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NSW and Brisbane hit hard by the housing supply crunch

Inner Brisbane and the western suburbs of Sydney are some of the hardest hit locations of Australia’s housing supply crunch, according to new research.

Buyer’s agency InvestorKit analysed the locations across the country that were suffering the most from a critical shortage of properties and discovered Brisbane, NSW and South Australia featured prominently in the top 10.

Founder and Head of Research at InvestorKit, Arjun Paliwal said inner Brisbane was the tightest location in the country for homebuyers.

“While Brisbane Inner North’s population increased by 26.1 per cent between 2012-2021, the total number of for-sale listings fell by 44 per cent over the same period,” Mr Paliwal said.

“The current volume of stock on market is low (at 1.18 per cent) compared to the region’s total house stock. 

“Housing stock has been recovering since early 2022 due to decreased sales volume and a slight increase in supply. 

“However, it still sits at a fairly low level, leading to a 28.3 per cent annual growth in house prices to August 2022.”

Mr Paliwal said Camden and Penrith in NSW were also seeing incredibly tight levels of supply.

“Camden’s population increased by 35.7 per cent in the nine years to 2021, but the total number of for-sale listings have decreased by 24.8 per cent over the same period,” he said.

“The population in Penrith has increased by 21.9 per cent in the nine years to 2021, while the total number of listings for sale have only risen 2.3 per cent over the same period.”

Other areas that were suffering from critical shortages include Toowoomba, Mount Gambier, Albury-Wodonga, Tuggeranong, Wagga Wagga, Prospect-Walkerville, Charles Sturt and Onkaparinga.

According to Mr Paliwal, structural issues in the housing market will likely see many of these areas continue to suffer from a chronic under-supply of homes.

“A combination of many existing and emerging problems have contributed to the housing supply crunch,” he said,

“These include net migration adding immediate demand to the rental market, the average household size declining, difficulties in accessing new land supply and delays in development approvals, the concentration of people in major cities and coastal areas, Australians holding onto their properties for longer, and delays in construction due to soaring material costs and labour shortages, and a suppression of investor activity.”

Mr Paliwal said in the sales market, Australia’s for-sale listings have been trending down since the 2011 peak. 

“However, our population has been growing steadily over the years, leading to a decline in available stock per capita,” he said.

Similarly, rental listings have been trending down since 2016, resulting in falling vacancy rates since then.”

Mr Paliwal said there were no quick fixes to the current supply-side problems.

“Unfortunately, the solution isn’t as simple as building new houses, as the construction industry is already struggling to meet underlying demand,” he said.

“To resolve Australia’s housing supply shortage issue, we need a more even distribution of population, a more efficient planning system, a fairer tax system to encourage stock mobility, more investor-friendly policies, higher diversity in housing providers, and more, which would take a long time to achieve.”

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.