Australia’s housing shortage will get progressively worse over the next 10 years, according to a new report.
The Housing Industry Association (HIA) National Outlook for the June quarter said that if the affordability crisis remains un-checked now, homes would remain in short supply until the end of the decade.
“Residential construction is flat in a climate of user pays funding for new housing, a lack of affordable land, and increasing planning and red tape hurdles,” said HIA chief economist, Harley Dale.
“Residential construction is historically a leading indicator of economic activity. Currently the affordability hurdle is condemning construction to a lagging indicator role. Without a concerted all-of-government approach to rectifying the affordability crisis the build-up in unmet demand will intensify.”
The release of National Outlook further underlines the importance of the recently launched Residential Infrastructure Plan, in which state and local governments could receive help in building and upgrading vital community infrastructure in regional and urban centres.
“It’s time to be smart and fair about housing affordability, particularly with forecast growth in housing starts of only 3% over 2007–2008 – a result that will barely touch the sides of the required lift in housing supply,” said Dale.
“This undersupply, however, has provided a significant boost to renovation activity as potential homebuyers stay put and add floor area to existing homes rather than face the prohibitively high transaction costs associated with moving house.”
According to the HIA, total investment in renovations in 2006–07 is expected to have hit a new record of $28.6bn, with growth of over 3% forecast for 2007–08.
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