NSW housing need set to grow ‘substantially’ by 2025

More than one in five NSW households will be in "housing need" by 2025, 5 per cent higher than the national average, a new study has revealed.

The Australian Housing and Urban Research Institute (AHURI) has revealed that the percentage of households in housing need across Australia will grow from 14 per cent in 2017 to 16 per cent (or 1.7 million households) in 2025. AHURI defines this group as: “The aggregate of households unable to access market-provided housing or requiring some form of housing assistance in the private rental market to avoid a position of rental stress.”

According to the report, modelling housing need in Australia to 2025, the percentage of households in need in NSW will grow from 13 per cent in 2017 to 21 per cent in 2025, while the percentage of Victorian households in housing need will grow to 17 per cent (up from 12 per cent in 2017).

The percentage in Queensland will fall of 5 per cent to 15 per cent. Housing need in South Australia will remain steady at 14 per cent, as will rates in the ACT, sitting at 8 per cent.

Western Australia will experience a fall to 9 per cent from 12 per cent in 2017. Tasmanian rates will slide from 14 per cent to 12 per cent in 2025, and the Northern Territory will see the percentage of households in need bump up slightly to 11 per cent from 10 per cent.

The research aimed to define the policy needs around affordable housing by identifying the populations and locations at risk, with the report’s authors—Steven Rowley, Chris Leishman, Emma Baker, Rebecca Bentley and Laurence Lester—noting that Australia lacks a “consistent methodology for addressing housing needs”.

According to the authors: “Housing affordability is a major issue in Australia. Young Australians are struggling to enter the housing market . . . while more and more older Australians are paying mortgages or rents into retirement.”

“Research has shown how access to affordable housing is critical for economic productivity . . . but resources are scarce, so affordable housing must to be allocated where it will be most effective.”

The research identified growth in the mean wage rate and mortgage interest rates as the “main demand shifters”, arguing that there exists a strong link between state-level earnings growth and house price growth; however, there is a weak link between interest rates and price growth.

Further, the AHURI research “determined that higher levels of housing supply reduces price growth, but the effect is small and suggests that new supply is a limited policy lever to reduce general price levels”.

The report noted that having a long-term disability or health condition had a “surprisingly limited influence” on determining an inclination towards housing need. However, receiving inheritance or family gifts was associated with a 40 per cent to 70 per cent increase in the chances of home ownership.

[Related: KordaMentha blasts ‘primitive’ response to housing affordability]

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Lucy Dean

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