Australia suffering from housing oversupply

by YIP29 Nov 2017

Though much attention has been directed towards the housing shortage in some of Australia’s largest and fastest-growing cities, a new study from the Australian National University (ANU) says the country actually has a significant oversupply of housing.

The Regional Housing Supply and Demand in Australia working paper, prepared by associate professor Ben Phillips and researcher Cukkoo Joseph of the ANU Centre for Social Research and Methods (CSRM), analysed 15 years’ worth of census data and building approvals to draw its conclusions.

“Between the years 2001 and 2017, we estimate the Australian housing market experienced an oversupply of 164,000 dwellings,” the report said. “However, there are significant regional differences with some regions experiencing significant undersupply while others have significant housing surpluses.”

According to the researchers, the majority of Australia’s housing surplus is in the inner-city areas of the major capitals, with Inner Brisbane, Melbourne, and Sydney all being oversupplied due to recent growth in unit developments. Many regional areas, especially those in mining-sensitive areas such as North Queensland and Western Australia, also retain housing surpluses.

In contrast, regions in the middle and outer rings of the major capitals, particularly Sydney, face modest housing shortages.

On a state level, the most oversupplied areas are the two territories: the Northern Territory and the ACT. Queensland has a significant oversupply, NSW has a relatively minor oversupply, and Tasmania has a mild housing shortage.

“The surplus [of 164,000 dwellings] is not particularly substantial, but certainly suggest that housing supply in and of itself is probably not the primary driver of house-price growth in Australia. There are other factors that are going on,” Phillips said.

“We've looked at factors like changes in household types and dwelling types and unoccupied dwellings which we don't think have been taken into account in other studies in any substantial way in the past, and certainly not at the regional level.

“The standard line of governments and industry seems to be that housing supply is a big problem in Australia. No doubt there are some areas where it is. But overall we don’t see the housing shortage that’s often talked about - in fact we see that there is a surplus.”