Researchers warn of uneven housing supply across Australia

Housing supply varied across states and territories and also in mainland capital cities

Around 1.5 million new homes were built in Australia between 2006 and 2016 but the growth of housing stock was uneven, forcing states like New South Wales to play catch up, new research shows.

A report from the Australian Housing and Urban Research Institute (AHURI) looked at the quantity, composition and distribution of new housing supply across Australia, examining what influenced the differences in local production rates and what governments can do to boost diverse new dwelling supply. 

The level of housing stock grew the most in Western Australia (26 per cent), and the least in NSW (12 per cent).

Researchers said only a building boom between 2015 to 2018 had pushed NSW to reach supply levels comparable with the other states.

As well as differing growth rates between states and territories, researchers also found an uneven distribution of new housing in all mainland capital cities.

Sydney had the most even balance between inner, middle and outer area supply.

Curtin University lead researcher Professor Steven Rowley said when considered in relation to population numbers, the distribution of new supply was quite even across Greater Sydney.

“In contrast, Greater Melbourne saw strong supply in its inner and outer areas, but little in established middle areas, while supply in Perth and Adelaide was mostly on the urban fringes,” Rowley said.

He said relationships between new housing supply and price change were complex, with typically cheaper housing areas recording modest price growth, compared with areas of pronounced multi-unit development which experienced higher price inflation. 

“An interesting finding was that, over the 10 years, in all cities those local government areas (LGAs) that delivered more housing supply had below city average house prices,” he said. 

“In fact, all of the high-supply LGAs in Perth and Brisbane were low-value areas. The outlier was Sydney, but even there 40 per cent of high-supply LGAs had a price below the city average.”

The report noted that the key drivers of new supply were the availability of sites – especially ones where developers stand to make a profit.  

“If there is no profit there is no development, so market conditions must be right,” he said.

“Government can help by making the development approval process as efficient as possible and monitoring the costs of urban regulation.”

The full report can be seen here.