Why Australia’s property crisis is about to get WORSE – as the report shows how far home sales have fallen
- Rent and housing availability is getting worse in Australia
- Recent report shows a drop in sales and supply of new homes
Australia’s housing crisis is expected to worsen following a recent report that showed new home sales have plummeted and a critical supply shortfall.
The Urban Development Institute warned in its latest State of the Land report on Wednesday that a slump in buyer demand and housing availability would raise rents and reduce affordability.
Sales of greenfield land — unoccupied pastures — fell 49 percent, while the multi-unit new construction sector recorded its lowest sales since the global financial crisis.
Sales of new apartments and townhouses were down 34 percent from 2021 and 54 percent below the decade’s average.
The decline is due to several factors such as rising interest rates, the cost of living, financial problems for buyers, construction costs and productivity slowdowns for developers.
Australia’s housing crisis is expected to get worse after a recent report from the Urban Development Institute (stock image)
The UDIA has called on the government to focus its attention on increasing the housing supply.
“The UDIA State of the Land 2023 report serves as the ‘canary in the coal mine’ for governments to take action now to bring new housing stock online and ensure affordability does not worsen further,” said Maxwell Shifman, UDIA National President.
“It is the responsibility of all levels of government to ensure that our industry can continue to provide homes for all Australians,” he added.
Colin Keane, director of Research4 – which collaborated with the UDIA on the report – said the data showed there was ‘a level of uncertainty across the market’, both from industry and consumers.
“This uncertainty is resulting in lower than modeled levels of activity in all markets, fueled by the rising cost of living, falling household savings rates and changing credit rates,” he said.
“With each rate increase, the customer’s purchasing power or ability to pay decreases, as does the cost of doing business for the industry.”
The UDIA estimates that sales of houses and apartments will continue to fall in 2023.
Completed homes will ‘decline sharply’ and are expected to fall to about 50,000 below the annual average of 200,000 needed to meet the Albanian government’s plan to build one million new homes.
Rents are predicted to rise and housing affordability to decline this year due to a drop in new home sales and a shortage of supply (stock image)
For Sydney, it is estimated that the number of new homes will fall to around 20,500 homes this year.
The drop in Melbourne is expected to be around seven percent with some 35,700 new homes in 2023. That number is expected to fall further to 33,700 next year.
Despite the decline in property sales and buyer demand, the median national lot price rose 20 percent last year, the report said.
Average lot prices in Sydney rose 31 percent to an average of $716,000, while Melbourne rose 16 percent to $382,000.
On the other hand, the price for new apartments in the major capitals leveled off.