Flatlining wages growth, decades of massive price increases
and the looming largest decline in housing commencements set to come on in the
next calendar year threatens to impact the economy without response says a new affordable housing
report released today by PowerHousing Australia informed by CoreLogic.
As Australia shifts back from the meteoric 230,000 home
starts of recent years down by up to 70,000 fewer homes delivered in 2022, (P.10)
there is a risk prices may rapidly rise again with it high time to consider
growth levers to support jobs, taxes and affordable supply said the 2020 Scale
Sector Capacity Prospectus report.
Nicholas Proud, CEO of PowerHousing Australia, which
represents 33 of Australia’s largest Tier One and scale-growth Community Housing
Providers, said “with 40 trades and subtrades receiving work from every new
house delivered there is a real need to ensure that the supply rate doesn’t
drop below around the 180,000 homes that need to be delivered each year (P.10) to
support the demand, underpin the economy and stabilise house price growth at or
just above CPI rates.
“House prices rose by up to 30% per annum (p.12) in capital
cities across the country in recent years which was out of alignment with wages
growth but have since come back as we built enough homes as a country.
“The risk is that if supply declines again below demand once
again and we don’t build enough homes to meet population needs, then excessive
price rises will recommence above already unaffordable levels today.
“The numbers of homes selling for a reasonably affordable
sub $400,000 mark has plummeted over the past 5-10 years. In Melbourne, 28.4%
of homes sold for under $400,000 in 2014, today just five years later only 2.5%
were sold in the past year under this price point (p.14).
“Just 10 years ago in 2009, 39% of homes sold under in
Sydney for under $400,000 as opposed to just 3.1% selling below this price
point in the past year.
The report flags the issues associated with “not building
enough affordable supply and the distortionary impact on pricing, but also
points to the affordable housing lever that is still able to be pulled to
deliver 10-20,000 new additional homes per year to underpin the national supply
rate when commencements finish their steep fall.
“If given the right incentive such as property transfer or
an NRAS type scheme (P.15) to cover the cost of providing rentals at more
affordable below market levels then there is a global asset class of international,
institutional and domestic investment as well as supporting partnerships that could
emerge to see new pre-commitment to scale developments underpin falling supply.
“The activation of the soon to operate NHFIC Research House
which is under development, will also support new innovative financing
mechanisms (P18-21) in addition to the NHFIC Bond Aggregator to roll out
addition streams of funds to the deliver the additional homes that will be
needed in 2020-22.
“There is an absolute vacuum of housing data that means
decisions that impact the future housing market and all those people to aspire
to be a part of it are unable to get off the bottom rung of the property
ladder. The NHFIC Research House will see greater numbers of homes built
particularly in affordable if the policy data and the gaps of provision are
made with respondent housing policy that NHFIC can then action.
“With a Federal Government now having three Ministries with
a role in housing, this data and the best practice emerging options for the
affordable dwelling demand group to underpin the housing commencements will
become a growing player in the Australian development sector.
“PowerHousing CHP Members are one of the last growth levers
that can be pulled to reduce the housing commencement downturn with the emerging
Sector increasing its size substantially over the past 5 years (p.29) are
seeing more homes built by these organisations than public housing with highest
“Innovative projects such as Global Asset Class investment
into affordable housing and Build to Rent are coming (p.46) and the Federal
Government will mobilise tens of thousands of homes to be built to underpin the
jobs, taxes and affordable supply needed to bring the housing market into a
position of equilibrium balance.
For further media queries contact:
Nicholas Proud, CEO, PowerHousing Australia, 0408 538 126.