Australian capital cities have moderate over-supply of housing
Australia has a mild to moderate oversupply of housing, particularly in the inner-city areas of Sydney, Melbourne and Brisbane, according to a recent report.
The study by Australian National University’s Centre for Social Research and Methods has estimated the oversupply at 164,000 dwellings, with inner-city Sydney having the nation’s largest oversupply at just under 6000 dwellings.
Areas in the middle and far-west of Sydney also generally had moderate undersupply, as did Wyong on the Central Coast.
The country’s second largest oversupply of dwellings was in inner Brisbane with around 4500 dwellings, while the Melbourne CBD and surrounds had the fourth-highest oversupply of just under 4000 excess dwellings.
The Regional Housing Supply and Demand in Australia Working Paper, by Associate Professor Ben Phillips and Cukkoo Joseph, analysed 15 years of Census data and building approvals.
The authors said that although increasing supplies may potentially reduce house price growth, supply levels between 2001 and 2017 were insufficient, or indeed larger than necessary to cover demand requirements.
The reasonable inference from this, they said, was that increasing supply may have some benefits, but is unlikely in isolation to create affordable housing in Australia.
“This inference is all the more likely given the time taken to complete new dwellings and that, inevitably, in the short to medium term new supply is only likely to be a small share of the total dwelling stock,” the paper said.
“If Australia’s current record home-building levels are not balanced by a large housing shortage, then there is the risk that these current levels will reduce in the near future.
“Policy makers will also need to place greater emphasis on other potential drivers of house-price growth and housing affordability, such as a range of demand influences.”
According to the authors, the research represents the first published regional analysis of housing demand and supply. Population growth and demographic change in Australia's 328 regions (called “statistical area level 3” by the Bureau of Statistics) were analysed to see how well new housing supply meets demand in those areas.
Of the 328 statistical areas studied nationwide, 250 were found to have a housing surplus, while 78 had a shortage.
Some regional centres, particularly those in mining-sensitive areas such as North Queensland and Western Australia, were found to have housing surpluses.