Housing undersupply not only in Australia but globally: Nerida Conisbee

EXPERT OBSERVER

Recently, The Economist looked at how much home building has been taking place globally using a measure of homes built per 1,000 people. Their analysis showed that globally, not enough homes are being built and it’s contributing to a range of problems including affordability and homelessness.

In Australia, we see marked differences between states as to how good they have been keeping up with population growth. Not surprisingly, Tasmania and NSW have been consistently under supplying housing for decades. Right now, it is showing up in affordability issues in Sydney. In Hobart, we have a rental crisis that is leading to a blow out in rental levels and higher levels of homelessness.

Looking at the past 35 years, Sydney hasn’t always seen low levels of building. Between 2015 and 2019, it roughly tracked the Australian average. A similarly high level of building took place between 1995 and 1999. However, Hobart has been under building since the mid 1990s.

Surprisingly, South Australia has also been under building, but it has managed to remain relatively affordable. We have, however, seen rental rates increase quite significantly over the past two years. Not exactly to Hobart red rates, but strong from a national perspective. It is likely that Adelaide pricing has in part been kept low by lower wages growth, an ageing population and perhaps far less speculation than we see in Sydney.

It’s not surprising that Western Australia, home to Australia’s largest home builders, is the state that builds most. Queensland is also pretty good, again an enthusiastic development industry would be a key here.

NERIDA CONISBEE is the chief economist for the REA Group