RBA raises concerns over housing shortage
With the threat and news coverage of the global financial crisis subsiding, the RBA has begun to focus attention on Australia’s housing shortage problem. The RBA has been vocalising a belief that there is a real danger that housing prices could continue to rise from their already high levels. If various levels of government don’t pay attention and start moving on the issue the problem can only get worse.
The RBA are not the only professional body to warn about a housing shortage, but proving these claims can be tricky. There are a number of contributing factors and many are open to interpretation. Let’s take a look at a few of them now:
- Rising rental prices. In 2008, Australia experienced the strongest rental growth for more than 20 years. Even the global financial crisis didn’t stop rents rising at levels over 3 per cent during 2009. What is fuelling this rate rise? Simple. Over demand or under supply.
- Supply and Demand. Estimates from the Commonwealth Treasury forecast that "Australians are currently demanding 200,000 new homes per annum. Over the past few years however, only 140,000 to 150,000 new dwellings have been built annually". Alarming, government red tape and the financial crisis have seen the number of new residential building approvals decreasing over recent months. This means that levels of new housing development have actually decreased in 2009.
- Growing population. Australia is in the middle of a population boom that promises to fuel economic growth for years to come. In March 2009, the population growth of Australia topped 2 per cent, the fastest pace on record and the highest rate of any of the advanced economies at the time. The two main contributing factors are an increasing birth-rate and migration. Skilled migration in particular is high, with net migration to Australia currently at the highest levels since 1788.
It’s important to remember that any prediction about a housing shortage may not come to pass. However, a brief look at some of the contributing factors indicates that unless Australia begins to build more houses, not less, a significant housing shortage is a real possibility. Looking at how to fix the problem can be just as complex. Industry experts argue that all levels of government need to address the problem of the increasing cost of developing new housing. They also claim that delays by councils, zoning bodies and general administrative planners have slowed down the building process in recent years.