A CURRENT shortfall of 215,000 homes Australia-wide has prompted calls to reform land and sales taxes to cater to the growing demand for rental accommodation.
Despite the slowdown in building demand and house prices, the 2011 State of Supply report from the National Housing Supply Council found that the gap between housing supply and population demand increased by 28,000 over the past financial year.
At current population growth, Australia's housing shortfall is expected to blow out by more than 640,000 over the next two decades.
The council's formula for calculating the shortfall incorporates building trends such as affordability, demolitions and approvals, and population trends such as migrant intake, homelessness and household transitions.
The ambitious land release programs on Melbourne's urban fringe in the past year have ensured that Victoria's housing shortfall (17,600) is significantly smaller than either NSW (73,700) or Queensland (61,900). About 14,000 lots were released in greenfield sites in Victoria this year, with a further 37,000 to be made available early next year.
However, greenfield development will not supply the 630,000 to 930,000 extra homes the state will need in the next 20 years, warns the council's chairman, Dr Owen Donald.
"The cost of infrastructure is already high we can't go on simply adding extra land and get away with it," Dr Donald said.
The greatest shortages remain in low-cost and subsidised rentals, despite the federal government's National Rental Affordability Scheme, which has underwritten 4603 subsidised rentals out of a 2016 target of 50,000.
"A much smaller proportion of the housing market is owner occupancy," said Dr Donald, "and that market is shrinking."
To supply the levels of rental housing required in the next two decades, negative gearing and progressive land taxes need to be wound back, Dr Donald said, to encourage institutions and superannuation funds to invest in large tracts of rental properties.
Commonwealth rent assistance could also be boosted, he said, to help those on low-incomes into private rental. His proposals were backed by the Housing Industry Association and Master Builders Australia.
The report is "depressing reading", said Eleri Morgan-Thomas, head of social policy at Mission Australia, which has invested heavily in community housing.
"Despite the billions spent on social housing by governments in the wake of the global financial crisis addressing a shortage that had grown worse over decades it hasn't been enough to meet demand."
New Housing Minister Robert McClelland accepted the report's findings, saying: "We need to make sure housing supply matches the needs of our changing populations."
Frequently Asked Questions about this Article…
What is the current housing shortfall in Australia and how fast is it growing?
The National Housing Supply Council's 2011 State of Supply report says Australia has a current shortfall of about 215,000 homes. The shortfall grew by 28,000 over the past financial year and, at current population growth rates, is expected to blow out by more than 640,000 over the next two decades.
How does the National Housing Supply Council calculate the housing shortfall?
The council's formula combines building trends (including affordability, demolitions and approvals) with population trends (such as migrant intake, homelessness and household transitions) to estimate the gap between housing supply and demand.
Which states have the largest housing shortfalls right now?
According to the report, New South Wales has the largest shortfall at about 73,700 homes, followed by Queensland at around 61,900. Victoria's shortfall is significantly smaller at roughly 17,600, partly due to large recent land-release programs.
Will greenfield development on Melbourne’s fringe solve Victoria’s long-term housing needs?
No. While Victoria released about 14,000 lots on greenfield sites this year (with a further 37,000 due early next year), the council warns greenfield development alone will not supply the 630,000–930,000 extra homes Victoria will need over the next 20 years, and infrastructure costs make simply adding land unsustainable.
Where are the biggest rental shortages and how effective has the National Rental Affordability Scheme (NRAS) been?
The greatest shortages are in low-cost and subsidised rentals. The report notes that the federal NRAS has underwritten 4,603 subsidised rentals so far, against a 2016 target of 50,000, leaving a large gap in affordable rental supply.
What policy changes does the council recommend to boost investment in rental housing?
The council recommends winding back negative gearing and progressive land taxes to encourage institutional and superannuation fund investment in large tracts of rental properties. It also suggests boosting Commonwealth rent assistance to help low-income households access private rental housing. The Housing Industry Association and Master Builders Australia backed these proposals.
Has government spending on social housing fixed the shortage?
No. Mission Australia’s head of social policy described the report as 'depressing reading,' noting that billions spent on social housing since the global financial crisis have still not been enough to meet demand built up over decades.
How did the federal Housing Minister respond to the National Housing Supply Council report?
New Housing Minister Robert McClelland accepted the report's findings and said policy should ensure housing supply matches the needs of Australia's changing populations.
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