It’s actually worse than it looks
I just don’t think people get how hard it is to build enough homes.
With the immigration hose on full-throttle, we need to build a lot of homes.
Labor upped it’s already ambitious pledge to build 1m homes in five years – which industry experts already thought was fanciful – to 1.2m – something which industry experts think is just delusional.
If, somehow, we do build 1.2m, then we might stop the housing shortage getting worse. It won’t get better, but maybe we can stop it getting worse.
Believe in the dream Australia.
But to build 1.2m homes, we need to build 240,000 a year. That’s ambitious. We’ve only ever built that many homes in a year once. We’ve never done it five years in a row.
But this is the thing, sometimes we build homes where there were once cows. Sometimes we build homes where there were once other homes.
The data doesn’t distinguish. So even if we do build 240K, we don’t actually know what the net-addition to the housing stock actually is.
A couple of cases in point.
Last week, the progressive press was celebrating the Andrews government’s decision to revitalise the community housing towers in Carlton.
Two vacant public housing towers in Melbourne’s inner-north will demolished to make way for at least 230 new energy-efficient apartments, in the first project to use the federal government’s $2bn social housing accelerator fund.
Anthony Albanese announced the redevelopment on Tuesday alongside the state’s premier, Daniel Andrews, and praised the Victorian government for not “flogging off” the land to developers.
Ok. That’s a good start. 230 homes is good.
But hold on. What used to be there? 196 homes.
The net addition to the housing stock? 34 homes.
That’s not quite so impressive.
But wait, it gets worse. Because sometimes we’re even knocking down multiple homes to make way for fewer homes.
Sydney property developers are buying blocks of units, knocking them down and replacing them with fewer luxury apartments or homes, a trend that is reducing dwelling numbers amid a statewide housing crisis.
Numerous developments across inner Sydney and the eastern suburbs have been approved, with more in the planning stage. In most cases interwar low-rise apartment buildings will be demolished to make way for “ultra-luxurious” homes for many fewer residents.
Should be a law against it.
The point is, depending on how that 240K homes a year – if we can actually do it – is distributed, the actual net addition to the housing stock could be considerably less than that.
And which is why it’s going to be incredibly hard to unwind the epic housing shortage we currently find ourselves in.
I just don’t see it happening.
And my central scenario, when I think about investing and potential for capital gain, is that the housing shortage just gets worse and worse and worse.
JG.