PHOTO: Australia’s residential building industry is in massive trouble. FILE
Australia is standing at the precipice of an unprecedented housing shortage and a looming catastrophe of homelessness. The latest federal budget reveals that Australia’s population is set to surge by a staggering 2.18 million people within the next five years until 2026-27, largely driven by a record-breaking net overseas migration of 1.5 million individuals.
Alarming statistics indicate that this population surge coincides with a decline in the number of newly completed dwellings across the country, as illustrated by the following chart showcasing the dwindling trend of dwelling completions compared to population growth. Various indicators for housing construction, including new home sales, dwelling approvals, and construction loans, have all collapsed.
During this month’s Senate Estimates Committee, Treasury Secretary Steven Kennedy revealed that the decline in housing construction is expected to persist until 2025. Investment in new dwellings is projected to decline by 2.5% this year, followed by 3.5% in 2023-24, and a further 1.5% in 2024-25.
Adding to the crisis, Australia’s home builders are succumbing to insolvency en masse, burdened by skyrocketing material costs and surging interest rates. In the past 18 months alone, thousands of home building companies, ranging from small entities to industry giants like Porter Davis Homes, have collapsed, leaving 1,700 homes under construction across Victoria and Queensland in disarray.
Just in the last week, prominent Melbourne-based builder Red Bluff Homes, with a 35-year legacy, and Sydney building company Ellingsworth Homes have both been forced into administration. The Australian Financial Review reports that a record-breaking 2,032 construction companies appointed administrators in the year leading up to May, exacerbating the severity of the situation.
It is estimated that over 5,200 homes worth a staggering $2.2 billion have been left abandoned by bankrupt builders since 2021. These widespread company failures have drastically reduced the number of builders available to meet the nation’s housing demands, which have been further amplified by an unprecedented influx of immigration.
According to Domain’s recent analysis, Australia needs to provide an additional 500,000 homes over the next four years to keep pace with the projected net overseas migration. To put it into perspective, this would require an astounding 341 additional homes to be built every day for four consecutive years. Such an ambitious endeavor is deemed impossible even under the most favorable housing circumstances, let alone the current predicament marked by escalating material costs, rising interest rates, and an alarming surge in home builder insolvencies.
Consequently, Australia’s housing crisis is expected to intensify, leading to soaring rents and an alarming increase in homelessness. Running an extensive immigration program amid a housing crisis of this magnitude is seen by many as a policy rooted in sheer madness.