Australia is on the brink of an unprecedented housing shortage and a potential homelessness crisis. Recent data from the federal budget reveals that Australia’s population is projected to increase by a remarkable 2.18 million people by2026-27, primarily driven by a record net overseas migration of 1.5 million individuals.
This surge in population growth coincides with a decline in the number of new dwellings being completed in Australia, as indicated by the following chart:
All leading indicators for housing construction have plummeted, including new home sales, dwelling approvals, and loans for construction. According to Treasury Secretary Steven Kennedy, this decline in housing construction is expected to persist until 2025, with investment in new dwellings projected to decrease by 2.5% this year, 3.5% in 2023-24, and 1.5% in 2024-25.
Meanwhile, the Australian home building industry has been severely impacted by soaring material costs and rising interest rates, resulting in numerous companies going into insolvency. Over the past 18 months, thousands of home building companies, ranging from small entities to well-established players like Porter Davis Homes, have collapsed, leaving many construction projects unfinished.
Just in the past week, Red Bluff Homes, a 35-year-old builder based in Melbourne, and Ellingsworth Homes, a building company in Sydney, both filed for administration. Disturbingly, a record number of 2,032 construction companies appointed administrators in the year leading up to May, as reported in The AFR. Since 2021, it is estimated that builders responsible for over 5,200 homes worth a total of $2.2 billion have gone bankrupt.
With the growing number of company failures, the availability of builders to meet the country’s housing needs is dwindling, particularly given the unprecedented demand caused by immigration. Last week, Domain estimated that Australia needs to provide an additional 500,000 homes in the next four years to keep up with the projected net overseas migration.
To put it in perspective, this means Australia would need to deliver approximately 341 new homes every day for four years. This feat would be challenging even under the most favourable housing conditions, let alone the current situation with escalating material costs, rising interest rates, and a record number of insolvent home builders.
Consequently, Australia’s housing crisis is expected to worsen, resulting in increased rental prices and pushing more individuals into homelessness. Pursuing such an extensive immigration program during a housing crisis is a policy decision that defies logic.
Let us work together to find sustainable solutions to address this housing crisis and ensure a brighter future for all Australians.
#HousingCrisis #Homelessness #SustainableSolutions #Australia
