sensum minds #5 - addressing Australia's Housing Crisis
Sensum Minds housing Series - Part 1
‘Housing as a human right’ has been debated in Australia for a number of decades. Through the 2009 National Human Rights Consultation, Australians identified housing as one of their most important rights. This is because housing provides the basis for stability and security in many social, cultural, and economic aspects of individual and family life.
Australia is facing a severe housing shortage, a crisis that affects both urban and rural areas across the nation. This issue has spurred significant responses from government and the housing industry, with ambitious plans and substantial funding allocations aimed at addressing the challenge. Despite these efforts, the journey from funding to actual housing delivery remains fraught with complexities. Sensum is delving into the current state of housing in Australia, the government’s response, the industry's role, and collaborating with industry partners, peers and Government departments to tackle some of the multifaceted challenges that lie ahead.
The Current Housing Shortage
The Australian housing market is in turmoil, characterised by soaring property prices and a severe lack of affordable housing. According to recent data, Australia needs an additional 1-million homes by 2046 to meet growing demand, with a significant portion required to be social and affordable housing. This shortage has particularly impacted vulnerable populations, including low-income families, key workers, and those escaping domestic violence. The situation is exacerbated by the substantial and growing waiting list for social housing across all jurisdictions, with New South Wales alone seeing approximately 60,000 people on the waitlist, highlighting the urgent need for scalable and sustainable housing solutions.
Government Funding and Initiatives
In response to the housing crisis, both commonwealth and state governments have committed substantial funds to various housing programs, and as of mid-October, Housing Australia is in negotiations with Round 1 applicants for funding approvals. The Commonwealth Government has pledged $32 billion towards increasing housing supply, supporting renters, and providing pathways to home ownership for low-income Australians. This funding includes the National Housing Accord and the Housing Australia Future Fund, which aim to deliver 40,000 social and affordable homes. Ensuring an alignment of priorities and funding across governments presents an opportunity we cannot afford to miss, as it is crucial for addressing the growing demand for affordable housing and delivering real, lasting solutions.
State allocations and initiatives include:
Queensland: Allocated $3.1 billion, focusing on planning system reform, homelessness, and Indigenous housing. Initiatives include a $350 million fund for infill development and a pipeline of 53,500 new social homes by 2046.
New South Wales: Committed $5.1 billion to deliver up to 30,000 new homes, including 8,400 social homes and rental housing for key workers.
Victoria: Through its $5.3 billion Big Housing Build, Victoria aims to support the delivery of 800,000 new homes over the next decade, with a focus on areas close to jobs and transport.
Tasmania: A $1.5 billion plan to provide 10,000 new social and affordable homes by 2032.
South Australia: Allocated $843.6 million for large-scale urban renewal projects.
Western Australia: Invested $1.1 billion to boost housing supply, delivering almost 5,000 additional social homes.
Northern Territory: Committed $1.03 billion towards housing and community amenities, with a significant focus on remote and regional communities.
Highlighting some of the key challenges
Alongside Government, the private sector plays a crucial part in addressing the housing shortage. With around 95% of the housing supply being delivered by private developers in Queensland, it's likely that this is a similar case for other states. Collaboration between the government, the private sector, and Community Housing Providers (CHPs) is essential to meet housing targets. However, the sheer volume of homes required in a short period poses a significant challenge. There are a number of hurdles that the industry as a collective must overcome, including, but certainly not limited to, labour shortages, planning delays, and rising construction costs.
Labour shortages - A major bottleneck in housing delivery is the shortage of labour. The construction industry faces significant issues in recruiting and retaining workers. This shortage impacts the ability to meet ambitious housing targets, as the availability of tradespeople in Australia is critical for large-scale construction projects. This challenge is amplified with major infrastructure projects including Renewable Energy Zones and Metros. This is particularly acute when overlaid with the shortage of skilled labour required to achieve the necessary quality and efficiencies required to met the volume of dwellings and the needs of the eventual long term asset owners.
Planning and infrastructure challenges – As many of us in the industry know, planning processes are often tricky to navigate. We need to explore more efficient and expedited planning processes which are vital for delivering the homes required in a timely manner. Queensland, for instance, has established a state-facilitated development team to streamline decisions and resolve planning and infrastructure issues. Similar initiatives are being introduced across most states to ensure that common bureaucratic hurdles do not delay housing projects.
Rising construction costs - Sky-high costs driven by factors such as supply chain disruptions, increased material prices, and labour shortages are adding to the complexity of delivering these ambitious housing targets. These costs have escalated due to global events, including geopolitical tensions and the ongoing wars in Ukraine and the Middle East, which have significantly impacted costs of construction materials and cost of living across the board. Further cost escalation pressures are likely to be imposed as an unfortunate but unavoidable result of the housing targets and programs themselves. Prices are further driven by significant inherit waste within project life cycles from design, labour and materials.
So what’s next?
Australia's housing crisis is a complex issue. While the funding commitments are substantial, translating these into tangible outcomes will necessitate overcoming significant hurdles. It requires a collective effort and multifaceted approach from government, industry, and CHPs that go beyond funding. The journey ahead is challenging, but the team at Sensum are optimistic that the ambitious housing targets set by the government can be achieved, providing much-needed relief to the nation's housing market, and homes for our most vulnerable.
As an industry, we must come together to deliver on these targets. We must take a view of ‘collaboration over competition’ to bring to the table industry leaders (and enthusiasts), innovative ideas, and a can-do attitude. We must be solutions-focused, and we must be ready to take action, and this aligns perfectly with one of our core values “Get It Done”.
Here are just a few ways Sensum believe that as an industry, we can all play our part and start to tackle this together:
Strengthening Workforce Development: Investing in training programs to increase the pool of skilled labour in the construction industry.
Streamlining Planning Processes: Implementing state-level initiatives to expedite planning approvals and infrastructure development.
Fostering Public-Private Partnerships: Enhancing collaboration between government, private sector, and CHP’s to ensure cohesive and effective housing delivery.
Promoting Innovative Construction Methods: Encouraging the adoption of Modern Methods of Construction (MMC) and other innovative techniques through regulatory support and industry incentives.
Ditching unnecessary IP and enabling true collaboration: Many organisations invest time, effort and significant dollars on innovation. When investing in innovation alone, then both the cost and the learnings are not shared. Genuine engagement and collaboration is key to limiting false starts and costly lessons (which others have already learnt) and building upon each other’s innovations to provide better industry solutions.
Now, if you know Sensum, you’ll know that social infrastructure projects and MMC are two areas that we are hugely passionate about and well-versed in. Whilst not a silver bullet, we believe that a key solution could well be MMC. MMC offers faster build times, reduced waste, and potential cost savings. Unfortunately, however, when it comes to housing, its adoption has been slow due to regulatory barriers and industry resistance. Overcoming these challenges will be crucial for MMC to play a significant role in meeting housing targets. We will talk more on this in the coming weeks.
If you’re keen to know more about what we are doing in this space, reach out to one of our team who can take you through some case studies of where we’ve implemented MMC and how we are currently working with multiple government departments in Victoria, Queensland and NSW to tackle the housing crisis.
References
Homes for Queenslanders - Queensland Budget 2024-25
Budget 2024-25 Overview Glossy
Overview: Our plan for New South Wales | NSW Budget
2024-25 Budget Overview | Department of Treasury and Finance Victoria
2023-24 Budget - The Budget - Budget Paper No 1 (treasury.tas.gov.au)
Housing | State Budget 2024-25
2024-25 WA Budget Overview (ourstatebudget.wa.gov.au)
BP4 The Infrastructure Program (nt.gov.au)