Housing shortage to endure
Australia will endure a soft residential building market in 2011.
According to the Housing Institute of Australia, there are indications that, following a reasonable 2010, the new home building recovery will reverse in 2011.
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“The door is being slammed shut on residential building in 2011 through the triple negatives of rising interest rates, tight credit conditions, and a stalled housing policy reform program,” HIA chief economist Harley Dale said.
“The combined weight of these adverse influences means Australia is likely to again endure a substantial weakness in new home building conditions.
“This will have flow-on effects across the whole economy.”
However, according to Mr Dale, Australia’s housing shortage is of greater long-term concern.
“Australia’s housing shortage is growing year after year, and even in a more favourable 2009/10 financial year we still added to the cumulative housing supply gap because as a nation we are continually under-building,” he said.
HIA economics has updated its projections of the underlying demand for housing, and the results show that with around 161,780 dwellings completed in 2009/10, Australia still fell short of the underlying demand for more than 184,000 dwellings.
Australia fell short by more than 22,000 dwellings in 2009/10 alone, and the annual shortage is estimated to be 16,800 dwellings in 2010/11 and 21,000 dwellings in 2011/12.
“Over the medium to longer term the undersupply of new housing will contribute to a further deterioration in housing affordability for aspiring home buyers and for those in the rental market, and this issue demands urgent attention from governments at all levels,” Mr Dale said.