Achieving this goal is a challenge in its own right. The challenge would be magnified if Australia’s household income growth returned to a rate above its long-term average because this outcome would generate further housing demand. If this does occur, then Australia will need to build in excess of 250,000 homes each year on average simply to ensure that the current affordability challenge is not amplified.
By way of comparison, Australia built just 175,000 dwellings per year on average over the 17 years since 2000.
A summary of the new home construction levels required up to 2050 is provided below. Details regarding the research and analysis underpinning these projections are provided in the Housing Australia’s Future report.
This shift upwards in the number of new homes required has not, and cannot, be met solely with the construction of the traditional detached house.
Census 2016 results demonstrate that apartments and semi-detached dwellings are housing a larger proportion of Australian households. This trend has partly been driven by households acting on a preference to enjoy inner-city living, which is most accessible through apartment dwellings, and the affordability of apartment living. A third of Australian households are now living in an apartment, compared with five per cent 25 years ago.
Addressing the affordability crisis is not a task that can be completed in a few years, or by amending single policies such as negative gearing and capital gains tax, placing punitive charges on foreign investors or focusing on short-term development strategies.
A meaningful response to the affordability crisis must see the needs of the housing industry as a key focus of government policy – at each of the three levels of government. Improvements in the delivery of residential land and accelerated approvals processes for new homes are required.