State of the Nation’s Housing 2021–22

First introduced in 2020, the State of the Nation’s Housing is the National Housing Finance and Investment Corporation’s (NHFIC) flagship research report.

It provides analysis into housing demand and supply across Australia, as well as long-term projections, with a view to identifying potential drivers of, and challenges to, housing affordability. This research has been informed by extensive consultation with stakeholders including industry and provides on-the-ground insights to understand Australia’s housing supply and affordability trends in the coming decade.

Modelling Suggestions

  • More than 1.7 million new households are expected to form across Australia from 2022 to 2032. By household type, the strongest growth in new households is expected from lone person households (595,000), followed by couple families without children (488,000), then couple families with children (361,000).
  • From 2022 to 2032 (cumulatively) new household formation is expected to be broadly in balance with net new supply, but this is largely driven by unusually low levels of household formation in 2022 and 2023 owing to COVID-19. NOM is expected to fully recover to pre-pandemic levels by 2024–25, and from then household formation is expected to outpace new supply by a cumulative 163,400 dwellings to 2032.

Key Findings (WA)

  • Median rental prices increased by 24.1 per cent in the Perth metropolitan region and 22 per cent in the rest of the state between January 2020 and December 2021.
  • Rental affordability deteriorated significantly in Perth for those on low incomes between June 2020- September 2021. Renters in the second-lowest income quintile could previously afford up to 25 per cent of rental stock, but less than 10 per cent a year later. Renters in the middle income quintile could afford up to 80 per cent of rental stock in 2020, but up to 60 per cent is now considered affordable. This means roughly 20 per cent fewer rental dwellings are regarded as affordable for renters in the middle-income quintile.
  • As an outcome of low vacancy rates, the research suggests that renters on the lowest incomes are crowded out by competition for affordable rentals from those higher up the income scale.
  • In regional WA, renters in the middle-income quintile were most affected by the strong growth in rents. For renters in that quintile, 15 per cent of dwellings became unaffordable compared to 2020.
  • Early 2021 saw a broad-based surge in detached building approvals. WA had the strongest growth in approvals, up 154 per cent over the year to April 2021. The subsequent decline in approvals since Home Builder ended has been most notable in WA, Qld and Vic.
  • In the medium-term (to 2024) overall housing supply is forecast to exceed new household formation.

Key Findings (Other States)

  • There has been unprecedented demand across regional housing markets during the pandemic. Over the course of 2020 and 2021, dwelling price growth in regional NSW (40.1 per cent) was substantially greater than dwelling price growth in Sydney (27.2 per cent), while price growth in regional Vic (29.9 per cent) was more than double that of Melbourne (12.2 per cent).
  • Affordability for renters and first home buyers deteriorated across most cities and regions in 2021 (to September), except in Sydney and Melbourne, where aggregate rental affordability improved modestly. However, rental pressures have been building in these cities more recently.
  • As projected in the 2020 report, rents fell sharply in real terms in 2020-21 and were expected to remain weak for some years. While the story is quite varied across markets, rents have rebounded faster than anticipated, to positive growth in 2021-22. Rents are likely to continue to rise in the near term as international border restrictions are relaxed.

Updates

The latest State of the Nation’s Housing 2021–22 research report includes new chapters on housing markets in Australian states and territories which provides detail on recent supply constraints in the development industry, as well as detail on recent housing prices and vacancy rate trends. There is also has a new chapter on regions and cities highlighting the impacts of the pandemic.

Report

Read the State of the Nation’s Housing 2021-22 here.