For a textbook example of how Australia’s housing affordability debate has been perverted, look no further than the latest Housing Affordability Report from the Bankwest Curtin Economics Centre.
Alan Duncan, Director of the Bankwest Curtin Economics Centre, penned an opinion piece in WA Today blaming a lack of supply for Australia’s housing crisis:
While interest rates, tax incentives, and migration settings all play a role in the debate, the core issue is brutally simple—we’re not building enough homes.
The latest Housing Affordability Report from the Bankwest Curtin Economics Centre lays the facts bare and shows that, across the country, housing demand is surging ahead of supply.
That imbalance is pushing prices skyward… But it’s the rental market where the supply shortfall bites hardest…
In many states, rental supply simply isn’t keeping up with population growth…
Years of under building, worsened by builder insolvencies, workforce shortages, and sluggish land release, have choked the housing pipeline.
We’re simply not building fast enough, or in the right places…
Take a look at the following chart of Australian dwelling completions:
Notice how Australia built significantly more homes in the past 15 years than in the 15 years prior?
Now consider the following chart tracking Australia’s population growth:
As you can see, Australia’s population growth jumped after net overseas migration more than doubled from 2005.
Australia’s net overseas migration averaged 90,000 annually in the 60 years following World War 2 and only exceeded 150,000 in two of those years.
Since 2005, Australia’s net overseas migration has averaged 226,000 annually, a 150% increase on the 60-year average following World War 2.
Given the above data, how can Alan Duncan seriously blame Australia’s housing crisis on the supply side when excessive levels of immigration are to blame?
The fastest and most logical solution to the housing crisis is to simply lower net overseas migration to a level compatible with the nation’s capacity to build housing and infrastructure, as well as supply energy and water.
The truth was laid bare in the National Housing Supply and Affordability Council’s (NHSAC) latest projections.
NHSAC projected that Australia’s housing construction would remain well below the Albanese government’s annual construction target of 240,00o homes.
And because population growth (read immigration) is forecast to remain historically high, Australia’s housing shortage will worsen by 79,000 dwellings over five years:
But here’s the rub. NHSAC’s sensitivity analysis shows that if Australia’s population grew by just 15% less than forecast over the next five years, then Australia’s projected 79,000 shortage would turn into a 40,000 surplus:
Blind Freddy can see that the primary solution to Australia’s housing crisis is to moderate demand by running a sensible, sustainable immigration program.
It’s the demand-side, stupid!
