Australia’s housing crisis is not a ‘supply problem’

Australia’s politicians, economists, the media, and think tanks continually claim that a lack of supply has driven the housing crisis. They also claim that if the nation just built more homes, the crisis would magically resolve.

This ‘lack of supply’ reasoning falls apart once you examine the data.

It turns out that Australia has one of the largest construction workforces in the world relative to our population:

Moreover, as independent economist Tarric Brooker pointed out on Twitter (X), “Australia is completing more homes per capita than almost anywhere in the developed world. When the population is constantly growing at such a high rate, even a world-beating level of construction still cannot keep up”:

The inconvenient truth is that Australia’s structural housing shortage has more to do with demand – that is, excessive levels of population growth – than an inability to build homes.

The federal government has dramatically increased Australia’s net overseas migration (NOM) since the mid-2000s, as illustrated in the following chart, which is projected to continue indefinitely:

In the 15 years to 2004, Australia’s NOM averaged 91,000 per year. But in the 15 years to 2019, Australia’s NOM averaged 220,500 per year, representing a 142% increase in annual NOM.

Even in the last four calendar years (2020–2023), NOM in Australia averaged 245,500 per year.

As illustrated in the following chart, Australia experienced the strongest population growth in 2005 among the major developed countries:

The chart below shows population growth between 2001 and 2023 in the capital’s main markets:

As you can see, population growth in major cities has been extreme, with Melbourne (1.7 million) and Sydney (1.35 million) seeing the strongest growth in numerical terms, and Brisbane (60%) and Perth (59%) recording the strongest growth. in percentage terms.

According to Australian Bureau of Statistics (ABS) forecasts, Australia’s population will grow to 43.9 million people by 2071, an increase of around 16.5 million from the current population of 27.4 million.

This is the equivalent of adding another Sydney, Melbourne, Brisbane, Perth, Hobart and Canberra to Australia’s current population in just 48 years!

It would also require the construction of at least 7.5 million homes accounting for demolitions to accommodate the projected population growth.

It is also worth pointing out that it took Australia 212 years to reach a population of 19 million people in 2000. However, the population is officially projected to grow by a further 24.9 million people in just 71 year old!

The following chart shows the actual populations of Australia’s major capital cities in 2001 compared to their projected populations in 2071:

As you can see, Melbourne (9.5 million) and Sydney (8.4 million) are projected to have larger populations than the entire population of Australia in 1950!

The following graph shows the estimated population growth between 2001 and 2071 of major capital, both in numerical and percentage terms:

Growth is unheard of, led by Melbourne, which is projected to grow by an obscene 6 million people (172%) in just 70 years!

The next time someone tries to tell you that Australia’s housing crisis is a “supply problem”, show them these graphs about Australia’s extreme population growth driven by immigration.

Australia will never build enough houses as long as its population grows like a science experiment out of control.

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