Housing shortfall locking out thousands

By George Megalogenis, From: The Australian, 28 April 2010

AUSTRALIA has 178,000 more potential home buyers than available properties, with Queensland and Western Australia accounting for almost half the total shortfall over the past decade, a government advisory body confirmed yesterday.

But NSW is the state having most trouble keeping up with demand, The Australian reports.

Slow planning processes and a sick building sector delivered barely one new house for every two new households that were prepared to buy last financial year.

The benchmark report by the National Housing Supply Council warns that the national housing supply gap will increase by 50,000 by June 30 next year, and the final figure may be much worse if one or more states fail to deliver on their modest targets.

On present trends, the total gap will reach 640,000 by 2029.

In a carefully worded criticism of the tax system, the report said the rules were skewed towards home buyers and mum and dad landlords at the expense of investors to build more medium-density housing for the future.

"Large-scale investors face tax disincentives to invest," the second annual NHSC report said.

"The council is not yet commenting on the changes to taxes and transfers that could enhance the efficiency of the housing market since that is within the scope of the Henry review of taxation."

The estimate of the previous supply gap to June 30, 2008, was revised up from 85,000 to 99,500 to take in better data and higher than expected immigration.

From this new baseline, a further 78,800 households were unable to satisfy their demand for housing in the past financial year - mainly because the global financial crisis placed a brake on new developments.

This brought the total gap to 178,400 by June 30 last year.

NSW accounted for almost 40 per cent of the national spike in 2008-09.

More critically, it was the only state that could not satisfy more than 50 per cent of the new demand, with 23,600 additional dwellings serving an extra 54,200 prospective buyers in the last financial year.

With new housing taking between six and 15 years from planning to delivery, the shortfall in NSW may last another decade.

The NSW supply response rate of 43.5 per cent in 2008-09 compared poorly with the 71.3 per cent result in Queensland, 68.6 per cent in Victoria and 59.1 per cent in Western Australia.

The report notes that the states and territories see scope for 176,000 additional dwellings a year this financial year and next.

"The council is concerned that if only a small proportion of these potential new dwellings do not proceed to completion - which is highly likely - new dwelling completions will not meet the increase in underlying demand."