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Modular housing highlighted as a strategy to addressing Australia’s housing supply gap.
The major bank’s chief executive has expressed concerns about the iconic “great Australian dream” of home ownership becoming increasingly unattainable. Ross McEwan, CEO of NAB, highlighted the significant challenges Australia faces in the coming year, with resolving the housing crisis as a top priority. (main pic: Render of Victorian housing provider Haven Home Safe modular housing under construction by Arkit.)
“Housing is Australia’s biggest issue – it will continue to have a disproportionate impact on young and vulnerable Australians if we don’t get the settings right now,” Mr McEwan stated. He expressed his worry about the viability of the dream of home ownership. “Affordability is at a 30-year low, and rental prices are rapidly increasing. That’s because we simply don’t have enough houses for our growing population, let alone enough affordable and social housing for people who need support.”
Recent findings from the PropTrack Housing Affordability Index, as of September 2023, support McEwan’s concerns, indicating that housing affordability has plummeted to its lowest in three decades as of June 2023. This decline is largely attributed to skyrocketing home prices during the COVID-19 pandemic and the Reserve Bank of Australia’s (RBA) intense monetary policy tightening. CoreLogic’s Home Value Index (HVI) further revealed that home values surged by 8.1 per cent in 2023, a recovery from the 4.9 per cent drop in 2022, yet still trailing behind the 24.5 per cent increase in 2021.
“The gap between supply and demand has increased significantly. We’re building around 50,000 homes less than we need each year,” McEwan elaborated. He urged that all levels of government must urgently work together on simpler and faster regulations and make more land available for construction. “There also needs to be more targeted government support for social and affordable housing and more innovative construction methods to meet supply targets, such as modular housing,” he suggested, emphasising the potential of modular housing as a solution.
The Housing Industry Association (HIA) also raised the alarm about insufficient new housing construction, warning that Australia is falling short of the government’s target of 1.2 million new homes. This was confirmed by the Australian Bureau of Statistics (ABS), which reported a 10.4 percent decrease in new home commencements, hitting a new low for the decade.
McEwan stated that NAB aims to contribute to resolving the housing supply issue, planning to lend an additional $6 billion for affordable and specialist housing by 2029. “Last year we invested $67.5 million into a specialist disability accommodation portfolio through Lighthouse Infrastructure,” he concluded, adding, “NAB also supports social and affordable accommodation projects through Nightingale and Good Shepherd. This issue is not just for governments to solve. Banks, developers, builders and community partners can all move faster.”
