Building Our Way Out of the Housing Crisis

While experts remain uncertain about a definitive answer to the housing crisis, the government is heavily emphasising a supply solution. The question remains: could we be exploring more comprehensive strategies?

Alarming statistics paint a dire picture, many Australians are living under housing stress, struggling to meet their housing costs. In a recent report conducted by the ‘Everybody's Home’ campaign found that 75 per cent of people are scared about their financial security due to the housing crisis.

The last 18 months have been especially hard on the construction industry according to experts. Issues such as high demand, labour shortages and constraints on the supply of materials have all led to increased building costs and longer build times.

The government has not been passive in the face of this crisis. The National Cabinet has made pledges to address the housing supply issue, with a commitment to build 1.2 million more homes. This ambitious plan, however, has been criticised for lacking detail. The government has also proposed the Housing Australia Future Fund (HAFF) legislation, which, if passed, would allocate at least $500 million annually to construct new affordable housing.

One of the significant upsides of addressing the housing crisis through a supply boost is the potential for job creation in the construction industry. The construction sector stands to benefit immensely from a surge in housing projects. A boost in housing supply not only addresses the immediate housing shortage but also stimulates the economy by creating jobs, fostering skill development, and promoting local businesses. The ripple effect of such an initiative can be far-reaching, benefiting associated industries like manufacturing, logistics, and retail.

There’s a growing narrative that homeowners are part of the problem, a perspective that could be detrimental. Some solutions proposed, such as vacancy taxes, aim to punish homeowners. Penalising homeowners could potentially reduce housing stock and inadvertently drive prices even higher. Instead of punishment, there should be incentives for homeowners to do the right thing, encouraging more investment in the housing sector.

The housing crisis is multifaceted. Housing supply growth, especially in new apartments and medium-density dwellings, has been declining since 2016-17. Restrictive zoning and inefficient planning systems have significantly impacted the delivery of new housing supply.

To genuinely “build its way” out of the housing crisis, Australia needs a comprehensive strategy. This entails streamlining planning systems for easier home construction, motivating homeowners to invest in housing without penalties, and bolstering housing supply through funding programs that cater to the population’s growth and requirements for social and affordable housing.

The Australian housing crisis requires a holistic approach that addresses the root causes rather than just the symptoms. By incentivising homeowners, revising outdated policies, and increasing housing supply, Australia can pave the way towards a more stable housing market, all while boosting employment in the construction sector.