The housing supply crunch is expected to continue into next year and 11 regions are likely to bear the brunt.
This is according to the latest study from InvestorKit, which analysed more than 300 SA3 regions.
The 11 suburbs were identified as the most impacted, achieving the highest Supply Shortage Score (SSS) of out five, based on factors including established supply risk, future supply risk, people movement, housing availability, and rental and price pressure.
According to InvestorKit, there are 10 existing and emerging problems that contributed to the housing supply crunch in the 11 regions:
- Net migration adding demand to the rental market
- Declining average household size
- Difficulties in accessing new land supply
- Delays in development approvals
- Concentration of people in major cities coastal areas
- Longer holding periods for properties
- Delays in construction
- Soaring material costs
- Labour shortages
- Suppression of investor activity
InvestorKit founder and head of research Arjun Paliwal said Australia’s for-sale listings have been trending down since the 2011 peak while population has been growing steadily.
“The solution isn’t as simple as building new houses, as the construction industry is already struggling to meet underlying demand,” he said.
“To resolve Australia's housing supply shortage issue, we need a more even distribution of population, a more efficient planning system, a fairer tax system to encourage stock mobility, more investor-friendly policies, higher diversity in housing providers, and more, which would take a long time to achieve.”
11 regions most impacted by housing supply
Here are the 11 regions identified as the tightest housing markets and some key insights about each one:
1. Brisbane Inner - North, Qld
- Supply Shortage Score – 4.7
- Population increased by 26.1% between 2012 and 2021.
- Total number of building approvals in 2021 represent 0.78% of all houses
- The current volume of stock on market is at 1.18%.
- House prices in the region increased by 28.3% annually in August 2022.
- Vacancy rates sit at a low of 0.7%.
2. Camden, NSW
- Supply Shortage Score – 4.7
- Population increased 35.7% over the nine years to 2021.
- Over the same period, the total number of for-sale listings declined 24.8%.
- Building approvals have been declining since 2018.
- While there has been a 47.5% increase in sale listings over the last 12 months, inventory still sits at a low level.
- House prices increased 18.9% annually in August 2022.
3. Penrith, NSW
- Supply Shortage Score – 4.7
- Population increased 21.9% over the nine years to 2021.
- Property listings increased 2.3% over the same period.
- Currently, 0.83% of the region’s total housing stock is on market.
- Annual price growth in August increased 15.6%.
4. Toowoomba, Qld
- Supply Shortage Score – 4.3
- The total number of for-sale listings declined 39.3% while population increased 9.8% over the nine years to 2021.
- Annual growth in house prices hit 19%.
- Rental vacancy rates remained low, leading to a 16.7% rise in rents over the past year.
5. Mount Gambier, SA
- Supply Shortage Score – 4.5
- Population in this region rose 5.8% between 2012 and 2021.
- Building approvals comprised 1.48% of all houses in the region.
- The decreasing number of for-sale listings, down 31.9% yearly, has resulted in a 36.5% drop in inventory level despite a slight decline in sales volume.
- House prices increased 22.8% over the year to August 2022.
6. Albury-Wodonga, NSW
- Supply Shortage Score – 4.4
- The regions recorded a dramatic 65.9% decline in for-sale listings over the decade while population increased by 6.7%.
- While demand for sales volumes have declined by 20.4%, the low level of listings makes the recovery in inventory levels slow.
- Homes in the region recorded a median price growth of 21.9% in August 2022.
- Rents rose 12.2% over the past year due to lack of supply.
7. Tuggeranong, ACT
- Supply Shortage Score – 4.4
- Its population is recovering steadily, up 3.9% over the past five years.
- Building approvals comprised only 0.19% of all houses this year.
- Current volume of supply is at 0.46%.
- Annual price growth in August was at 22.2%.
- Vacancy rates have been hovering at crisis level of less than 0.5% over the past year.
- Rents increased 14.3%.
8. Wagga Wagga, NSW
- Supply Shortage Score – 4.3
- Between 2012-2021, Wagga Wagga’s population increased by 5.6% but the total number of for-sale listings dropped by 66.9%.
- Although sales have slightly declined by 22.5% in a year, the decreased supply is seeing inventory stay at an extremely low level.
- The low inventory level has resulted in a 22.8% annual gain in house prices.
9. Prospect-Walkerville, SA
- Supply Shortage Score – 4.3
- Population in this region has increased 6.1% in the nine years to 2021, while the total number of for-sale listings increased by 6% over the same period.
- While there is a slight increase in supply and a decline in sales volume, the stock remains at extremely low level.
- Median prices increased by 44% in August 2022.
- Rental vacancy rates are at 0.6%, leading to a 11.1% increase in rents.
10. Charles Sturt, SA
- Supply Shortage Score – 4.3
- This region’s population increased by 10% in the nine years to 2021, while the total number of for-sale listings decreased by 40.2% over the same period.
- Inventory started trending upward since mid-2022 as listings increased and sales decreased. However, the recovery is fairly slow, so inventory still sits at a low level.
- Annual growth in median house prices was at 19.3% in August.
- Rental vacancy rates in this region are at 0.3%, pushing rents up 12.8%.
11. Onkaparinga, SA
- Supply Shortage Score – 4.3
- Population has been steadily increasing over the past decade, up 6.5%.
- While there is recovery in inventory levels, the total stock is still low, leading to a 23.7% annual price growth.
- Vacancy rates are at crisis level of 0.2%, which resulted in a 17.3% increase in rents.
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Photo by Altaf Shah from Pexels.
