New South Wales the “poster child for failing housing markets”

A new report has found that the country’s housing markets are in crisis, with New South Wales deemed the “poster child for failing housing markets”.

The ‘A Stark Reality’ report from the Property Council of Australia has found that there has been an “epic failure of Australia’s national housing policy over decades”, which has led to the current affordability and rental crisis that is currently gripping the country’s housing markets.

New South Wales was found to run the worst planning system in the nation, with the vast majority of councils unlikely to keep up with demand requirements.

The report, the first in a planned series of thought leadership papers from the Property Council, said the NSW Government’s “self-inflicted inability to meet its housing targets” is particularly acute in Sydney.

The NSW Government consistently fails to sustain a durable pipeline of housing, knowingly undershoots its own housing targets, has a complex legislative and regulatory approvals process and fears necessary conversations with local governments and applies high rates of taxation to new housing, according to the report.

The Victorian Government has also been slammed in the report, with policy errors and taxes continuing to stifle the pipeline of new housing.

The report was critical of the way the Victorian Government introduced the Windfall Gains Tax, which made housing more expensive.

While Queensland was also criticised for not keeping up with its own projected supply of new houses.

The report stated that between now and 2030, active supply capacity in South East Queensland is predicted to average 1100 lots per month, while peak demand is expected to average 1400 lots per month – leading to a shortfall of 36,000 lots over the decade.

Ineffective government policy

Property Council of Australia Chief Executive Mike Zorbas said Australians are clearly feeling the effects of years of ineffective government policy.

“Poor planning systems and mediocre policy choices continue to combine with high state and local taxes to further add to the cost of building each new home,” Mr Zorbas said.

“Costly, overtaxed and delayed housing construction pipelines reduce the total supply of new dwellings including social, affordable and at-market homes as well as diverting investment from the future sustainability and resilience of our built environment.

“We have to change things up.

“We can’t afford another decade of failure.”

Mr Zorbas said a combination of unaffordable housing, a lack of rental housing, as well as not enough new supply coming on board have also been key drivers of the current rental crisis.

“Australia is home to property companies that lead the world in sustainability and resilience metrics,” he said.

“Now is the time to put that global expertise into action here at home, by delivering the housing choices for our growing needs, and lifting Australia off the bottom of the affordability ratings.”

Poor sentiment

According to Demographia’s International Housing Affordability 2022 report, Australia was the sole nation with all of the major city housing markets ranked as severely unaffordable.

Sydney was the second least affordable market among 92 surveyed, with all five Australian capitals measured sitting inside the worst 20 for affordability.

The current housing crisis is also weighing heavily on sentiment with the report finding that 81 per cent of Australians believe there is a lack of housing that is affordable in their area, with 45 per cent thinking the government should arrange incentives to encourage developers to build more affordable housing stock for key workers like nurses, police and teachers.

It also found 40 per cent of people want to allow more townhouses and duplexes to be built to boost housing stock.

The survey also found over half of all renters say they are renting because they have no other option on the table, with a third believing they won’t be able to purchase a home in the next five years.

“While a significant portion of people who rent feel trapped, another significant portion chose to and prefer renting because it suits them,” Mr Zorbas said.

“If you are a senior Australian who wants to expand their quality of life in a retirement village, a student who wants a community conveniently based near their place of learning or a family who seeks the improved security of tenure that comes with Build-to-Rent housing you need governments at all levels to make investment in these options as affordable as possible.”

Housing solutions

The Property Council said it’s time to hold the state and federal governments accountable for the mistakes and lack of action on housing issues with a regular report card on how each state is doing.

They also want to design, implement and enforce clear housing targets at a national, city and local government level and ensure capital city and regional strategic plans have a supply of well-located housing that matches population growth.

The report said Australian cities must also shift towards high amenity, high liveability and medium-density metropolitan living supported by great public transport.

The Property Council also wants more focus put on providing housing for those who need it most, including better support for first-home buyers, pensioners and renters.

Finally, they also want to encourage more institutional investment in housing, through lower taxes for build-to-rent schemes and more accommodative policies on both state and federal levels.

“The last few years have seen growing Federal awareness of the challenge. There is now in principle agreement between three levels of government to work with non-government partners on broad housing solutions,” Mr Zorbas said.

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.