Housing shortage to hit 466,000 by 2020, HIA report reveals

Australian’s housing crisis is set to continue over the next decade resulting in a shortfall of 466,000 dwellings by 2020 if current trends continue, according to the latest figures from a Housing Industry Association report.

The report comes as property analysts have said prices will continue to rise over the next few years as the shortfall problem is magnified by Australian’s booming population.

The HIA “Housing to 2020” report, which is the first to examine the shortage issues at a local government level, has found the current housing shortage already equates to a shortfall of over 109,000 dwellings.

HIA economist Ben Phillips said the report demonstrates while some areas of Australia remain affordable with plenty of dwellings, a number of factors are increasing the problem dramatically.

“The reality in many regions and cities in Australia is that affordable, well located land is not available or abundant. Furthermore, planning restrictions, higher taxation on new housing relative to existing dwellings, labour shortages, and onerous regulation biased toward new housing all add to the problem,” he said in the report.

“If we don’t get a comprehensive supply response to the accumulating housing shortage then the lack of affordable and appropriately located rental properties will only worsen, while pressures on existing home prices will continue at an undesirable rate, placing avoidable upward pressure on interest rates.”

The report found that during 2009, the local government area with the biggest shortfall was Brisbane, at a shortage of 6,474 dwellings. This is followed by Sydney and Bankstown in New South Wales, with shortages of 5,234 and 2,285 respectively.

But if current trends continue, the Gold Coast is set to have the biggest shortfall in 2020 with an expected shortage of 10,777 dwellings. Victoria will also see a massive shortage of 17,000 homes by 2020, the report claims.

“It was also found that many of the LGA’s with the largest housing shortage are also the same regions with the highest level of demand,” Phillips said.

“Again, it’s the growth areas in the greater Sydney area and in South East Queensland where demand will be amongst the highest in the nation… The growth areas in and around Melbourne also show high levels of demand.”

About 295 of Australia’s 669 local government areas are currently experiencing shortages, Phillips said.

And although dwelling starts increased by 15.1% in the December quarter to 40,022, up from an 11% increase in September, Phillips said these figures just aren’t providing enough support – and the problems will be increased by a lack of skilled labour.

“Current construction levels in most high demand areas are simply not sufficient to meet the needs of a fast growing population.”

“A lack of skilled labour is an emerging threat to the much needed housing supply response. A second round resources boom this decade will draw heavily on an already tight labour market. The $90 billion worth of resource projects on the books is expected to demand an additional 136,000 direct and indirect jobs. This labour will need to be housed, adding additional pressure to the supply of labour and materials in non-resource regions.”

The report comes after similar forecasts from ANZ and Residex this week, which said prices are set to rise over the next few years as housing supply struggles to keep up with demand.