It was another high for Australia when its population reached 25 million earlier than expected. However, this poses a challenge for housing supply, which must be able to keep up to prevent worsening affordability.
In a report for Australian Broker, HIA Deputy Managing Director Graham Wolfe explained that the country should be able to produce 230,000 new dwellings annually over the next three decades to ensure that supply remains in line with the population growth.
“Clearly growth has occurred faster than the experts predicted. If these predictions are to be realized we must find a way to keep new, affordable homes coming into the market to ensure supply is maintained across the country," Wolfe said.
Should Australia fail to do so, Wolfe warned that the current affordability challenges would likely continue – a situation which would reduce homeownership rates.
The first Intergenerational Report, released in 2002, predicted Australia would reach a population of 25.3 million by 2042. In 2007, the estimates were adjusted, saying that the population target would be reached in 2027. In 2010, Australia's population had already reached 22 million and the Intergenerational Report said the population target would be reached by 2020. The latest report now projects the population to grow to 39.7 million by 2055.
"Governments must recognise that growth in the housing sector and improvements in housing affordability will not be realised by making ad-hoc changes to negative gearing, capital gains tax or charges on foreign investors," Wolfe said.
He urged the local and state governments to establish a unified agreement on managing land supply to be able to sustain the steady stream of housing supply.
“A strong housing sector at a time of population growth not only means more affordable houses, it means more jobs and a more prosperous economy overall."
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