Housing undersupply hits property industry confidence as Victoria lags

Despite the shortage, fewer houses are being built than in a typical year.

Despite a marginal rise in confidence among the property industry, the latest Procore/Property Council Survey shows a lack of housing supply continues to drag on property industry confidence.

The survey of property executives found industry confidence remained stable in the September quarter, with confidence rising two points to 108 after a 14-point drop in the July quarter. A score of 100 is considered ­neutral.

Housing is a key concern across the industry and key players expect to deliver fewer homes while prices keep rising, which plays into broader political concerns over the government’s stalled plan for housing, which has emerged as the most significant cost-of-living concern for most ­voters.

The survey showed that housing construction expectations over the next 12 months are seven percentage points below the historical index average, while housing price growth expectations over the next 12 months are 20 percentage points above the historical index average.

This will create more pressures across the industry as homeowners face mortgage repayment pressure like that of baby boomers who paid 17.5 per cent interest in 1990, as housing ­affordability slumps to the worst levels on record.

A near record high number of survey participants (43 per cent) chose housing supply and affordability as the most pressing concern for the federal government. Likewise, 42 per cent say it is the most critical issue for state governments.

Property Council chief executive Mike Zorbas said the fact that industry expected to build fewer homes than the long-running historical average in a housing crisis should ring alarm bells.

“We must build our way out of the housing crisis. We continue to need governments to come to the table with the right planning and tax settings,” Mr Zorbas said. “Just a few months into the national target window of 1.2 million new homes by 2029 we know we will fall short by a third unless further reforms are adopted.”

He said that Senate amendments proposed by the industry and community housing bodies could deliver 105,000 rental homes over 10 years.

Confidence levels in Victoria are mired in negative territory despite rising by one point to sit at 91 on the confidence index.

NSW rose two points to 107, Queensland seven points to 113 and SA lifted 11 points to 132, the highest in the country.

WA saw a decrease in confidence levels, falling 19 points to 119.

ACT declined 10 points to 104, despite its hot housing market.