EDITORIAL: Boosting supply is the only solution to Australia’s housing crisis

Housing is one of life’s basic necessities, but keeping a roof over one’s head is more challenging now than in any time in recent memory.

The Reserve Bank’s brutal two-year tightening cycle has added tens of thousands of dollars to the annual cost of servicing the average Australian mortgage.

It’s possible things could get worse before they get better. Most economists expect the RBA to keep the cash rate unchanged at 4.35 per cent at its meeting on Tuesday. But the prospect of another rate rise before the end of the year looms as a very real possibility if inflation doesn’t show signs of slowing.

Despite this, house prices are continuing to rise. The median house price across Australia’s capital cities is now $975,592.

Rental vacancies are close to all-time lows just about everywhere. Perth and Adelaide were the worst places to try to secure a rental, with vacancy rates of just 0.6 per cent in April. Sydney and Melbourne were 1.2 per cent and 1.1 per cent respectively.

The lack of supply has sent rents skyrocketing. According to the latest rental affordability snapshot by Anglicare Australia, just 0.6 per cent of rentals were affordable for those earning a full-time minimum wage.

Desperate prospective tenants are resorting to offering huge cash payments upfront, or massive increases on the advertised price in order to find a home.

Others are staying in sub-standard homes, wary of reporting issues for fear of retaliation from their landlords.

Our politicians have been quick to point the finger at migrants as the cause of this housing crisis. The Government is working to halve annual migration to Australia to about 260,000 people while the Coalition has pledged to cut it by a further 100,000.

That of course raises the question of who are we not going to let in? The nurses or doctors we need to treat our sick? Teachers? Farm workers? The tradies we desperately need to build our way out of this mess?

The fact is that this crisis is a result of poor planning by governments across Australia. Population models are fairly robust. We have a good idea how many people are born and die in a year. The rest is up to the Government to decide in how many visas they issue.

And yet despite having this information at their disposal, they’ve allowed population growth to far exceed housing growth, resulting in the challenges we face today.

Now governments are scrambling to play catch-up.

Some regions are cracking down on short-stay providers. Property owners in Brisbane, where 10,000 homes are listed on Airbnb or similar platforms, must now get a permit from the council before listing their investments for short stays.

Victoria already has a 7.5 per cent “Airbnb tax” and has also recently hiked its land taxes on investment properties.

But none of these attempts at solutions actually address the core issue. We don’t have enough houses to go around.

The only solution is to build more of them, in places where people actually want to live.