The National Housing Finance and Investment Corporation (NHFIC) has warned that Australia’s housing crisis is not going away any time soon.
The organisation said in its State of the Nation’s Housing 2022-23 research report on Monday that strong population growth post-pandemic and ongoing rate hikes were the main contributors towards the ongoing housing shortage and affordability struggles.
Findings revealed that the strong demand for housing, a tight supply of labour and materials and bad weather had put a strain on the construction industry. In 2022, approximately 28,000 dwellings were delayed due to reasons such as these.
NHFIC CEO Nathan Dal Bon said the pressures were likely to stick around.
“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,” Mr 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.”
The report also found that rising interest rates, the availability of serviced land, higher construction costs, ongoing community opposition to development and long lead times for delivering new supply were all impeding the supply of new housing.
The NHFIC expects net new constructions to fall in 2024-25, before making a recovery in 2025-26 as interest rate rises are expected to ease.
Meanwhile, the NHFIC’s projection for household formation over the next decade dropped by 79,300 dwellings between this year’s and last year’s reports, with The Property Council of Australia suggesting it marked a “grim warning” over a widening national housing gap.
“It reminds us that state, territory and local governments simply have to lift their run rates on housing supply across the at market, key worker and social housing spectrum,” Property Council Chief Executive Mike Zorbas stated.
“We also need to urgently move the housing needle by creating the right investment conditions for new build-to-rent housing, purpose-built student accommodation and retirement living communities.”
Mr Zorbas added that the report shed further light on the need to “urgently revive and support” the Australian Government’s Housing Australian Future Fund and the new National Housing Supply and Affordability Council.
The Centre for Population anticipates net overseas migration to rise further, by 268,000 between 2022 and 2024, which could put further pressure on the already-struggling housing market.
The aim of NHFIC’s research reports is to provide data and analysis into the nation’s housing demand and supply across Australia, as well as long-term projections, shedding light on the drivers and challenges surrounding housing affordability.