State of the Nation’s Housing 2022–23

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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 1.8 million new households are expected to form across Australia from 2023 to 2033, taking total households to 12.6 million (up from 10.7 million in 2022). These households are expected to comprise around 1.7 million new occupied households and 116,000 vacant properties (e.g. holiday homes).
  • From 2023 to 2032, household formation is expected to be dominated by lone person households (563,600 additional households), followed by couples with children households (533,300 additional households). Within five years, it is expected lone person households will be the fastest growing household type across the country.
  • The much earlier increase in interest rates (relative to previous Reserve Bank of Australia guidance) is adversely impacting supply. NHFIC expects around 148,500 new dwellings (net of demolitions) to be delivered in 2022-23, before net new construction falls to 127,500 in 2024-25. A recovery in supply is expected after 2025-26 on the back of changing macroeconomic conditions and stronger underlying demand.
  • NHFIC estimates that, conservatively, around 377,600 households are in housing need, comprising 331,000 households in rental stress and 46,500 households experiencing homelessness. Housing need across the country range from 208,200 households in highly acute rental stress to 577,400 households under less acute rental pressure.

Key Findings (WA)

  • Capital cities generally experienced bigger price declines than state regional areas. Property prices in regional areas of WA, SA and NT are still higher than they were 12 months ago, although price growth has slowed.
  • Detached house price growth in regional NSW, Vic, Qld, SA, WA and Tas outpaced growth in capital city areas of these states. The strongest regional price increase was in regional SA (16 per cent), followed by regional WA (5 per cent) and regional NT (3 per cent).
  • National property price growth declined steeply as interest rates rose at their fastest pace in more than two decades from May 2022. Sydney and Melbourne were the first cities to record price falls.The largest price falls from their peaks (to January 2023) were recorded in Sydney (-13.8 per cent), Brisbane (-10.7 per cent), Hobart (-10.8 per cent) and Melbourne (-9.3 per cent). Dwelling prices in Adelaide, Perth and Darwin remain relatively unchanged.
  • The spread between the rental yield and investor variable mortgage rate is larger in Sydney and Melbourne than in the other capital cities. Latest data shows the variable mortgage rate is, on average, 3.3ppts greater than rental yields in those cities. Darwin has the most attractive rental yield (6.3 per cent), which is in line with the variable mortgage rate, followed by Perth (4.8 per cent), Brisbane (4.3 per cent) and the ACT (4.1 per cent).
  • SE Qld, greater Perth and Adelaide all experienced surging rents across most LGAs. This reflects interstate migration patterns, strong demand and tight supply of rental stock. SE Qld renters fared the worst out of all states since the beginning of the pandemic. In all 10 LGAs, in January 2023 rent levels were more than 30 per cent higher than pre-pandemic levels. Most Perth LGAs also now have rents 30 per cent above where they were pre-pandemic.

Key Findings (Other States)

  • Rental affordability has varied greatly across the country during COVID-19. In Sydney, rents in several outer Local Government Areas (LGAs) increased more than 30 per cent from early-2020 to January 2023 and more than three times that of some inner-city LGAs. Outcomes in Melbourne have been more subdued, with more than half of Melbourne’s LGAs experiencing rental increases of less than 10 per cent since pre-pandemic. Southeast Qld has had the largest rental rises, with all 12 LGAs experiencing rental increases of 30 per cent or more.

Reports

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