The strength of supply in Australia’s housing market has resulted in the slowest rate of house price growth in three years, according to the Property Council of Australia.
Property Council chief of policy and housing Glenn Byres noted that recent Australian Bureau of Statistics data on housing showed a 3.5 per cent increase in residential property prices over the year, and an increase of 1.5 per cent for the quarter.
This marks the weakest growth since the March quarter of 2013, and a decline from the peak of 10.7 per cent a year ago.
Mr Byres explained that the housing market has seen its strongest period of supply for “close to a decade”, which has contributed to a moderation of house price growth.
“It makes clear one thing above all else can work to tilt the balance back in favour of homebuyers – and that is a sustained performance in supply to meet demand,” he said.
“It also comes with a caveat, as there are signals from other official data on approvals and construction that the peak has passed on new stock coming into the market. Without a contribution on the supply side over the long haul that meets the pace of growth in our cities, we will struggle to close the affordability gap.”
Mr Byres emphasised that what is needed to address the affordability gap is a new deal between the Commonwealth, states and territories to bring a “competition-style” approach to fix housing markets and planning systems that act as a barrier to development.
“Meaningful policy reforms that deliver real improvements in housing supply will benefit homebuyers more than playing with negative gearing – which even its advocates say will only change prices by 0.49 per cent,” he said.