Building Dreams, Building Communities: Unlocking Australia's Housing Potential

According to Tony Richards, a former Reserve Bank of Australia economist, the shortage of housing in Australia can be primarily attributed to expensive zoning, planning, and building regulations imposed by local councils. Over the past 20 years, housing supply has grown at a slower pace of 4.5% compared to population growth, resulting in a deficit of 1.3 million homes. To address this issue and accommodate future population growth, a significant increase in housing construction is necessary. The states most affected by the housing shortfall include NSW, Queensland, Victoria, Western Australia, South Australia, Tasmania, Canberra, and the Northern Territory.

Richards argues that instead of focusing on high-rise towers, Australia should prioritize the construction of more medium-density homes in inner and middle suburbs. He suggests that better utilization of already zoned residential land, without encroaching on parkland or recreational areas, could meet the increased demand. Richards emphasizes the need for a simplified planning and approvals system that reduces barriers to entry and lowers the cost of home building. A projected decline in new home building coinciding with a record influx of 1.5 million migrants, which would exacerbate housing shortages, drive up rents, and inflate real estate prices. According to the University of NSW's City Futures Research Centre, around 640,000 households in Australia face housing challenges such as homelessness, overcrowding, or excessive rent burden.

There is a debate surrounding whether local councils should have their decision-making powers curtailed to streamline approvals for building more medium-density housing. However, councils reject this idea and argue that centralizing planning processes could result in poor planning decisions. The chief executive of Australia's largest brick making company estimates a current housing shortage of 250,000 houses. Tony Richards calculates that if the historic relationship between population and housing stock had been maintained, Australia would have built an additional 1.33 million dwellings. The slowdown in housing stock growth over the past two decades has led to increased housing prices relative to household incomes. Richards suggests that inflexible housing supply and strong demand have contributed to these price increases, negatively impacting homebuyers and renters.

Source: https://www.afr.com/property/residential/1-3-million-missing-homes-blamed-on-councils-and-nimbys-20230515-p5d8d3