No quick fix to Australia’s housing shortage, warns RBA

RBA's Hunter said there were signs that builders were considering new projects, given the strength of underlying demand, but high costs for products and labour were holding them back. — Bloomberg

SYDNEY: Australia’s central bank warns there is no quick fix to the country’s housing shortage, which is pushing up prices and rents and adding to inflationary pressures.

In a speech on the housing sector yesterday, Reserve Bank of Australia (RBA) assistant governor Sarah Hunter said there were signs that builders were considering new projects, given the strength of underlying demand, but high costs for products and labour were holding them back.

“Demand pressure, and so upward pressure on rents and prices, will remain until new supply comes online,” said Hunter, who heads the central bank’s economics unit.

“We expect this response to take some time to materialise, given the current level of new dwelling approvals and the information that many projects are still not viable,” she added. “In the meantime, we expect residential construction activity to remain relatively subdued.”

House prices rose about 9% in capital cities in 2023 and priced many new buyers out of the market. Rents have surged as vacancy rates fell to all-time lows and strong migration flows swelled the population.

Yet approvals to build new homes have fallen over the past year amid high building costs and a shortage of specialist workers. — Reuters