Currently at 24.9 million, Australia’s population increases at an annual rate of 1.6% and, if the current trajectory continues, it will reach 41 million by 2050. This will put further pressure on infrastructure and housing.
Many Australian cities are perceived to be having a housing crisis and the government has been looking for ways to prevent it from becoming even worse in the coming years. Supplying new dwellings could prevent affordability from falling to even lower levels but based on a study, Australia will need a lot by 2050.
Even if Australia’s population growth slows to 1.3% and household income growth accelerates to the longer-term average rate of 3% per annum, 184,807 new houses per annum should be built by 2050 to house the growing and aging population. If we maintain the current traction, we would need 232,489 houses each year by 2050.
Many politicians have called for changes to the tax system and amendments to CGT, negative gearing or foreign investor taxes to improve affordability. But it’s important not to lose site of the supply-side arguments, making sure that there is an adequate supply of land to meet the demand and keep a lid on prices. In Sydney and Melbourne alone, median lot prices increased by 10.3% and 33% respectively over a year to $480,000 and $331,000.
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