Canberra has the biggest oversupply of housing of any jurisdiction other than the Northern Territory, according to new research.
The capital has 6700 more homes than population demands, in particular an over-supply of apartments in the town centres, according to the Australian National University report.
The areas of biggest over-supply in the ACT are Belconnen, with 1682 more dwellings than demanded by the population along with other demographic changes, south Canberra with 1494, north Canberra with 1212, and the Cotter-Namadgi region with 1200.
The research calls into question claims a housing shortage is to blame for spiralling house prices.
The paper, Regional Housing Supply and Demand in Australia, by associate professor Ben Phillips and researcher Cukkoo Joseph from the university’s centre for social research methods, analysed 15 years worth of census data and building approvals. It found an over-supply nationwide of up to 164,000 dwellings.
“Our interest was primarily around whether Australia had a housing shortage and if so where was the shortage most acute,” Dr Phillips said.
“In the ACT, we have a surplus of 6700 dwellings relative to an assumed balance of housing in 2001.
“We find that Belconnen and the inner north and south have the most substantial housing surplus, mostly driven by unit developments.”
Dr Phillips, whose calculations are based on population numbers and the number of people in each household, said more homes had been built than population growth demanded, with some of the units vacant.
“In time they will become occupied but for the moment we do have significant supply and this suggests that housing development need not be as high as it currently is,” he said.
“This could have implications for the local economy as housing development will likely drop in the near future in Canberra.”
State and federal governments had for years suggested housing supply was the answer to housing affordability but said the research questioned it, he said. In 2004, the Productivity Commission said rising house prices indicated demand was outstripping supply.
“For a start, if it is the solution then how come the recent surge in construction has not had any impact on house prices,” he said.
“It also means that we need to further consider alternative solutions and explanations for house prices and affordability in Canberra and Australia.”
Dr Phillips said the housing market is often heavily based on momentum. He said house prices in Canberra are pushing up.
“It makes sense for developers and investors to develop in a rising market,” he said.
“That does lead to an oversupply in the market and could have implications for a slowdown in construction in the near future for Canberra.”
Dr Phillips’ work concluded that Australia didn’t build sufficient dwellings between 2007 and 2014, but in the eight years before that the country built too many, and since 2014 there had also been “a period of over-building”.
Dr Phillips’ report said house prices had decoupled from incomes about 2000, with real house prices outgrowing incomes by 71 per cent, and rents by 95 per cent – partly a result of low interest rates.