Investa Inside

Australia’s housing development activity and outlook is being hit with a number of cyclical headwinds, including high interest rates, elevated construction costs and building sector labour shortages. While these headwinds may persist for some time yet, the structural tailwinds driving a fundamental undersupply of housing in Australia are here to stay. 

Australia has maintained an underlying shortage of housing for an extended period and the housing market has been unable to find a sufficient solution to this problem. To address the chronic housing shortage, the housing market needs to innovate the model of dwelling supply. That is, Australia’s problem of housing scale needs to be addressed with scope. 

To support the establishment of much-needed nascent living sector housing options, Australia’s housing market needs to attract institutional capital. While capital sources will be attracted to the first mover returns provided by nascent market fundamentals, government regulation and taxation policy will play a critical role in impacting the longer-term sustainability of capital support for Australia’s living sector. In particular, attracting offshore capital can bring global experience in developing emerging housing options to the Australian market as well as increasing the scale and capacity of new housing supply.