There is a shortage of smaller, more affordable homes that can accommodate growing families, downsizing seniors, and younger people looking for their first home.
Australia’s housing market has been a hot topic of discussion in recent years, with rising prices and a shortage of affordable homes causing concern for many, adding to the issue of the “missing middle”. Oddly, increasing population growth can help to alleviate the current housing crisis so long as more rezoning occurs, and suitable planning is enacted.
The “missing middle” refers to a gap in the housing market for ‘smarter’ medium-density housing, such as townhouses, small single storey dwellings, duplexes, and apartments that are suitably designed for segments outside of the investor market. While there is a surplus of detached homes in many areas, there is a shortage of smaller, more affordable homes that can accommodate growing families, downsizing seniors, and younger people looking for their first home. This gap in the market has led to a housing crisis in many parts of Australia, with rising prices and limited options for buyers.
However, with the Australian population expected to heavily increase with the annual population growth rate over the next decade possibly being higher than the previous: 391,500 per annum between 2011 and 2021 versus an estimated 487,000 each year between 2023 and 2033 there is an opportunity for the new housing and development market to thrive. Noting that the ‘young first home buyer’ segment is set to increase from 13,500 to 44,500 during this annual population growth period, affordability in housing is going to be paramount.
The government has recognized the need to address the housing crisis and has implemented policies to encourage the construction of more medium-density housing. For example, the National Housing Finance and Investment Corporation (NHFIC) has launched a scheme to provide low-cost loans to developers building affordable housing (community housing providers). The government has also implemented planning reforms to make it easier for developers to build medium-density housing in developing areas, this is going to play a large part in our new communities moving forward, so it’s important that we begin to plan for this and we begin to design product suitable to segments outside of the typical investor. That said, Latitude has already taken steps to engage builders in order to begin working on alternative product to not only appeal to multiple buyer markets, but present better and hit the required price points to enable our developers to appease planning authorities.
Overall, while the Australian housing market has faced many challenges in recent years, and there are more to come given the recent issues surrounding our partners in the building industry, the increase in population growth provides an opportunity for the new housing market to thrive along with better, more segment-suited product. By allowing for more affordable housing, developers will help to address the current housing crisis and provide more affordable homes for Australians, that are better suited to various family types. The government’s policies and planning reforms have created an environment that encourages the construction of these types of homes, and we can expect to see more of them being mandated in new community planning in the coming years.
‘Rapid population growth set to transform property market’ – Matusik Missive
