Reforms needed to boost housing supply


Reform is needed to help boost housing supply amidst an unprecedented population increase, according to an expert.

InvestorKit Founder and Head of Research, Arjun Paliwal said most areas across Australia had a huge undersupply of homes, with some areas at a critical level.

“Australia’s housing supply crunch is impacting both the sales and rental market at a time when we are seeing growing demand due to rising migration, a decline in average household size, and a population concentration in Australia’s capital cities,” Mr Paliwal said. 

“Despite rising rates, Australia’s housing crisis will not resolve until we nail the fundamentals – supply and demand.

“Currently, supply issues for established and incoming stock are set to persist over the coming years while our population growth continues to soar.”

Mr Paliwal said there was an immediate need for policymakers to review the current system and implement favourable reforms and housing policies.

“Without this, Australians will continue to feel the crunch in both regional and metro areas across the nation,” he said.

Mr Paliwal said Robina, on the Gold Coast, was currently the tightest market in the country on the back of surging population numbers.

Penrith in NSW is also at crisis point, with inventory well below the balanced mark for the past year.

Brisbane Inner – North has had a big population increase over the past few years and supply levels are extremely tight.

While in South Australia, the Barossa’s population continues to rise along with Bayswater and Bassendean in WA, putting a huge strain on the supply of homes.

Mr Paliwal said the outdated tax system, low planning efficiency, rising construction costs, and unfavourable policies towards investors were some of the factors fueling supply issues. 

“To resolve the housing supply shortage issue, Australia needs not just to build more housing supply but, more importantly, to have its population distributed more evenly, improve the efficiency of the planning system, have a fairer tax system to encourage stock mobility, increase the housing market’s friendliness to investors, and improve the diversity in housing and rental providers,” he said.

He said rental reforms and encouraging build-to-rent (BTR) and social housing are key to relieving rental supply, and Australia is currently not friendly to either. 

“While BTR is a focus for the Labor Government, it still faces a range of hurdles including an unfavourable tax system, extended development approval times, relatively low yields, and high construction costs,” he said.

“Likewise, despite a growing population, the availability of social housing has not risen to match. The government needs to urgently address these issues.”

Mr Paliwal said as the majority of Australia’s population is concentrated in or near capital cities, expediting land supply and planning approvals is vital. 

“Rezoning of city areas has become a focus of improving land supply,” he said.

“However, the process is unwieldy and can take several years causing severe development delays. 

“Slow, convoluted development approvals (DA) have also been identified as a hurdle. 

“We are already seeing reforms, such as NSW’s Rezoning Pathways Program, but more is needed.”

According to Mr Paliwal, people also need to stop bashing property investors.

“Investors play an important role in easing rental pressures and increasing stock mobility in the sales market,” he said.

“However, investor activity has been suppressed due to unfavourable policies, higher taxes and fees, and higher interest rates for investor loans. 

“We need to end investor-discouraging fiscal policies that are hurting rental supply and worsening affordability. 

“Investors are crucial to a healthy market.”

Mr Paliwal while these reforms are critical they will take a long time to achieve and it will mean prices keep rising.

“In the short-term, housing prices in markets that are facing the most severe supply crunch are expected to keep their robust growth momentum,” he said.



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