News & Tips

By Julian Coppini, CEO Project Marketing & George Bougias, National Head of Research

The Federal Government’s recent changes to migration policy is just the latest sign that, as a nation, we have fundamentally failed to plan for the needs of a growing population.

Increasing homelessness, a collapse in affordability and a generation ready to give up on the great Australian dream are all symptoms of one of our biggest failures – not building enough homes to meet demand.

Adjusting migration policy is only one part of solving the extraordinarily complex housing puzzle. The time has come to stop tinkering around the edges and get on with delivering the required reforms.

At Oliver Hume, as with the property sector as a whole, we have been talking for many years about the need to ensure supply constraints, in one form or another, are removed. We have argued repeatedly that housing policy must ensure that supply is responsive and flexible enough to adapt to changing population and other trends.

While attempts to match overall demand and supply are welcome, especially in the short to medium term as we navigate the current housing crisis, the fundamental issue of ensuring new housing supply can better meet demand still needs to be addressed.

Esteemed economist Chris Richardson perhaps put it best when he said recently that we had “screwed up” housing with an “overly regulated and high-cost supply side (that) has spectacularly failed demand”.

Former Reserve Bank Governor Phillip Lowe, in one of his last speeches as Governor, argued population growth was not a bad thing and brings “huge advantages” to the country, but we need governments and businesses to keep investing to build the capital stock to support population growth.

The great frustration to many in the property sector is that there is no shortage of good policy ideas to help address the supply issue. We recently asked some of our clients for five simple solutions that could be implemented today to improve supply and affordability. All are worthy of consideration.

The immediate and most pressing issue is not the number or range of solutions available.  Rather, it is a lack of execution and, more specifically, our ability as a nation to implement solutions quickly, effectively and consistently.

To tackle the ‘failed implementation’ problem we might need to be very bold.  For example, we might need to seriously consider revamping and reinvigorating some of our existing institutions. In their current format, it appears these institutions and processes are not working and need reform.

We might need to look overseas to places where the delivery of new and affordable housing has been successful and how it was achieved. We might need to remodel our local institutions on these successful examples.

To the extent that the issue is a lack of suitable ideas we might need, again, to be bold and start looking outside the box. For example, some of the current, seemingly intractable, housing market challenges might be solved from outside the housing sector, including the manufacturing sector or the use of new technologies and innovation. For example, should we be making more significant investment in modular housing that can be built relatively quickly and affordably?

There is another chain of thought that says truly big problems need truly big solutions. Do we need, for example, to fundamentally reimagine and rethink where Australians might live? Most of Australia’s population lives on the eastern seaboard with Sydney and Melbourne, by far, accounting for a significant share of the nation’s population. Do we need to think about growing our smaller capital cities? Do we need to think about growing our regional cities and our regions more generally?

Finally, we should be prepared to ask questions that we have not dared to ask in the past. Do we need to build a new city? Our last major new city was Canberra. Building a new city (or cities) would be an incredible challenge. However, a new city could house millions of people and take some of the stress off our existing cities. We could utilise our current knowledge and latest technologies to ensure we build a well-designed city, better able to successfully navigate the opportunities and challenges of the 21^st century and beyond.

Like many people I find myself increasingly questioning the rate at which progress is being made to address fundamental issues. Housing supply and affordability is just one of many important issues but a fundamentally critical one. The time has come for bold reforms that achieve results quickly. Hopefully, 2024 will bring a renewed focus and the beginning of a journey towards real reform, progress and results.