Oxford Economics has released its Prospects for residential propertiesAccording to the report, there will be an increasing disparity between the quantity of houses being constructed and the quantity required to accommodate the Australian population.
According to Oxford, there will be a shortage of 97,284 homes in 2024, which is predicted to increase to 145,470 by 2026.
According to Maree Kilroy, a senior economist at Oxford Economics Australia and the author of the report, the housing market in Australia will experience high prices for both houses and units due to this lack of supply, which will also cause rents to continue rising.
The median price of homes in Australia reached an all-time high of $939,000 in December 2023. Oxford predicts that there will be a 2.7% increase in the 2023-24 financial year, followed by an average of 6.3% growth each year in both 2024-25 and 2025-26, as a result of rate cuts.
What’s behind Australia’s housing crisis?
Strong growth in Perth, Brisbane, and Adelaide will be the main factor behind the national increase in prices, while Melbourne and Sydney will experience lower price levels.
The rental market experienced a tightening in 2023 due to a significant increase in net overseas migration and a decline in the construction of dwellings. As a result, the national capital city vacancy rate remained extremely low at 1% and the cost of renting a home increased significantly.
According to Oxford Economics, rental inflation is expected to be slower but still strong in the coming years, with an anticipated increase of 4.1% for houses and 5.8% for units in 2024.
In view of the current data on dwelling construction from the Australian Bureau of Statistics (ABS), which indicates a negative trend, the projected decline in available stocks by Oxford Economics seems logical and expected.
Multi-pronged approach needed to address shortage
According to the upcoming chart, the number of approvals, commencements, and completions for housing constructions are currently at their lowest levels in a decade. These low numbers coincide with the fact that Australia’s population is growing at an unprecedented rate.
Also Read: Trudeau and Albanese’s leaders pose with machine guns: Is this a sign of things to come?
What are the solutions to Australia’s housing crisis?
The amount of loans granted for buying or building a new house is currently hovering around its lowest levels on record.
As long as the Albanese government continues to tightly control immigration, the housing shortage in Australia will keep getting worse, causing house prices and rents to rise.
The housing equation is that simple.
