Number of Residential Dwellings being Built Less than Required

The rate at which we are currently churning out houses is around 30,000 less than what is actually required in order to meet the demand, according to a recent analysis of the home building industry.

Although we are experiencing a housing boom in Oz, new projections show that Australia’s long-run average annual rate of new home building could be tens of thousands less than what is necessary to meet future demand.

The Housing Industry Association (HIA) released its’ analysis of a range of scenarios regarding population and income growth through to the year 2050. According to the HIA projections, we would need a total of 186,391 new houses and apartments if medium growth rates of each plausible scenario come to pass.

The HIA says that medium growth figures indicate construction deficit of at least 30,000 homes a year. This is compared to average yearly commencements of just under 157,000 over the 2 decades leading to June2014 according to ABS data.

However the deficit spoken of by the HIA is not equal throughout Oz. The HIA says that states such as South Australia and Tasmania which have low population growth rates are actually building more homes than required in the long run, the high growth states such as NSW require a much greater increase in home construction productivity.

According to an article on Sourceable.net the long term average home building rates in Western Australia on the other hand need to be increased by more than half in order to meet the demands, under the HIA’s implied scenarios for the state.

It should however be noted that these projections are subject to considerable variability and implied annual levels of demand for new housing vary from 248,186 to 118,164, depending on which scenarios actually play out.

The post on Sourceable.net also goes on to quote HIA economist Geordan Murray who explained that medium scenario figures put the current cyclical boom in new housing construction into perspective.

residentialconstruction“In 2013/14, the number of new homes built was about the same as the number of new homes demanded by the population during the year,” he said. “Unfortunately a match of this kind is an aberration – throughout much of the last decade there was a considerable mismatch between the level of demand for housing and the amount of new home building.”

Read more at: http://sourceable.net/australia-building-30000-less-homes-than-needed-each-year/#sthash.xc9PzYGZ.dpuf

HIA goes on to detail how each state compares and what would be required in order to meet the demand through to 2050 (assuming that medium range projects prevail).

Even with a modest rate of expected population growth (one per cent), New South Wales would need to lift activity from historic home building rates of 40,861 new houses and apartments per annum (20 year annual averages of dwelling commencements to June 2014 – ABS figures) to 45,284 dwellings per annum

Strong growing Victoria would have to lift historic building rates from 42,731 per annum to 46,669 per annum

Stronger growing Queensland would require a massive lift in annual home-building rates from 35,862 dwellings per annum to 44,364 dwellings per annum

Booming Western Australia would require a bigger lift still from 21,125 new dwellings to 34,993

The ACT and Northern Territory would have to lift historic build rates from 2,854 and 1,497 to 3,455 and 1,962 respectively.

Read more at: http://sourceable.net/australia-building-30000-less-homes-than-needed-each-year/#sthash.xc9PzYGZ.dpuf

 

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