Drastic action needed for an apartment market on the brink

A wartime response is needed to solve the housing crisis – as apartment building will remain at decade lows for another three years.

That’s the blunt assessment of Richard Temlett is a recent cross industry report for the Urban Development Institute of Australia Institute (UDIA)

The stark reality is that the new government needs to adopt drastic measures to get anywhere the 1.2 million homes by 2029 – with the UDIA predicating a 400,000 shortfall.

“Apartment markets remain distorted and in various cities such as Melbourne have in fact broken down,” said the Charter Keck Cramer director.

“The dramatic increase in building costs, combined with a plethora of taxes, levies and charges, has caused the price delta between new and established apartments to become the widest it has been in the last two decades.

“This is making the feasible delivery of new apartments across most sub-markets almost impossible.

“Supply is going to remain at decade lows for the next 3–4 years, given supply is not able to be mobilized at scale.

“What this ultimately means is that the aspirational target of the Federal Government to deliver 1.2 million new dwellings over 2024-2029 is highly unlikely.”

Mr Temlett, a member of the Victorian Property Council, is adamant that the apartment market is the future.

Underlying demand is strong as Australia is an extremely attractive place to live and work for migrants, with apartment living a necessity as people are living in apartments and renting for longer.

“The longer-term outlook for the apartment markets across Australia looks very positive as all the fundamentals remain and in fact are becoming more pronounced,” he noted.

But he says that concerted government and regulatory action is needed.

“The speed of the change comes down to how quickly and meaningfully the RBA, APRA and the various levels of Government act to address these current issues,” he said.

“It is however going to take time and significant Government intervention to allow the markets to unlock and revert back to market equilibrium.

“Drastic action is undoubtedly required to rectify the housing crisis.”

“The same mindset as was adopted by the Menzies Government after the end of World War II is now required to pull Australia out of this housing crisis.”