Australia built 62,000 fewer homes than needed to accommodate population growth over the 2024 financial year, worsening the ongoing crisis in housing supply.
Believe it or not, this was actually an improvement from the 2023 financial year (FY23), which saw a shortfall of 110,000 homes relative to population growth.
This year-on-year improvement doesn’t come from an increase in the rate at which we are building new homes (with only 4,400 extra homes completed), but from a slowdown in population growth.
Over the year ending June 2024, 552,000 people were added to Australia’s population, down from 638,400 over the previous 12-month period.
To get an estimate of how many new homes are needed, an average of 2.5 people per household is assumed (source: RBA). These figures also take into account demolition rates - the number of existing homes demolished for the creation of new homes. Demolition rates vary by state, averaging around 10% nationally.
Over FY24, 72% of the homes needed to accommodate population growth were built. In FY23, it was even lower, with just 61% of the number needed completed.
And this shortfall is significantly worse in some states.
The under-supply of new homes remains greatest in Western Australia, where population growth has outpaced housing supply over each of the past six financial years.
Over FY24, just 48% of the new homes needed were built in WA. In FY23, just 36% were built. With less than half the new homes needed being built, it is no surprise that Greater Perth has seen the sharpest growth in property prices over the past year.
Following Western Australia for the worst under-supply of new housing were the Northern Territory and Queensland, where just 56% and 61% of the homes needed to accommodate population growth were built in FY24, respectively. The shortfall was 26% in New South Wales, 18% in Victoria, and 12% in South Australia.
Tasmania and the ACT were the only states where housing supply has kept up with population growth. In the case of Tasmania, new home construction has far exceeded population growth, with more than four times the number of new homes needed completed.
While the government is projecting population growth to moderate to pre-pandemic norms over the next 10 years, dwelling approvals remain subdued. Critically, they remain well below the level required to recoup the deficit in housing supply seen over the past three years.
