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The Australian | Housing shortage threatens living standards, economic growth: report

21 December 2011

AUSTRALIA'S housing crisis has worsened, with a shortfall of 186,000 dwellings prompting warnings of a slump in living standards and economic prosperity.

In its latest report, the National Housing Supply Council found the gap between housing supply and demand widened by 28,000 dwellings in just 12 months.

The shortfall is projected to blow out to 640,000 within 20 years, placing massive pressure on social housing and the lower end of the rental market.

“This growing gap indicates that housing production needs to lift well above trend to reduce the likelihood that housing shortages and poor affordability impact adversely on economic growth and standards of living,” the council's 2011 state of supply report warns.

It says the current rate of new home building is “exceptionally low”, so the gap between supply and demand may widen even more rapidly than forecast in the medium term.

The biggest shortfalls are in NSW and Queensland, which need an extra 73,700 dwellings and 61,900 dwellings respectively.

The report says housing will become increasingly unaffordable as shortages become more acute, causing household sizes to increase as extended families are forced to live under the one roof.

“Increased household sizes will have social consequences beyond the housing market,” it says.

“Lack of access to healthy, affordable, well-located housing could have intergenerational implications for engagement with work and community, and for productivity in the economy.”

The report says the supply of social housing continues to fall well short of demand.

The government's National Rental Affordability Scheme, worth $4.3 billion, has funded the development of 4,603 low-rent dwellings so far from a target of 50,000.

It is due to have 35,000 completed by June 2014, and the remaining 15,000 by the end of 2015-16.

Housing Minister Robert McClelland said the shortfall in housing supply was an “inescapable fact”, given the growth in underlying demand.

“The report confirms that access to affordable housing is a challenge for many Australians,” he said.

“We need to make sure housing supply matches the needs of our changing population - that is why the government is making an unprecedented investment to increase the supply of affordable housing across the nation.”