faces a dramatic shortfall of more than 100,000 homes over the next four years.

According to the The National Housing Finance and Investment Corporation’s (NHFIC) third flagship ‘State of the Nation’s Housing 2022-23’ research report, there will be a shortfall of 106,000 dwellings by 2027 mainly due to questionably huge immigration rates and skyrocketing interest rates.

It’s a situation described as ‘grim’ by the report, with the 100,000 plus ‘missing’ homes to exacerbate the pressure and stress on a housing market that is as unaffordable as ever for the average Australian and a rental market in which vacancy rates are around one per cent in every capital city.

There is expected to be a shortfall of more than 100,000 homes in Australia over the next four years.

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“The rapid return of overseas migration together with a supply pipeline constrained by decade-high construction costs and significant increases in interest rates is exacerbating an already tight rental market,” NHFIC CEO Nathan Dal Bon said.

“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.”

In fact the situation could be far worse. The NHFIC report was based on Centre for Population estimates that net overseas migration will increase by 268,000 between 2022 and 2024.

However, the Albanese Government has conceded the actual number of new immigrants will likely be three to four times higher with 900,000 migrants set to arrive over the next 18 months.

It’s a recipe for disaster, with the collapse last week of major firm Porter Davis Homes, a stark reminder of the myriad of challenges facing the construction sector and off the addition issues homebuyers now face.

The NHFIC report said Brisbane would be short 12,300 homes within five years. Picture: Brendan Radke

Porter Davis stopped work on more than 1700 projects in Queensland and Victoroa and had more than 750 contracts with homebuyers pending.

The NHFIC report said Brisbane would be short 12,300 homes within five years, with Sydney, which will receive the majority of new migrants with Melbourne, short 9600 homes.

Perth will be hit the hardest, with a shortfall of 25,200, while the Victorian capital will be missing 1900 homes.

It’s making conditions for homebuyers even worse, with the report stating “the average deposit required as a percentage of annual income has nearly doubled [from the 1990s] from 60 per cent to 110 per cent.

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The situation also means more than likely end of another of the Albanese Government’s signature campaign promises.

“The Government is set to fall well short of their goal of building one million homes over five years according to today’s report from their peak housing advisory body (NHFIC),” stated Tim Reardon, HIA’s Chief Economist.

“Every state and territory need to take action to attract more investment in the housing sector to improve the supply of new homes.

“The NHFIC Report expects around 180,000 new households to form each year, but less than 150,000 new homes to commence construction each year for the next two years. Over the decade, this will see an expected 79,300 shortfall in the supply of new homes.

Prime Minister Anthony Albanese’s $275 energy bill saving is out the window, as is his 1 million homes. Picture: NCA NewsWire / Gary Ramage

“This will see the acute rental shortage worsening and unnecessarily high increases in home prices.

“The Report also highlights that to meet the accelerated demand for new homes, there needs to be an increase in the number of apartments commencing construction.

“Commencements of apartments last year were 40 per cent lower than at their peak in 2016.”

Originally published as Australia facing shortfall of 100,000 homes as prices, demand skyrocket, supply issues mount