Housing supply and affordability issues 2012–13

Housing Australia
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This report marks a change to how the National Housing Supply Council publishes its work. The Council will now look at specific issues and themes in this Housing Supply and Affordability Issues publication each year. It will also publish its annual assessment of the balance between housing supply and underlying demand, as well as what is happening to housing affordability, in a shortened State of Supply Report around the middle of the year. The latter will be similar to the Housing Supply and Affordability — Key Indicators, 2012 report published in June 2012.

There have been recent changes to the Council’s terms of reference. Most notably, the Minister for Housing has specifically asked that the Council examine the broader implications for housing supply of urban planning and infrastructure development processes, including transport and telecommunication services. This report was largely completed before the terms of reference were amended. The revised terms of reference can be found in Appendix 1 and on the Council’s website.

The housing market remained soft in most areas and market segments over 2012, presenting a difficult operating environment for the industry. As the Council outlined in previous reports, a slow housing market, reflecting sluggish effective demand and fragile confidence, is not necessarily inconsistent with an underlying housing shortage. In fact, a sluggish house purchase market and subsequent low volume of new supply coming onto the market potentially exacerbates the problem of inadequate supply. The shortage is likely to continue to be felt by the more vulnerable in our population, such as would-be buyers with low and insecure incomes, those at the lower end of the rental market and those dependent on government income support payments.

Looking ahead, the Council aims to refine its assessment of the adequacy of housing supply, including looking to overcome some of the challenges thrown up by the revisions to, and current uncertainty about, population estimates. It will also need to look more closely at its regional analysis. Previous estimates of the balance between housing supply and underlying demand for each State and Territory have included assumptions about interstate migration rates and the destination of new arrivals, driven by past trends. These have changed significantly in many parts of Australia. For instance, between 2006 and 2011 Western Australia overtook Queensland as the State with the fastest rate of population growth.

In addition to addressing data challenges, future work will see the Council taking a stronger interest in urban development patterns and infrastructure. Following the change to its terms of reference, the Council will look in more detail at linkages between housing and infrastructure, including roads and public transport, telecommunications, freight movement and major facilities like schools and public hospitals. This is an important area of work given the role of infrastructure provision and financing to many elements of success in new and expanding communities, as well as to those communities that act as conduits or destinations for an expanding population in a growing city. The Council also recognises the challenge of infrastructure maintenance and renewal in all communities, including those with static or declining populations. The interaction between infrastructure provision, housing supply, amenity and affordability will be the primary focus of the Council’s work in this area

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