The big squeeze: why Australia is facing a persistent housing shortage

The key point to bear in mind here is the length of the development cycle. The period from site purchase to building completion takes several years (especially for higher-density housing), so the impact of this reduced shortage will likely only emerge around 2024 and beyond.

Unfortunately, the effects of housing undersupply are also cumulative. A report into Sydney’s housing undersupply by the Property Council of Australia found that, "Each year that the dwelling targets are not met exacerbates this deficit. Crucially, the current targets do not incorporate the deficit into dwelling demand, meaning that there is an underlying deficit that can persist, even when dwelling targets are achieved³".

The outcome of this persistent shortage of housing and other property assets is that the long-term fundamentals make this sector attractive to investors. Regardless of short-term price movements, the market dynamics are strongly supportive of a robust property investment industry with decades of demand ahead of it.

Zagga’s latest white paper, 'Remarkably Resilient: Australian Real Estate in an Age of Inflation', explains how commercial real estate debt can tap into the current market conditions.