VICTORIA is facing a “looming and significant demand-supply gap” of new housing, despite historically high levels of activity in that sector.
The latest Residential Development Index — released by the Urban Development Institute of Australia’s Victoria branch today — forecasts that buyer demand will outstrip housing supply by more than 4000 dwellings “in the immediate future”.
The report states that the volume of housing commencements experienced in the past two financial years and expected in 2017-18 “will not be adequate to meet current population and household growth”.
This was despite supply numbers being at an historic high.
“Victoria’s residential development industry is being driven by historically high population and employment growth,” UDIA Victoria chief executive Danni Addison said.
“While growth in these areas is positive, the levels of housing undersupply we are facing is cause for serious concern — both from an affordability and liveability perspective for all Victorians.”
The report notes that a significant proportion of commencements don’t add to Victoria’s housing stock, involving the demolition of existing homes and the building of “unoccupied dwellings”.
Ms Addison said there was an “urgent need” for government policy creating a 15-year land supply program in Melbourne’s growth corridors.
The availability of affordably priced land lots in these areas was key to Victoria’s strong population growth, as they were highly sought by interstate and overseas migrants, the report said
Ms Addison said Victoria’s residential development industry was also being challenged by recent policy changes that could undermine the affordability of new apartments, including increased taxes on foreign buyers and the removal of incentives for investors.
The research, developed by Ernst & Young, also found the townhouse market in middle and outer Melbourne was performing “very well”, along with smaller apartment projects in the inner ring.
It predicts “dwellings other than house” will make up majority of the state’s building commencements in the coming years.
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Source: Real Estate