The Albanese government will be able to get its $10 billion Housing Australia Future Fund (HAFF) legislation approved by the Senate after the Greens agreed to an additional $1 billion ‘sweetener’ to pass the bill, along with dropping its demands for a rent freeze.
However, economists do not believe that the Fund will help Australia’s housing supply issues.
AMP chief economist, Shane Oliver, noted there are problems with both worker and materials shortages. He describes the HAFF as a “drop in the ocean” and estimates 220,000 new dwellings are needed each year to meet underlying demand.
However, the nation is currently having trouble building around 165,000 a year:
“The main problem is shortfalls of materials and particular shortages of workers”.
“Right now we’re having trouble trying to build something like 165,000 dwellings a year. The reality is we need at least 220,000 to keep up with underlying demand. It’s all pie in the sky if we don’t have the means to build them”.
“30,000 dwellings is a drop in the ocean compared to the size of the shortfall we already have. It will be made problematic by the backlog of work that is yet to be completed”.
Jarden chief economist Carlos Cacho warned that large amounts of public infrastructure spending is crowding-out housing construction:
“The public sector is to some extent exacerbating supply chain challenges and putting pressure on the industry. The scale of public infrastructure and non-residential construction, it is pretty massive already”.
Let’s get real. Australia will never build enough homes so long as it continues to grow its population aggressively via mass immigration.
Australia built a record number of homes last decade:
But even then, we only built more than 220,000 homes once in 2017 (with 223,0000). Therefore, expecting the nation to build 240,000 homes for five consecutive years is deluded, especially when interest rates are high, builders have collapsed left, right and centre, and there are widespread builder and materials shortages, alongside higher costs.
The number one solution to Australia’s housing supply problem is to moderate demand to a level commensurate with the nation’s ability to supply housing and infrastructure. This necessarily means moderating net overseas migration:
The latest federal budget projected that Australia’s population would grow by 2.18 million people (equivalent to a Perth) over five years, driven by record net overseas migration of 1.5 million (equivalent to an Adelaide):
The latest Intergeneration report projected that Australia’s population would grow by 14.2 million people over 40 years, which is equivalent to adding a combined Sydney, Melbourne, Brisbane and Adelaide to the nation’s current population.
This population growth would be driven by extreme net overseas migration of 235,000 a year.
Australia’s housing shortage is the direct result of nearly 20 years of high net overseas migration, which is projected to continue for decades.
If the Albanese Government genuinely wanted to end the nation’s housing shortage, it would do so by running an immigration program that was lower than the overall expansion in the housing stock, not the other way around.
It’s time to stop blaming a ‘lack of supply’ and start addressing the mass immigration driving Australia’s housing shortage.
