Australia’s rental crisis is set to deepen as the nation faces a shortage of more than 100,000 homes over the next five years.
High interest rates, soaring immigration, bad weather, the rising costs of construction and a tight supply of labour and materials have all contributed to the shortfall, according to a report by the National Housing Finance and Investment Corporation (NHFIC).
The NHFIC estimates that conservatively more than 331,000 households are already in rental stress – defined as paying more than 30 per cent of their income in rent.
Meanwhile, around 46,500 households are experiencing homelessness.
A surge in migration, which is expected to reach 350,000 as skilled workers and students flock back to Australia, at a time of record low vacancy rates is likely to put upward pressure on rents
The availability of serviced land, rising construction costs, and community opposition to development are also hindering new housing supply.
Ten consecutive months of interest rate rises from the Reserve Bank, lifting the official cash rate from 0.1 per cent to 3.6 per cent, has tightened borrowing.
NHFIC forecasts estimate that not enough properties will be built to keep pace with demand, with a shortage of around 106,400 dwellings expected over the next five years.
Just 148,500 new dwellings will be added to the national housing stock this financial year. The NHFIC forecasts that will drop to 127,500 in 2024-25.
The biggest drop was expected to be in apartments and multidensity dwellings, the corporation said.
The federal government is facing an uphill battle to win over the senate crossbench for its $10bn Housing Australia Future Fund.
Housing Minister Julie Collins said the NHFIC report highlighted the need for the crossbench to get on-board.
“This report is another reminder that too many Australians are struggling to secure safe and affordable housing,” she said.
Master Builders Australia chief executive Denita Wawn said the report called for a conversation on changing how industry operates – taking aim at fixed-price contracts.
“There is fragility and volatility in the industry at the moment that has been a consequence of businesses working predominantly with fixed-price contracts that were set pre-Covid,” she said.
“To achieve better housing affordability and keep up with demand, changes need to be made to the way we do things now and over the long term.
“There needs to be a conversation around fixed-price contracts and appropriate risk sharing between banks, developers and builders.”
The report comes as CoreLogic’s measure of dwelling values showed a 0.6 per cent rise in March – the first national increase in 11 months.
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