Why Australia’s property crisis is about to get worse – The report also finds out how much lower home sales are
- Rents and housing availability are getting worse in Australia
- The latest report shows a decline in new home sales and supply
Australia’s housing crisis is expected to worsen after the latest report found that there was a sharp decline in new home sales and an acute shortage of supply.
In its latest State of the Land report released on Wednesday, the Urban Development Institute warned that a decline in buyer demand and housing availability will increase rental rates and reduce affordability.
Sales of new land – unoccupied pastures – fell 49 percent while the multi-unit new construction sector posted its lowest sales since the global financial crisis.
New condo and home sales are down 34% in 2021 and 54% below the decade average.
The decline is due to a variety of factors such as rising interest rates, cost of living, financing issues for buyers, construction costs and productivity delays for developers.
Australia’s housing crisis is set to worsen after the latest report from the Urban Development Institute (stock image)
UDIA called on the government to focus its attention on increasing the housing supply.
UDIA’s 2023 State of the Land Report, Maxwell Schiffman, said: ‘The UDIA State of the Land Report 2023 is a ‘canary in the coal mine’ for governments to act now to bring new housing supplies online, ensuring affordability does not deteriorate further.
“It is the responsibility of all levels of government to ensure that our industry continues to deliver home deliveries to all Australians,” he added.
Colin Keene, Director of Research4 – who was involved with UDIA on the report – said the data showed how there was ‘a level of uncertainty across the market’ from both the industry and consumers.
“This uncertainty is leading to lower-than-typical levels of activity across markets fueled by rising costs of living, shrinking household savings rates and changing lending rates,” he said.
“The purchasing power or purchasing power of a customer decreases with each rise in price, along with the cost of doing business to the industry.”
UDIA estimates that home and apartment sales will continue to decline throughout 2023.
Completed housing stock will decline sharply, and is expected to fall to about 50,000 below the annual average of 200,000 needed to meet the Albanian government’s plan to build 1 million new homes.
Rental rates are expected to increase and housing affordability will decline this year due to lower new home sales and supply shortages (stock image)
For Sydney, it is estimated that the supply of new housing completed will drop to around 20,500 homes this year.
The decline in Melbourne is expected to be around seven per cent with around 35,700 new homes in 2023. This number is expected to drop further next year to 33,700.
The report said that despite the decline in real estate sales and buyer demand, the national average lot price rose by 20 percent last year.
Average lot prices in Sydney rose 31 per cent to an average of $716,000, while those in Melbourne rose 16 per cent to $382,000.
By contrast, the price of new apartments is stable across major capitals.