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This is the same as 1.2 million homes. The federal government’s hopes will come true In the next five years.
The National Housing Finance and Investment Corporation’s latest National Housing Status Report predicts that the housing shortage will reach about 157,000 units by 2027, which would be a huge loss.
Rawnsley believes many of the current housing difficulties are the result of changes in our behaviour. Falling fertility rates mean fewer people live in each house, the coronavirus pandemic has led to shared homes being broken up and more people owning second homes, while the return of migrants and international students has also boosted demand.
But independent economist Harry Dale said the problem was easy to spot but difficult to solve.
“It’s one thing to acknowledge the increase in these vacant spaces, but it’s another to try to get other people to use them,” he said. “We’ve tried to entice people to downsize by cutting taxes and building more small apartments, but a lot of people don’t want to leave their memories behind.
“It’s fair to say both the federal and state governments should be providing additional incentives for people to downsize to help alleviate the housing shortage, but there’s also an affordability issue. Who can afford that four-bedroom house?”
Professor Peter Phibbs, head of the department of urban and regional planning and policy at the University of Sydney, believes the popularity of working from home – converting bedrooms into offices – is another factor squeezing household size.
“It doesn’t take a lot of households to do that to reduce a lot of capacity,” Phibbs said. “A lot of people have had more money during COVID because of government subsidies, so they moved out of sharehouses and lived on their own and found they liked it. Affordability may hold some of them back.”
He said short-term rental holiday accommodation represented a large number of properties that could move into the long-term rental market, a lever the government was focusing on.
The 2021 Census found there are at least 3.5 million unused bedrooms in Australia, often in homes where people are reluctant to downsize. However, UNSW research found these bedrooms are often used as home offices or craft rooms by visiting grandchildren – a major barrier to downsizing.
“Also, if you go to a financial planner when you’re 60, a lot of times their advice is to upsize rather than downsize because a house is a great tax shelter,” Phibbs said.
“So the most important thing is to increase rental supply, and the dilemma right now is construction costs and high interest rates, which means developers can’t get loans or construction finance or make money. When interest rates fall, costs will fall, but the results may not be seen until 18 months to two years later.”
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