Why Australia’s property crisis is about to get even WORSE – as report finds how far sales of dwellings have fallen
- Rent and housing availability to get worse in Australia
- Recent report shows a fall in new home sales and supply
Australia’s housing crisis is expected to worsen following a recent report that found there has been a drastic fall in new home sales and a critical supply shortage.
The Urban Development Institute warned in its latest State of the Land report released on Wednesday that a slump in buyer demand and housing availability would increase rental rates and reduce affordability.
Sales of greenfield land – unoccupied paddocks – fell by 49 per cent while the new-build multi-unit sector recorded their lowest sales since the global financial crisis.
Sales for new apartments and townhouses were down 34 per cent on 2021 and 54 per cent below the decade’s average.
The fall is due to a variety of factors such as rising interest rates, the cost of living, finance issues for buyers, construction work costs and productivity delays for developers.
Australia’s housing crisis is expected to get even worse following a recent report from the Urban Development Institute (stock image)
The UDIA has called on the government to focus its attention on increasing housing supply.
‘The UDIA State of the Land 2023 report serves as the ‘canary in the coalmine’ for Governments to act now to bring new housing supply online, and ensure affordability does not degrade even further,’ said Maxwell Shifman, UDIA National President.
‘It is the responsibility of all levels of Government to ensure our industry can continue to deliver homes for all Australians,’ he added.
Colin Keane, director at Research4 – which partnered with the UDIA on the report – said the data showed how there was ‘a level of uncertainty across the market’ from both the industry and consumers.
‘This uncertainty is resulting in lower than modelled levels of activity across markets which is fuelled by the rising cost of living, shrinking household saving rates and changing lending rates,’ he said.
‘The purchasing power or capacity of the customer is falling with each rate rise, along with the cost of doing business for industry.’
The UDIA estimates that home and apartment sales will continue to plummet throughout 2023.
Completions of dwellings will ‘retract sharply’ and are predicted to slump to around 50,000 below the 200,000 yearly average needed to meet the Albanese government’s plan to build one million new homes.
Rental rates are predicted to increase and housing affordability will be reduced this year due to a fall in new homes sales and a supply shortage (stock image)
For Sydney, it’s estimated that new residential supply completions will fall to around 20,500 dwellings this year.
It’s expected that the drop in Melbourne will be around seven per cent with about 35,700 new dwellings in 2023. That number is expected to plummet even further next year to 33,700.
Despite the drop in property sales and buyer demand, the median national lot price rose by 20 per cent last year, the report said.
Median lot prices in Sydney increased by 31 per cent to an average of $716,000, while Melbourne rose by 16 per cent to $382,000.
By contrast, the price for new apartments flatlined across the major capital cities.