Australia is running 80,200 homes short of where it needs to be in order to be on track. (Source: Getty/Yahoo Finance)
Since Australia emerged from the pandemic – with more government stimulus thrown at the property market in the form of Scott Morrison’s HomeBuilder scheme – the housing market has remained front and centre in political debate. Looking at the underlying numbers it’s easy to see why.
According to the federal government’s National Housing Supply and Affordability Council (NHSAC), since July 2023 alone, the nation’s homebuilding efforts have delivered a shortage of more than 140,000 homes. Despite the talk, we’re not getting the job done.
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In terms of housing deficit projections that go back further than NHSAC’s, such as those produced by AMP Chief Economist Shane Oliver, the deficit is between 220,000 and 300,000 homes depending if you factor in estimates for changing household demographics.
Against the backdrop of rising housing prices and record low rental vacancy rates, the Albanese government has pledged to build 1.2 million new homes between July 2024 and June 2029.
Yahoo Finance/Tarric Brooker
So far the performance has come up well short, with 219,800 homes built out of a required 300,000 to be roughly at par at that stage to meet the required target.
Despite the fact that the nation is running 80,200 homes short of where it needs to be in order to be on track to reach the 1.2 million new home target by the June 2029 end date, the Albanese government continues to insist that the target is realistic.
While Australia as a nation is coming up well short of the required target and the needs of the growing population, the aggregate masks a highly varied performance between the different states and territories with some doing much better than others.
Over the last 12 months of data, there is a clear loser in terms of dwelling completions per 100,000 people, with New South Wales (NSW) coming in last with 494.5.
But it’s here that it’s worth exploring what this means through a more global lens.
The United States is sometimes seen as shining example of home building conditions, with regulations surrounding new builds and zoning in many states often significantly less complex and protracted than in Australia.
Yet despite NSW being Australia’s most poorly performing major state, in the last full calendar year of data it built 19.6 per cent more homes per capita than the United States and 1.7 per cent more homes than Canada.
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In fact, over the last 40 years of data the US only built more homes than NSW per capita in seven calendar years, despite NSW having the worst average performance of the major Australians states across that time period.
Yahoo Finance/Tarric Brooker
At the other end of the spectrum over the last 12 months of comparable data is Victoria, with 790.3 dwelling completions per 100,000 people, 59.8 per cent more than the last place New South Wales.
In second place is Western Australia, with 748.7 new homes completed per 100,000 people, followed by South Australia in third with 675.6.
Victoria being the strongest performer in the nation for dwelling completions per capita was entirely expected by the National Housing Supply and Affordability Council.
According to their estimates, Victoria was tipped to complete 98 per cent of its share of the 1.2 million new homes slated for completion under the Albanese government’s Housing Accord Target.
Of the major states, NSW was expected to be among the poorest performers, achieving just 65 per cent of its share of required new home completions.
Overall, the worst expected performer of all the states is Tasmania, with the expectation of just 51 per cent of the required new homes being built across the five years.
Yahoo Finance/Tarric Brooker
If we shift our focus from the most recent 12 months of data to an average over the last 40 years, a very different picture emerges.
The best performing state is Western Australia, with an average of 962.0 dwelling completions per 100,000 across this time period.
At the other end of the spectrum the worst performer is again NSW, with 632.1 dwelling completions per 100,000 people.
Yahoo Finance/Tarric Brooker
While Australia can best international rivals in terms of dwelling completions per capita, the reality is the completions of new homes here are not keeping up with the expansion of demand, fuelled high by immigration and changing household formation trends meaning fewer people per household.
It is almost a certainty that Australia will come up well short of the Albanese government’s 1.2 million new homes target.
And the consequences will continue to be felt.
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