Big build underway
The ABS released its latest update on the total value and volume of the dwelling stock, which showed that the number of dwellings increased by an estimated 168,000 over calendar year 2024.
There were approximately 11.3 million dwellings by the end of last year.
These figures are provisional estimates and may yet be revised lower, but this does suggest we are at least beyond the cycle lows for the pace of construction, even if the figures are a long way below the desired 240,000 additional dwellings per annum.
The biggest annual percentage in dwelling stock was seen in the ACT (2 per cent), and then in Victoria (1.9 per cent).
There was a slower percentage increase in Queensland (1.5 per cent) and New South Wales (1.4 per cent).
Since the borders reopened, the return to the use of youth hostels, backpacker hostels, student accommodation, and share-housing has seen the estimated number of persons per dwelling revert higher to around 2.43.
This has helped to keep the rental vacancy rate nationally at around 1 per cent, even though population growth of over 500,000 per annum is comfortably outpacing the speed of building housing.
However, this trend appears to have almost run its course now, and the rental market will thus likely remain under considerable pressure in 2025.
The number of persons is also a long way below where it was a decade ago, meaning that we need, on average, to build more dwellings than we used for each additional 1,000 persons of the resident population.
Higher mortgage rates helped to curtail housing price growth in 2024 in Sydney and Melbourne, and the ratio of the value of the dwelling stock to GDP has eased somewhat to around 4x.
Japan's famous housing bubble saw the value of residential property hit a ratio to GDP of around 500 per cent, but it's hard to compare - Australia has some of the
best capitalised banks in the world these days, and lending standards have tightened considerably over the past 20 years.
Lower interest rates and more stable construction costs should help to see the pace of building pick up in 2025, but population growth is still running at a considerable pace, so there's a long way to go in this cycle before supply begins to meet demand.
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