Just not enough homes

Supply shortage is one of the most significant hurdles for Australians trying to enter the property market, new research shows.

Westpac’s latest Home Ownership Report has revealed that one in four first home buyers said a lack of listed properties is holding them back – a sentiment that’s grown by 14 percentage points since 2019.

Competition subsequently remains fierce, with two in five (39 per cent) citing rivalry with other buyers as a barrier – growing by eight percentage points over the same period.

Carolyn McCann, Westpac Chief Executive of Consumer, thinks increasing supply should be one of our most urgent priorities.

“We have a responsibility to the next generation of Australians - housing is a fundamental right,” McCann said.

“Young Australians are eager to get into the property market, but the reality is that limited supply is creating significant challenges.

“The most critical focus has to be on supply. We need to build more homes at the right price point so that every Australian feels they have a chance to own their own home.”

According to the research, aspiring homeowners were open to new and alternate ways to help boost supply. More than one third (35 per cent) of first home buyers said more build-to-rent or rent-to-buy properties could help make housing affordable and one quarter (25 per cent) think more land should be freed up for new housing.

With growing interest and uptake in the Federal Government’s 5 per cent Deposit Scheme, more than half (52 per cent) of first home buyers are supportive of more government help to alleviate affordability challenges.

“Across the country, we’re seeing younger Australians adapt to the realities of the housing market, with many recognising that increased density and alternative housing models are essential to improving affordability,” McCann said.

Ironically, while one quarter (24 per cent) of first home buyers think more apartments or townhouses in existing suburbs could help alleviate affordability barriers and 16 per cent are in favour of increasing density limits, more than half (52 per cent) are concerned about high-density buildings being built in their suburb.

Three in five (61 per cent) first home buyers fear growth in high-density buildings could lead to increases in rent or rates, half (47 per cent) are concerned it encourages high population growth and close to two in five (38 per cent) are worried it will change the lifestyle or vibe of the suburb.

“Australians care deeply about the character of their suburbs, but the reality is unless we increase supply, younger generations will continue to be locked out of home ownership,” McCann said.

“This is a national challenge that requires balance, protecting what people value while creating the homes we desperately need.”

Westpac has put forward a number of recommendations to address housing affordability challenges and supply shortages, including harnessing AI to streamline, speed up and give certainty to new housing development approvals, deferring upfront development costs and moving all state planning systems to a consistent ‘deemed approval’ setting.

"This isn’t just about housing, it’s about nation-building. Faster approvals, investment in apprenticeships, and targeted support for construction in the right places will create jobs, strengthen communities, and give more Australians the chance to own their home,” McCann added.