Deloitte Access Economics has published a note on Australia’s housing crisis, which is attributed to housing demand via population growth (read immigration) overrunning the housing supply.
“The root of Australia’s housing crisis is that supply is failing to keep up with rising demand”, Deloitte says.
“Demand has escalated in line with strong population growth driven by record high net overseas arrivals through 2023”.
“Recent growth in housing commencements has failed to keep up with this population growth, let alone start to address the structural undersupply”.
Deloitte has produced the below chart showing the massive backlog of unfinished homes across Australia, which is a by-product of supply-side constraints from the pandemic:
“This backlog of construction work stems from pandemic-era challenges”, Deloitte notes.
“Due to lockdowns, worksite access was limited, hindering progress on both residential and non-residential construction projects. Emerging from the pandemic, higher material prices, higher wages and shortages of labour have continued to weigh on the level of construction activity”.
“These setbacks have only been exacerbated by insolvencies in the construction industry, which has left some homes only partially built and in need of new contractors”.
Deloitte warns that these pandemic-era supply-side constraints will continue to weigh on housing construction over the foreseeable future.
“The backlog of construction projects appears to have peaked, but the issue remains a key constraint”, Deloitte says.
“Over the past two years, on average almost 103,000 houses have been under construction at any one time. That is more than two thirds higher than the average seen over the decade prior to the pandemic, as shown in Chart 1”.
“This is not a good news story, but an example of the blockage that is preventing a faster upswing in housing supply”.
The question every Australian should be asking the federal government is: why did it choose to ramp-up immigration to record high levels when the supply-side of the housing market was clearly bottlenecked?
Australia’s population grew by a record 680,000 people in 2023, which dwarfed the circa 170,000 homes built over the same period.
The federal government’s reckless immigration policy is the primary driver behind the collapse in the nation’s rental vacancy rate to record lows, alongside the hyper-inflation of rents.
It is an inequality disaster in the making, courtesy of the Albanese government.
