There are several key reasons for the current housing shortage in Australia:

Population growth and changing housing preferences

• Australia’s population growth, driven by net overseas migration, has increased housing demand.
• The COVID-19 pandemic caused people to want more space, leading to a surge in demand for housing in certain areas.
• Smaller households, with more people living alone, significantly increased the number of homes needed.

Supply issues in the residential construction industry

• Housing supply has not kept up with demand due to high interest rates, labor shortages, materials shortages, and poor planning/regulation.
• The volume of residential land transactions has fallen 37% over the 12 months to March 2023, leading to an acute shortage of available land.
• Dwelling construction was disrupted during the pandemic, with fewer new dwellings completed.

Decline in social and affordable housing

• Investment by governments in social housing has declined over decades, with the share of social housing stock falling from over 6% in the early 1990s to less than 4% in Queensland.
• The number of homes being offered for sale and rent in Australia has fallen since 2015 and early 2020 respectively.

Mismatch between supply and demand

• Australia has fewer dwellings per 1,000 people than the OECD average.
• Over a 6-year projection horizon, new housing supply is expected to total 1,040,000 dwellings while new demand is expected to total 1,079,000 households, resulting in a deficit of around 39,000 dwellings.

In summary, the housing shortage is driven by a combination of strong population growth, changing housing preferences, supply chain issues in the construction industry, declining investment in social housing, and an overall mismatch between housing supply and demand. Without significant intervention, the shortage is expected to continue for at least the next six years.

References

1. Reddit - ELI5: Why Is There a Housing Shortage?
2. AMP - Econosights: Housing Shortage
3. Property Update - Why Does Australia Have a Rental Housing Shortage?
4. Real Estate - The Big Reason Australia Has a Housing Shortage
5. UQ Contact Magazine - Australia’s Housing Crisis: How Did We Get Here, Where to Now?
6. ABC News - Federal Budget: Housing Crisis in 10 Graphs
7. Australian Property Update - Housing Shortage to Continue at Least Six Years
8. PEXA Group - Real Causes of the Housing Crisis