The reasons for the decline in new housing supply are multifaceted. From planning bottlenecks and labor shortages to soaring material costs, various factors intertwine, resulting in the number of new homes built in Australia's capital cities expected to decrease to 79,000 by 2026, a 26% decrease from last year. This undoubtedly exacerbates the housing crisis, causing property prices to soar once again, making already record-high prices even more out of reach.

The Urban Development Institute of Australia predicted in a new report that despite Australia's population growth, the number of new homes being built is decreasing, indicating that housing issues will become increasingly prominent in the coming years. Strong measures must be taken to achieve the goal of building 300,000 new homes from 2026 to 2029.

Internet

However, Jo Masters, Chief Economist at Barrenjoey, stated that the target of 1.2 million is challenging, and there are still many obstacles in the construction process, including challenges in costs, labor, and skills. This means that the government needs to collaborate with state and regional governments to jointly address this serious issue.

In response to the housing crisis, the Australian government has implemented a series of measures. These include a A$3 billion New Home Bonus, a A$500 million Housing Support Program, a A$10 billion Housing Australia Future Fund, and new incentives to increase the supply of rental housing. Among them, the New Home Bonus is a subsidy policy that provides bonuses to states and regions that can build over one million new homes. The introduction of these policies is expected to alleviate the housing shortage to some extent.

Internet

However, experts are cautious about the government's ability to achieve its goals. Carlos Cacho, Chief Economist at Jarden, estimates that the government may fall short of about 230,000 homes in achieving the target of 1.2 million new homes. He points out that labor shortages are currently the biggest issue, and reforming zoning laws may be a key measure to improve the housing supply chain. In addition, the situation in the land market is also a concern, with national land sales decreasing by 28%, but average land prices in capital cities rising by 4.8%.

Against this backdrop, the continued decline in housing supply will continue to drive up property prices, posing challenges for both buyers and sellers. Buyers will face higher prices and fewer choices, while sellers may face the risk of price declines. Although the government and experts continue to make efforts and explore solutions to address the housing crisis, issues such as high construction costs make it difficult to effectively address housing inventory shortages in the short term, and property prices may continue to rise in the foreseeable future.