Housing shortage set to get worse

By George Megalogenis, From: The Australian, 29 March 2010

OFFICIAL forecasts for the nation's housing shortage have worsened, with more than 100,000 prospective home buyers already locked out of the market by June 30 last year.

The ongoing gap between demand and supply will be greater than previously feared, as all levels of government and the building industry struggle to keep up with Australia's world-beating population growth, The Australian reports.

By 2029, the combined shortfall could reach 500,000 homes and apartments.

The housing shortage is most critical in NSW, which accounts for almost one third of the nation's total population but is contributing less than 20 per cent of the nation's new dwelling starts at the moment.

There is concern at senior official levels that Sydney is about to experience another debilitating price boom as rising demand coincides with inadequate dwelling stock.

The report of the Rudd government's national housing supply council, to be released next month, will show that estimates for the existing shortage and the gap from here on have been revised up after a switch to a more detailed formula.

The global financial crisis has added to the problem as property developers were squeezed for funds in 2008-09.

Australia is building fewer houses per head of population growth than at any time on record, according to new research from economist Saul Eslake.

Last year there were just 333 dwellings completed for every 1000 increase in population, less than half the rate that applied 10 years earlier, Mr Eslake said.

Population pressures are creating a perfect political storm across federal, state and local governments as rising prices lock out first-time buyers, lower-income earners face rental stress as they are forced to compete with the middle class, and public services such as schools, hospitals and transport are stretched.

One measure of the affordability crisis is that average home loan sizes in Victoria, Queensland and Western Australia have now caught up with those in what was traditionally the nation's hottest market, NSW.

Last week the Bureau of Statistics confirmed that Australia's population grew 2.1 per cent last year, almost double the world average of 1.1 per cent. On present trends, Australia's population of 22 million would rise to 34 million by 2050.