Housing supply in Sydney and Perth has not been keeping up with demand, yet a new report has found all capital cities are failing to provide enough affordable options to manage the country’s housing crisis.
The report, from the Australian Housing and Urban Research Institute, is the first of its kind in Australia and examined data from between 2006 and 2014.
Head researcher Rachel Ong from Curtin University said it examined how the distribution of housing across different locations, in particular local government areas, responded to changes in population and changes in employment rates and opportunities.
“The policy narrative that we usually get is that there is a lack of housing supply relative to demand for housing, but what we found in the report was that — very interestingly — that is actually not the primary issue,” Professor Ong said.
“In certain capital cities housing supply is actually outpacing population growth, however in some other capital cities, like Sydney and Perth, we’re finding that housing supply is not able to keep up with the population growth rates.”
While Perth has since seen a decrease in population, with the surge over the time period of the report attributed to WA’s mining boom, Sydney continues to struggle with an undersupply.
Professor Ong said it was especially severe considering Sydney’s population growth actually sat under the national average.
“The issue is not so much about the population growing at a really quick rate, there are also some supply-side barriers and even geographical constraints as well that’s preventing quick expansion of supply,” she said.
“In Sydney it also has a lot to do with high house prices, with really, really high house price to income ratio.”
More supply not driving down price
The report also found an increase in supply was not leading to better housing affordability, and this was a national issue.
“Most new housing supply is concentrated in middle to high-concentrated segments,” Professor Ong said.
“We’d normally expect to see a trickle-down effect, where building higher-value homes leads to the opening up of lower-value homes for those on lower incomes, but our research indicates that isn’t the case.
“Unfortunately, what that means is that between 2006 and 2014 … less than 1 per cent of new housing supply has been delivered to the lowest price decile in the housing market.”
She said housing affordability announcements made in the recent federal budget, including the National Housing and Homelessness agreement and the city deals in the National Housing Infrastructure Facility, were welcomed.
But she said solving the problem would require cooperation across all tiers of government.
“It’s really important for government to intervene,” she said.
“This may mean providing incentives to developers to deliver more supply in lower value areas or for government themselves to come in and increase the supply of housing in low-value areas.
“The issue of being able to deliver housing supply to the right location is a really critical one so it’s really important for federal and state and territory and local governments to all work together in order to coordinate to deliver new housing supply where it’s most needed.”