The so-called housing shortage, which has been used by the property industry as an excuse for Australia’s overpriced housing, has been exposed by the 2011 Census figures. The Census revealed that the number of households in Australia is some 1 million less than assumed by the National Housing Supply Council (NHSC) in its estimates of Australia’s housing shortage. From Bloomberg:
Australia has almost 1 million fewer households than assumed in government forecasts of a housing shortage, raising doubts about a supply shortfall cited as the main reason the nation will avoid a U.S.-style crash.
The Pacific nation had 7.8 million households, data released yesterday from the 2011 Census showed. That compared with estimates of 8.7 million as of June 2010, according to the latest figures used by the National Housing Supply Council, a group created by the government in May 2008 to monitor housing demand, supply and affordability. Australia’s population also grew by 300,000 less than previously estimated, to 21.5 million…
“There’s been a bit of a disconnect between the estimates between the census points and the actual census data,” said David Cannington, Melbourne-based economist at Australia & New Zealand Banking Group Ltd. (ANZ) “My feeling is that some of the underlying housing demand numbers will be revised down.”
Australia faces a shortage of about 369,000 homes by 2016, under a medium household growth scenario, which assumes the nation will have 9.7 million households by that time, the council said in a report released last week…
The council’s figures are based on the last census, conducted in 2006, with adjustments for additions and reductions of homes, said Owen Donald, Sydney-based chairman of the National Housing Supply Council, in a telephone interview.
“On the face of it, 900,000 is a gigantic difference,” he said. “We need to get to the bottom of what’s in the statistics bureau numbers.”
For readers unfamiliar with the NHSC’s estimate of Australia’s housing shortage, below is a summary chart taken from the 2010 NHSC report:
While it is true that Australia’s housing supply tightened over the 2000s – owing to there being no boost in construction levels even as Australia’s population growth surged – conditions were never as severe as assumed by the NHSC.
The NHSC’s estimate of housing shortages, which is based on ‘underlying demand’, also failed to account for the fact that Australian households have responded to higher home prices by increasingly opting for shared (group) accomodation, which has resulted in a lower number of households than would otherwise have been the case.
There is certainly a shortage of affordable homes in Australia, but no housing shortage per se.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
