The National Housing Finance and Investment Corporation (NHFIC) has released its first flagship report producing five-year projections for housing supply and demand across Australia’s major cities and regional areas.

The State of the Nation’s Housing 2020 report assesses the number of new households that are expected to form (new housing demand) over the next five years, the number of new net dwelling additions expected to come on-line, and annual balance of new supply and demand, while also assessing housing affordability.

NHFIC’s flagship report, which will be undertaken annually, found:

• The global COVID-19 pandemic has caused the largest shock to population growth since early last century, triggering a forecast fall in new demand for housing of 286,000 dwellings over the next five years. 
• Despite the impacts of the pandemic, a recovery in construction activity from the COVID-19 recession is underway - led by detached housing - with total net additions expected to rise to 181,000 in 2021 from 170,000 in 2020 on the back of the monetary and Federal and State Government fiscal stimulus put in place this year. 
• Federal and state government stimulus is supporting supply by encouraging construction activity in the short term, but the lower demand for new housing is expected over the medium to longer term, with net additions likely to fall and then recover to around 148,000 in 2025. Weakness in net apartment additions will potentially extend to 2025, when 27,000 new dwellings are expected, similar to levels seen prior to the apartment boom. 
• Despite record levels of residential construction over the years prior to COVID-19, supply outpaced demand by only 4,500 dwellings (on average) for the years 2017-2019. The shorter term period where new supply exceeds new demand can be seen as a catch up for much longer periods of under supply in the earlier 2000s.